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Behind the Numbers: an EMARKETER Podcast
The Death of the Click: How AI Is Reshaping the Internet’s Business Model with CMO Huddles’ Drew Neisser | Behind the Numbers
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- [00:01]
A
Unlock more growth with awin. Tackle acquisition, conversions and retention by tapping into a network of over a million affiliate partners. That's right, a million. With everything from partner management to reporting and payments in one easy dashboard. The best kind of dashboards are easy. AWIN helps brands drive real scalable results. Visit awin.com/emarketer to learn more or just for fun, it's up to you. Hey, gang, it's August. Nope, it is August. But it's also Monday 25th August. Grace, Drew and listeners, welcome to behind the Numbers and you, Marcus, at video podcast made possible by awin. I'm Marcus, joining me today for today's conversation. We start with our tech and AI analyst. Let's living in California, it's Grace Harmon.
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B
Hi, Marcus, thanks for having me.
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A
Of course, of course. And special guest, the CEO and founder of CMO Huddles and host of Renegade Marketers Unite, the podcast based in New York, it's Drew Neiser. Welcome to the show, Drew.
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C
Hey, Marcus, thanks for having me.
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A
Of course, of course. We start when we have a special guest on with a speed intro. So, two questions for Drew, one for Grace. First one just for Drew is what do you do in a sentence, easy.
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C
I help B2B CMOs via community coaching and content. And that community is CMO Huddles.
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A
Very nice. And second question, we'll start with you, Drew. What was one of your favorite movies from childhood?
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C
So I was a little bit of an old movie geek and there's a movie from the 40s that called Sullivan's Travels and it was about a film director who goes sort of undercover and ends up in prison. And what he discovers is that the end of the day, it's all about making people laugh and bringing a little joy to people's lives. And that stuck with me for a long, long time.
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A
I like it. Did you have it on VHS or was this one you used to watch on?
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C
I watched it on television and then I owned a VHS copy of it. Yes, for those folks who remember that.
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A
Yes, very nice. I have my favorite movie of all time on vhs, Nightmare Before Christmas. It's just the best. Tim Burton, Danny Elfman soundtrack. Grace, how about you?
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B
I liked Corpse Bride and Finding Nemo. So a little bit more. A little more animated.
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A
Good choices. Well played. Well, they are the folks we have for you today. Today's real topic, the Internet's business model is breaking, thanks to AI. Now what? All right, folks, so today we're talking about how AI is, is changing search and the Internet's Business model. Pew Research center just did a study about AI summaries and as you can see from this chart on the screen, it found that when people see an AI overview which are Google's results, they're half as likely to ever click a link from Google. He also found that after folks see an AI overview answer, they're more likely to end their browsing sessions. Drew, what do you make of this research? What was your biggest takeaway?
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C
Well, first I think it actually understates the truth rather than overstates the truth. I think that there's less clicking than they're even seeing and you can see that in the amount of site traffic that is declined to so many different websites. So I don't think there's any doubt that gen AI is and LLMs are changing, you know, organic site traffic. If that was your business model, you certainly need a new one.
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A
Yeah, yeah. Grace, many, many AI searches, they're just fulfilling people's curiosity without the need to click. And to Drew's point, CNN one such example, traffic down 30% year on year. HuffPost down closer to 40%. Both that number from similar web. What's your take on this study? I think you wrote a piece about it.
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B
I believe I did, yeah. And I think it's exactly what you said, which is that these options are pushing people out of search really quickly and that changes everything for brands and for publishers and you know, I mean in addition to AI overview you have perplexities AI search, all of these different engines that are creating content but kind of ending discovery. So yeah, it absolutely changes search behavior.
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A
Yeah. There seems like there's just a mounting evidence that this is having a significant effect. There's Marissa Jones who who writes for one of our newsletters was saying ARF study found AI overviews decreased click through rates by over 34%. There was a Sea Interactive study noting a 70% drop in organic click through rates in search with AI overviews. She also points to authoritas cited from the Guardian found sites previously ranked first in search results could lose nearly 80% of traffic. For results that fall below AI overviews and then similarweb again. They measured about 100 million web domains and estimate that worldwide search traffic by humans fell 15% in the year to June. Certain sites, health ones in particular close to 30 drew in AI's defense though, I mean Google does say they say click through volume from search from the search engine has remained as they say relatively stable year over year Though some types of websites are getting more clicks, others getting less. You could Argue it's not all AI's fault. Right. There are other reasons that folks are visiting sites, less social media, listening to more podcasts, things like that.
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C
Yeah, I think that's fair. I mean, first of all, I want to. This is going to take longer than you think. It's not going to be like suddenly there's going to be no organic site traffic and suddenly, I mean, I remember working on a brand a few years ago that was still selling typewriters. People actually bought a million typewriters every year, you know, long after computers were developed. So it takes a long time for the, the and people. Yeah. For the first time I think I saw the Google search usage went below 90% their. Their share. But it's like 89. Right. I mean they're still the dominant starting place. So that's part one of this is consumer behavior changes slowly over time. And, and, and so yes, AI has accelerated, which was probably something. Yeah. We're spending more time on our phones, we're spending more time on T with and there's a reason why every single platform is trying to do vertical videos because people are on mobile devices. So yeah, I think. Yes. And LLMs are killing organic site traffic.
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A
Yes. So what's the, so what's the advice or what's some of the conversations that you're having with the CMO community with regards to this? Because LLMs, large language models, them versus those versus browsers. And it is that LLMs are giving you one answer. Browsers give you a list and so there's fewer chances to get in front of customers. But like you said, things are happening slowly but surely. So what are CMOs talking about when it comes to this conversation?
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C
Oh, gosh. So there's a lot of angles to answer this, but number one is when your organic site search traffic goes down, you start to think and people are on LLMs. How the heck do you get your brand to show up on an LLM? So there's a lot of conversation about whether you call it AEO or Geo CEO and a lot of different folks experimenting with this and, and we're seeing a lot in, in that area. And I can go list some of the things that they're trying to do. But here's the one thing that we know so far is that nobody has a clear answer on solving this problem because of the way LLMs work. If you go in and ask it a question today, you'll get. And, and you ask it once and, and then you ask it again, it'll give you a Different answer. You have to do like a thousand queries to actually get to a percentage of where 70% of the answers look like the same. So it's so different than SEO. Tracking it is really hard. So it's very difficult right now. But everybody wants the answer to this question. How do we make AEO work the way SEO did?
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A
Yeah, yeah. Grace is difficult because AI overviews appearing I think in about 20% of results. So it's significant, but it's not everywhere. And Eli Goodman, chief executive and co founder of Datos, was saying that over 90% of all AI searches are informational or productivity based rather than you looking for links type searches. So what do you make of this? What seems to be transition but slow transition towards LLMs?
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B
Yeah, I mean, I guess going back a little bit, you know, Google did contest that Pew Research study, but I don't think it's, it's undeniable that Google's or AI overviews and AI are changing how people engage with search and with, you know, instructional content. That Pew Research study found that, you know, w questions, who, what, when, where, why, how those trigger a lot more AI overviews. I think that you also end up seeing less diversity of answers. So a lot of the time AI overview is generating links from Wikipedia, often from Reddit, not seeing necessarily all of those smaller publishers, those smaller brands, those smaller web pages. Yeah, I mean SEO and GEO work very, very differently. For one thing, we don't necessarily understand everything about generative engines and how they surface content. So there isn't really a perfect strategy like there is with SEO. It isn't just reliant on keywords, it's about contextual recall. And you know, like Drew said, you can put in a thousand different queries or a thousand different times the same query and you can get a thousand different results. So I think that, I don't think that there's a great answer for how to perfectly appear. I think, you know, what we've written a couple times is websites might want to add things like FAQ pages, really specific product specs. Adding summaries I think is the big thing for what those engines can take in, what they'll scrape and what they'll regurgitate later.
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C
Yeah, there's more to that though. I do think there are like probably seven different things that you can do right now. You don't know how much it's going to work. But I will tell you that a number of brands are already seeing the result. They're seeing inbound traffic as a result, result of an LLM referral. So that's happening too. Brands are getting discovered, but certainly nowhere near the way they would have from SEO. But there is the Q&As and extensive Q&As. There is having the basic information that an LLM wants like do you have your competitive information, do you have your pricing information? There's certain code that you can put on there that the. It's funny early days of of SEO it was about code and having trying to trick it with code. But now there is literally pages that you could probably put up that will be readable by the LLM that no human will ever see. Mm.
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A
Let's talk a bit about this shift in how the Internet did work that the kind of the bargain that was the promise of the Internet and and how that's changing. AI is killing the web. Can anything save it was an economist asked who is looking at for for this episode and the Economist is writing that AI search can slow traffic to websites which in turn removes the incentive for content to be created which alters the balance of the open web. As we've been discussing as AI changes how people browse, it's altering the economic bargain at the heart of the Internet. The piece was saying human traffic has long been monetized using online ads. Now that traffic is drying up, content producers are urgently trying to find new ways to make AI companies pay them for information. If they can't, the open web may evolve into something very different. But what might that look like? The economists had two examples. One saying some folks like Tollbit as a paywall for bots proposed a pay as you crawl system in which AI bots are charged for reading sites content. And then the second one here, others people like Pro Rata are working on systems that analyze chatbots answers to determine where the information came from so that sources can be compensated. Kind of a credit sharing model, so to speak. Drew, what do you make of these?
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C
So I'm a big fan of the Economist and I generally really really respect. I think I disagree with the premise fundamentally that. Tell me number one part of it is the incentive to create high quality content is more important than ever because that's the only way you'll be able to cut through the slop. Think of the economists. Are they going to stop creating content because suddenly there's less organic? No, they're not. And by the way, the Economist is a premium brand known for high quality content and it's a subscription based model. The notion of free content is the problem here. But if you are creating content that is good enough that your subscribers will pay for it. In a world where there's so much distrust, I think the reputation of the content provider is never going to be more important. And therefore, because there's so much more fake and garbage out there, people are going to seek sources they trust and they'll pay a certain amount of money to get that content because it can't.
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A
Yeah, Grace, you actually wrote about this, saying AI search has trust issues. You're saying just 9% of people fully trust AI overviews. You say 1% of users click on a source link in an AI summary. That's from the Pew Research study. However, over 70% said Google search is either the same or better than before AI overviews launched, according to Exploding Topics. So it does seem like there's a bit of a paradox here, similar to how we see with a lot of things, people don't trust news on social media, but they use it all the time.
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B
Yeah, no, I think that's a contradiction there in terms of how much people trust AI versus how much work they're willing to do. And, you know, to a degree, it's kind of hard. AI overviews doesn't always surface the links to what exactly it's talking about. But I agree with Drew. That brand is a really big deal. I actually did have a question for you, Drew, really quick, which is, you know, Google had rolled out preferred sources, so you can kind of start developing your Google search results results to be more like an algorithmic feed where you're selecting exactly what you want to show up. Which, you know, I think limits discovery to a big degree. And I was wondering if there's any brands or CMOs that you're working with that are having more interest in these indie publisher sites like Substack, like Medium, that have a really big focus on discovery.
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C
You know, I think it's still early days in when it comes in again, our community is all B2B. So you're going to see, I think, more experimentation in B2C initially than, than you will in B2. Uh, but, you know, suddenly Reddit is on everybody's radar and they're all trying to figure out, oh gee, how do, how do we play in that, in that space? And, and that's obviously really hard. Uh, so I don't know if I have a good answer for you on that one.
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B
And Reddit is so huge. I mean, for the amount of, you know, community building and niche communities and just like built up community trust there is in terms of you're getting a product recommendation. I know I'm talking B2C there, but if you're getting recommendations from your community there, I think it'd be a lot more trusted than what you're getting from. From Google.
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A
Yeah, yeah.
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C
And, and by the way, I think that's a major problem for the LLMs if people don't trust them and, and if it drags Google down because I think there was a, you know, the interesting deal, the bargain you had originally with and, and I really wonder what Google is thinking because if I were them I would have said there's still Google, it exists and there's a new LLM product but instead they're trying to do both and you can't ever do that. So yeah, you know, so it's a business issue for them. Obviously they have to defend but they had this cash cow that they've decided to kind of use and it'll be really interesting to see how their ad revenue performs over the next five years.
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A
Yeah, yeah. A lot of folks feeling differently about Google to a certain extent. Neil Vogel head of DASH Meredith they own people what food and wine, things like that were saying. We had a very positive relationship with Google for a long time. They broke the deal. Grace, what do you make of those two models of how the Internet might work? The pay as you crawl system for AI bots and then the credit sharing model.
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B
I mean I guess at the base I just say that I think media publishers need to be compensated for when their content is used for training or in answers. But I think it's gets really complicated because there's only so much control you have. I mean you're talking about a, you know, pay as you crawl model. How enforceable is that? There's a lot of websites that have been trying to put code onto their, their sites instructing bots on what they can and can't scrape. But there's only so much you can do. So I think it's great in theory.
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A
Yeah, yeah. As with a lot of things, we're talking a bit about AI search having, having trust issues. And there was an Atlantic article from Emma Maris questioning whether AI slope might finally cure our Internet addiction as chatbots make much of the web unreliable in turn nudging folks offline. She points out that YouTube, long destination for real people who know how to repair toilets, make omelets or deliver engaging cultural criticism is getting less human by the day as the newsletter Garbage day reports that 4 out of May's top 10 YouTube channels were devoted to AI generated content and recently the fastest growing channel featured AI babies in dangerous situations. For some reason, she says Reddit is currently overrun with AI generated posts. Many AI photos and videos have become indistinguishable from reality, making it much harder to trust anything online. Grace, how much of a chance is there that AI slop will nudge folks offline?
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B
I think a good chance. I mean it erodes user trust, it erodes platform utility and you know, a huge amount of it. It's like SEO spam times 100. I think that it will nudge some people offline. I think it'll make people have less trust in what they're seeing. You know, you're talking about what percentage of Internet users think that AI has made the Internet a better place. I don't think that stat is going to stay the same forever. I think it also might spark more of like a slow web revival. So, you know, niche communities, online newsletters, you know, not to bring substack up again, but substack zines, things like that. So I think that you might see people nudged offline and also just away from what these legacy platforms that are getting more inundated with AI.
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C
Yeah, I'm not sure, I'm not sure I agree with the very premise that people are going to change behavior and move offline because there's so much slop. I do think, and you know, when you look at the YouTube baby things, I mean that is a moment in time for YouTube babies, let's face it, they are almost irresistible. You just can't not watch them. So, but, and in fact they're addictive and that's why, you know, these things are, are kind of winning. But you, it takes, it's like saying it's really hard if, if it is an addiction of sorts to suddenly go to cold turkey. You know, I, I respect that Atlantic article and how they personally felt it was driving them, but I, I suspect again, I don't think you'll see a major change in what I hope will happen is that people will seek out quality that people will seek out, you know, if they really, they'll start to seek out human made and that there will be actually this sort of reverse with every trend. There's a counter trend and is as Grace talked about, that while people are going to the AI slop, they more and more will seek this, you know, not AI, real human stuff. But that doesn't necessarily mean it'll happen offline. Yeah, right.
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A
Yeah. There was a point in the article saying we might see a bifurcation the Internet's new era may push AI skeptics to spend less time online while another group ramps up their AI mediated screen time, which could split the Internet's culture or culture at large.
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C
And that's really concerning.
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A
Yes.
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C
Because, I mean, there's a really good chance a lot of people, if you miss the AI wave, it's like, you know, if you might have had a grandparent, a great grandparent who said, I'm never going to be on email or I'm not going to text and they can't communicate, you know, you're going to, if you are ignore these tools in, in your personal lives and in your professional lives, you're putting yourself at risk.
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A
Yeah, yeah. A lot of it could be AI by proxy as well. Another point in the, in the piece was that even if you never use something like Chat GPT, the rest of the Internet is loaded with the stuff and people parroting their hallucinations. It was saying. So you might get it indirectly anyway.
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C
Right, right. Really the hardest part of all this is wherever you go, it's so difficult to know what's AI and what isn't.
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A
Yes.
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C
Yeah, yeah.
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B
There's a couple of examples in that, that Atlantic article that I liked. I think one that came to mind for me was this video that went viral on TikTok of a bunch of rabbits jumping on a trampoline and no one could realize that it was AI or saying they needed to go touch grass after they realized. Or the example in that article of, you know, getting messages on a dating app and feeling formatted by ChatGPT. So I think it's unlikely that all of that means no one's going to spend time online, but it's just really going to change how they engage the Internet. And I don't think that. I also just don't think that that means that everyone's going to be taking full minutes to scrutinize everything they see.
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A
Yeah, yeah.
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C
So I come back to where are there going to be channels? Like, if the New York Times had a video feed, I would say, oh, I trust that because it's a brand that I trust. Or the Economist did. So if suddenly we had social places where the content was branded or under an umbrella brand that you trust, we're going to feel good. And there was a moment where social networks were kind of creep going that way. They're not anymore. So now maybe there's a big opportunity for social networks where the content is actually 100% screened.
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A
Yeah, yeah. The content's really going to matter. Here it really is newsletters you trust, paywalls where you know the content you're getting is high quality from a trusted brand. Drew, you speak to a ton of CMOs about a lot of things, but this I'm sure. In particular, what would be one takeaway or one take from from those conversations that you'd like to share with the listeners on this?
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C
Well, overall, I would say that we are dealing probably with the biggest transformation in marketing that certainly in my lifetime. And the CMOs are feeling that. And all of course, because of Gen AI. You know, fundamental questions like what's my staff look like today and tomorrow? Am I going to have agents on my org chart? Do I need junior people anymore or do I not? Maybe I have a bell curve and or a barbell and I only have people that are really senior or really junior. There's a lot of questions about people in that. There's a lot of questions about process. And then finally what we've already talked about, how if SEO doesn't work anymore, then what does aeo? How do you get discovered? How is their brain going to get discovered in LLM? And that is a constant subject of conversation.
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A
Grace, you've been writing a lot about this and I'm sure we'll continue to what would be one take that you would share with brands who are listening?
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B
I think that for one thing, AI search isn't going anywhere. How it works might become less mystified. But I would agree with what Drew was saying earlier that geo really figuring out those strategies is going to be key because if you want brand discovery, if you want communication, if you want to establish a relationship, part of that means appearing in queries.
- [24:10]
A
Yeah, well, Drew is host of, as we said, Renegade Marketers Unite podcast, so check that out. That is all we have time for for today's episode. Thank you so, so much to my guests. Thank you. First to Grace.
- [24:22]
B
Thanks for having me.
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A
And of course to Drew Marcus.
- [24:25]
C
Thanks. Great conversation.
- [24:27]
A
Absolute pleasure. And thank you to the whole editing crew and to everyone for listening in to behind the Numbers new marketed video podcast made possible by Awin Jr Wednesday to hang out with Arielle as she guest hosts the Reimagine retail show where the committee presents its most interesting retailers of the month, which is August list.