Podcast Summary: Behind the Numbers: An eMarketer Podcast
Episode: The Weekly Listen: Why AI Might Be Hitting a Wall, The Impact of Impending Tariffs, and More
Release Date: December 13, 2024

Introduction

In this episode of Behind the Numbers, hosts Marcus Johnson, Oscar Orozco, Zach, and Ethan Kramer Flood delve into pressing topics impacting digital media and marketing. The discussion spans the current state of Artificial Intelligence (AI), the potential repercussions of impending tariffs, the future of live sports in the age of highlights, and trends in children's sports participation. Engaging banter and insightful analysis make this episode a valuable listen for marketers, retailers, and advertisers navigating the ever-evolving digital landscape.

1. Story of the Week: Is AI Hitting a Wall?

The panel kicks off with a critical examination of AI's progress, inspired by Alex Heath’s article from The Verge. The central question revolves around whether AI advancements are plateauing due to diminishing returns in data and computational investments.

Oscar Orozco's Position: AI Has Hit a Wall

At [04:55], Oscar argues that AI is encountering significant barriers:

• Cost Concerns: "We've seen numbers out there from a query costing about $0.36 to, you know, the upkeep, the daily upkeep of these platforms being close to $700,000 just to keep it going" (04:55).
• ROI Challenges: Citing Gartner’s prediction, Oscar mentions that "by 2028, more than 50% of enterprises that have built large AI models from scratch will abandon their efforts due to costs, complexity and technical debt in their deployments" (05:20).
• Public Sentiment: Highlighting a Pew study, he notes, "52% of Americans are more concerned and excited about AI in their life" (06:29), indicating a shift from skepticism to fear and fatigue.

Zach and Ethan's Counterpoints: AI's Potential Continues

Zach (08:11) and Ethan (09:00) contend that AI hasn't necessarily hit a wall:

• Long-Term Vision: Ethan emphasizes that current AI advancements are just "the tip of the iceberg," drawing parallels to smartphones’ evolution since 2007 (10:06).
• Application Focus: Zach suggests a pivot towards smaller, more targeted AI models that address specific consumer needs might sustain AI’s growth despite high operational costs (11:00).

Marcus's Conclusion

Marcus synthesizes the debate, acknowledging both the current challenges and the potential for future breakthroughs. He notes the increased public concern may not be entirely negative, allowing for a more measured approach to AI development (12:22).

2. Weekly Game: Fortune Teller - The Fate of TikTok

The hosts engage in their weekly game segment, predicting outcomes related to pressing issues. This week, the focus is on the potential U.S. ban of TikTok.

Scenario:
A federal appeals court has upheld a nationwide ban on TikTok unless sold by its China-based parent, ByteDance. With Donald Trump as the incoming President, the panel discusses whether he will act to save TikTok.

Zach's Prediction (15:36):
Zach anticipates a temporary disappearance of TikTok from app stores post-ban but believes the platform will persist with business operations continuing. He questions Trump's commitment, suggesting the ban is more of a political bargaining chip than a priority (16:37).

Oscar Orozco's Prediction (16:39):
Oscar is more assertive, predicting that TikTok won’t be sold off. Instead, he foresees TikTok distancing itself from ByteDance through minor adjustments, viewed as a gesture to improve Sino-U.S. relations without actual divestiture (26:39).

Ethan Kramer Flood's Insight (16:39):
Ethan echoes Oscar, believing TikTok will survive into 2025 with US ad revenues expected to reach $15.5 billion. He acknowledges ongoing legal uncertainties and potential shifts in advertising dynamics should the ban proceed (15:36).

Outcome:
The debate highlights the complexities of geopolitical tensions impacting digital platforms, with no definitive resolution in sight.

3. Random Scale: Is Live Sports Under Threat from Highlights?

The discussion shifts to the realm of sports, evaluating whether the rise of highlights and short-form content threatens live sports viewership.

Ethan's Argument (21:09): More Highlights Mean More Sports Viewership

Ethan posits that highlights actually bolster sports engagement:

• Accessibility: "Watching your favorite team can be expensive and a full game is a big time commitment" (21:09).
• Retention: Highlights keep fans engaged, ensuring sustained interest that can translate into live viewership when possible (22:11).
• Historical Precedent: Referencing ESPN’s SportsCenter, Ethan notes that highlights have historically driven interest in live games rather than detracting from them (22:31).

Oscar Orozco's Agreement (22:34):
Oscar concurs, viewing highlights as a complement rather than a replacement for live broadcasts. He references a YouGov survey indicating that while younger audiences prefer highlights, the majority across age groups still favor live game viewing (23:46).

Zach's Perspective (24:35):
Zach downplays the threat, likening current fears to past unfounded concerns about SportsCenter’s impact. He suggests that actual threats to sports viewership stem from accessibility and affordability issues, not highlights (24:35).

Marcus's Observation (25:00):
Marcus adds that varying participation rates across different sports and age groups further illustrate that highlights serve diverse audience preferences without undermining live viewership.

Consensus:
The panel largely agrees that highlights enhance rather than threaten live sports, serving as a strategic tool to maintain and grow fan bases.

4. Fill in the Blank: The Impact of Impending Tariffs

The final segment involves predicting the effects of newly proposed tariffs on U.S. imports, particularly those from China.

Scenario:
President-elect Donald Trump has proposed universal tariffs of 10-20% on all imports to the U.S. and over 60% on goods from China. Historically, tariffs have raised consumer prices, with retail categories like appliances seeing costs rise by nearly 12% post-2018 tariffs.

Oscar Orozco's Prediction (26:39):
Oscar boldly fills in the blanks, stating that the impact of tariffs will be "catastrophic" for U.S. consumers. He supports his stance with data:

• Consumer Burden: Citing a University of Chicago survey, he notes that 98% of economists agree tariffs primarily burden consumers rather than businesses (26:48).
• Economic Impact: "The consumer is going to suffer," he asserts (27:00).

Zach's Counterpoint (27:47):
Zach moderates the prediction, suggesting that while tariffs will not be "catastrophic," they will exacerbate existing inflationary pressures. He highlights that companies have adapted supply chains since the last tariff wave, potentially mitigating some adverse effects (27:47).

Ethan Kramer Flood's Insight (28:55):
Ethan emphasizes the unexpected nature of tariffs for many consumers, noting significant financial impacts:

• Household Costs: "Tariffs could cost American households an additional $2,600 a year" (28:55).
• Supply Chain Adjustments: He points out that some companies have already adapted by offshoring from China to other regions, which may lessen the immediate impact (29:37).

Marcus's Addition (30:11):
Marcus references the National Retail Federation, highlighting that Trump’s proposed tariffs could raise costs across six retail categories by $362 to $624 per household annually. He also notes increased "buy now before tariffs kick in" messaging from retailers (30:11).

Conclusion:
The panel agrees that impending tariffs will significantly impact U.S. consumers, primarily through increased costs. However, there are varying opinions on the severity, with Oscar maintaining a dire outlook and Zach and Ethan suggesting a more measured impact.

5. Trivia: Most Interesting Things Learned This Week

The hosts share intriguing insights and statistics from various domains:

a. Christmas Gift Spending Worldwide (33:03)

• Top Spenders: Germany leads with an average of $1,100 per person, followed by Canada ($946), and the U.S. ($826). The Netherlands ranks lowest in the top 10 at $327 (34:00).
• Insight: Advanced economies dominate spending on Christmas gifts, with cultural factors like Germany’s famous Christmas markets contributing to higher expenditures (35:27).

b. Time Spent Choosing What to Watch on TV (36:29)

• Statistics: The average American household subscribes to three streaming platforms, spending an average of 18 minutes deciding what to watch on Netflix—a 50% increase since 2019 (36:29).
• Implication: The growing complexity of streaming choices may influence consumer behavior and platform strategies (36:31).

c. Elephants' Vocalization Specificity (36:48)

• Discovery: Elephants in a Kenyan national park have been found to use unique vocalizations akin to names for individuals within their herd, marking the first non-human species to display this level of social communication (37:05).

d. Kids' Sports Participation Trends (41:18)

• Overall Participation: Organized sports participation among kids aged 6-17 has grown by 6% over the past decade, rising from 55% to 61%.
• Demographic Shifts: Participation among boys, particularly African American and Hispanic kids, has declined, while girls' participation saw a slight increase.
• Popular Sports: For ages 6-12, basketball leads at 14%, followed by baseball (12%) and outdoor soccer (8%). For ages 13-17, basketball remains the most popular at 16%, with baseball, golf, and tennis trailing (41:18).

Reflection:
These insights reveal shifting consumer behaviors and societal trends, from holiday spending patterns and media consumption habits to animal behavior studies and youth sports dynamics.

Conclusion

This episode of Behind the Numbers offers a comprehensive exploration of critical issues shaping the digital and consumer landscape. From the potential stagnation of AI advancements and the geopolitical intricacies threatening platforms like TikTok, to the evolving nature of sports consumption and the impact of economic policies on consumers, the discussion provides valuable perspectives for industry stakeholders. Additionally, the trivia segment adds a layer of engaging, diverse knowledge, enriching the overall discourse.

Tune in next week for more in-depth analysis and thought-provoking topics to stay ahead in the dynamic world of digital media and marketing.

Notable Quotes

• Oscar Orozco (04:55):
  "We're not seeing those expenses drop. ... the ongoing maintenance of them is really diminishing those returns."

• Ethan Kramer Flood (08:11):
  "People are underestimating what they're going to see in the long term when it comes to autonomous vehicles, when it comes to healthcare and other industries as well."

• Zach (22:11):
  "When we talk about highlights, let's talk about the OG highlights. ... it's a great way to get people to actually want to go ahead and watch live sports itself."

• Oscar Orozco (26:39):
  "The impact of tariffs will be catastrophic for the US Consumer."

• Ethan Kramer Flood (28:55):
  "Tariffs could cost American households an additional $2,600 a year."

Timestamps Reference

• [04:55] to [06:29]: AI hitting a wall discussion
• [15:36] to [19:21]: TikTok ban predictions
• [21:09] to [24:35]: Live sports vs. highlights debate
• [26:39] to [31:25]: Impact of tariffs analysis
• [33:03] to [42:57]: Trivia and interesting insights

(Note: Actual timestamps in the transcript have been referenced accordingly for accuracy.)