#22: AI + Brand (Part I)
Do brands matter anymore?
The way people search for information is fundamentally changing, particularly in e-commerce. Last week, rumors swirled that OpenAI and Shopify are working on an integration, based on leaked code referencing Shopify. My guess (as well as many others) is that ChatGPT will soon offer the ability to make purchases within its prompt interface. If this integration comes to fruition, it will turn the e-commerce industry upside down. And in turn, it may completely devalue the process of building a long-lasting consumer brand.
Let me explain.
In April, Sam Altman (founder of OpenAI) claimed that 10% of the world’s population uses an OpenAI product. If that stat checks out, that’s nearly 800 million users. By comparison, Google’s Chrome sees roughly 3.5B active users, over four times OpenAI’s reach. But sheesh, OpenAI is growing at a blistering rate.
With such quick growth, it’s fair to assume that human search and discovery behavior is also shifting rapidly. The traditional search experience (ie Google) involves sifting through usually ten blue links, with a few of them sponsored. It’s up to the user to decipher what is relevant to them and what is purely a sales pitch. Ideally these two things are the same, but I find that’s not usually the case.
Enter Large Language Models (LLMs). Instead of searching for “business casual outfits for men” on Google and receiving ten answers, I type the following prompt into ChatGPT: “I’m going to a work dinner of e-commerce professionals tonight where the restaurant is a swanky but new-age steakhouse. The industry group tends to be more casual in dress. Suggest an outfit that I should wear to fit the vibe and a few brands that would fit this style.”
And my output is one relevant answer. Not ten, of which I need to spend further time sorting through what is worthwhile and what isn’t. Just one. Sure, the ChatGPT prompt took longer to write than a Google search query, but that extra twenty seconds on the front end saved me at least five minutes on the back end.
The Google search engine results page (SERP) would have likely spit out a list of branded links. But with the ChatGPT prompt, I received one brand mention. Because discovery is rotating more toward conversational commerce (ie ChatGPT prompt) it’ll be tougher for brands to show up for broad inquiries (ie Google search query).
In Technology is Profound, we discussed the changing SEO landscape and how companies like Profound are helping shape the AI marketing landscape. A bit of an aside, operators should prioritize gaining deeper insights into their brand’s LLM presence and subsequently taking action to capture LLM real estate. That said, this alpha won’t be around for long. It’s crucial you hunt down how LLMs scrape your website, and which types of content are showing up more frequently than others in prompt outputs.
Let’s play this scenario out: if everyone types unique scenarios into ChatGPT when they want to make a purchase, consumers aren’t seeing a full suite of brands. And those might not be the brands that invested decades and millions of dollars into building their brand. In the case of my wardrobe inquiry, I received a few suggestions for Buck Mason or Theory, not Ralph Lauren or Banana Republic (brands that I imagined would be included). Sure, Buck Mason and Theory have built large followings, and are also known for their aesthetic, but certainly don’t have the heritage of Ralph Lauren.
AI enables hyper-personalization. Consumers will soon become reliant on specific outputs from LLMs to help them make decisions for them. No need to surf the web and peruse several fashion brands online. You know the occasion you need to attend, and AI will tell you exactly what to wear for it. It’s likely your wardrobe will become a collection of tons of different brands, with little affinity for any one brand. That said, you may become brand loyal through the quality and feel of the clothing, but less so because their marketing resonates with you.
My argument is that hyper-personalization takes away from shared experiences. If everyone searches and discovers products differently (through their own super specific prompts), what becomes of the shared experience that makes a brand… a brand?
A brand is a story. And the best brands are world-class raconteurs. Think about Nike and what “Just Do It” means to you. Or think about the prestige associated with a Hermes Birkin bag. The brand is first and foremost why these brands have become as ubiquitous as they are.
The thing is, AI effectively takes away the opportunity to tell a story. If consumers aren’t heading to Google search or your own branded website to discover what they’re looking for, you are subject to the whims of LLMs. Your story becomes what a prompt output says it is.
In Tuesday’s edition, I’ll play devil’s advocate and chat on why investing in brand (ie story) is one of the few things you should double down on now. Stay tuned…