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The Refresh News: April 14 – Google’s AI Mode, Walmart’s Retail Media Pressure, and Economic Headwinds
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Yo Yoing and Spiraling. No, I'm not talking about the latest season of White Lotus. Unfortunately, I'm talking about our present reality. I'm Kate with marketexture and this is the Refresh your weekly download on what went down in advertising. Today is Monday, April 14, 2025. This week we're covering Google's AI Mode, Walmart's retail media problem and tariff trouble. So let's get into it. Kicking things off with Google's AI Mode have you ever seen something out in the wild and wanted to know more about it? Maybe you took a photo of it to save and reference later? Google is streamlining these moments by enabling their multimodal AI image search product within AI Mode. Part of Google Search Labs experimental product AI Mode is part of Google's larger Search Labs product that more closely mimics the user interface, search experience and deep reasoning functionality that we've come to expect with LLM or large language model interfaces like ChatGPT and Google Gemini. With multimodal search, we gain the ability to use a variety of inputs like text, image, video and audio to inform search outputs. These multimodal inputs and outputs are increasingly being paired together as well. The feature is gaining in popularity not only in Google search platform, but within various LLMs like ChatGPT. It is worth noting, however, that multimodal search isn't necessarily new, but it has been improved and made more widely accessible recently. Google's multimodal search feature uses Google Lens, allowing users to ask complex multi part questions and follow ups to dig deeper from a reference image. For for example, you can use a photo of a set of books that you enjoyed and ask Google to recommend similar best selling books. Google also rolled out the broader AI mode feature to millions more Searchlab users. This past week. I actually received an email to test it out and now I have an option to click into AI mode, which appears as a tab at the top of my Google search browser alongside other tabs like shopping images and news. These two announcements reveal clear intentions from Google's end that the future of search looks a lot less like a SERP page or a search engine results page, and a lot more like a chat interface with multimodal functionality. Tech innovation has always forced us to reconcile and adapt from how things are done to the way things will need to be done, and the ad industry hasn't been forced to adapt this severely since the Internet and social media ages. However, at this point, the evolving search landscape is a rock rolling downhill, increasing in momentum as it moves all of us toward its future state, forcing consumers to adopt new behaviors and advertisers and publishers to adopt new strategies for making their brands and content discoverable. Next up is Walmart's Retail media woes and Question for you Walmart? Would you expect your boss to give you a fat raise even if your performance just didn't justify that raise? Probably not. So it is a little perplexing that Walmart is requesting its advertisers to increase their spend on its retail media network despite not being able to promise that the performance will come along with those increases. Adweek reports that Walmart has requested its brands to increase spend by about 25% across the board, with one brand increasing spend up to 75% and another brand raising its investment to north of $30 million. Despite seeing plateauing performance results, brands are concerned that if they don't meet these spend demands or sorry requests, their brands may not be findable specifically in stores and on shelves, meaning their profits could take a hit. Typically, brands are hyper focused on getting the most out of their investments and being able to justify every dollar they spend. This investment scrutiny is flipped on its head when the channel becomes a pay to play environment, especially if the state of play is rigged. I think at this point we can call a spade a spade here and say this is an abusive market position and sets a dangerous precedent as brands respond to economic pressures. Will they it safe and I'm air quoting here and make these requested investments in retail media networks because they're typically labeled a performance channel or will they actually pull backspend in an effort at self preservation during economic turmoil? It's definitely something to watch. Finally, we do need to address the tariffs. If you lost track of all the back and forth like I kind of did, here's a quick refresher. Goods from Mexico and Canada that aren't protected under the USMCA trade pact will be subject to increased tariffs. And last week Trump announced reciprocal tariffs for a lot of countries, including those inhabited exclusively and solely by penguins. The stock markets took a tumble, then they made a comeback and then they tumbled again. At this point investors, financial advisors and the markets, including the bond markets, all started crashing out and allegedly it was the bond markets that pushed President Trump to have a change of heart, implementing a 90 day extension for most countries except China. Tariffs on Chinese goods are now at 145% since Trump took office. Understatement of the year. But we get a lot of our products and raw materials from countries around the globe. There are very few companies that won't feel the effects of these tariffs if and when they go into effect, including financial or tech services who face a potential threat of retaliatory tariffs from the European Union. Specifically tech services like Google's ad and cloud business, as well as Meta's ad business and Amazon's web services. For the record, it does sound like imposing tariffs on these kinds of services isn't really a road that the EU wants to go down, but it's worth keeping in mind while we're all trying to heal ourselves from repeated whiplash, Advertisers continue to contingency plan Here's a few things I think we can expect in the coming months and some thoughts on how to prepare the First Everything is chaotic right now, but advertisers should hold steady, focusing ad budgets and strategies onto proven methodologies while avoiding overly dramatic decisions. Because honestly, we've kind of had enough of that already from the tariff rollouts. Staying consistent also helps to keep your data set consistent, meaning you have more reliability when it comes to analyzing and identifying what's working and what's not. Second, and I know I'm swimming upstream here with a lot of you, but I'm a firm believer that continuing to build brand equity and value is a worthwhile investment, especially in the thick of economic headwinds. Kantar found that during the COVID 19 pandemic, the world's most valuable brands found their brand value increased by almost 6%. They also found that strong brands were in a much better place during the pandemic than they were in the global economic crisis of 2008-2009. On the consumer side, we've seen extraordinary resilience in spending since the COVID 19 pandemic, but this is likely a house of cards that could be toppled by even harsher economic conditions. The Wall Street Journal recently reported that the top 10% of earners now account for 50% of all spending in the US for the rest of consumers, spending priorities continue to be reallocated to the must haves. Deloitte reported discretionary spending intentions have decreased for a third consecutive month as of March 2025, slipping below even the 2021 rates. Consumers are also saving at some of the lowest rates since 2018, meaning there isn't a safety net. From a channel perspective, investments are naturally shifting to performance channels, especially Search, because this is always a safe bet, but it could lead to increased competition and pricing pressures. I'm predicting more budgets will be allocated to programmatic channels as advertisers seek out flexibility, more lenient agreements and cost effective media opportunities. As far as upfronts go, wow, what bad timing for them. I'm extremely curious to see what happens this year. Media buyers may take a more conservative approach to investments, softening the market and creating more room for negotiation. Last year's upfront saw buyers demand more programmatic opportunities and costs decrease a bit, largely thanks to Amazon Prime Video flooding the market with impressions. I'm thinking this year's economic conditions could exacerbate these trends. Equally intriguing will be retail media spend and I already touched on this a bit, but I am curious to see if brands continue to spend or if they actually end up pulling back on spend. Another strategy we can expect to see is that many brands will retreat from channels where performance isn't perceived to be readily proven. And yes, the emphasis on perceived is intentional. This will drive down costs in these environments due to the flattened demand. We saw this happen with digital out of home during the pandemic. I think smart brands will set aside a portion of their budgets to take advantage of these low cost environments to make an impact in a clever and meaningful way. Finally, AI is maturing and being made more accessible at a time when it's needed the most to reduce costs and automate processes. If you are not looking at AI solutions to help navigate this time, I'd highly recommend starting to do so. Brands tend to only start planning for hard times when it's on their doorstep instead of preparing for when it inevitably does happen. At this point, as a brand, you need to be ultra clear on what your value is, how you provide that value to consumers, and how you plan to support your customers. Right now, today, it is your responsibility to convince consumers that your brand is a worthy investment as they begin to scrutinize purchases. One closing thought and it's in the realm of self reflection. I think advertisers are prone to forgetting that you are also a consumer. Make prudent decisions, but also think intuitively. How are you making purchase decisions right now? What channels or platforms do you rely on to help you make decisions? What advertising messaging would be effective for you and why is that? Things are incredibly uncertain right now and it's likely that they'll continue to be for a while, but I think the Pandemic equipped advertisers with the agility, wisdom and skills needed to navigate turmoil successfully. That's all we have time for today. Keep your wits about you because honestly, if the economy is spiraling, nobody else is allowed to. Thanks for joining us for the refresh and we'll catch you next week.
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