John Croteau (6:28)

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Ann Berry (6:45)

AI is growing, companies are looking to monetize their chat bots, which are expensive to run. And in the past week, two big stories caught our eye about the evolution of this nascent monetization business. And key to this is the question, what kind of chatbot experiences do consumers actually want so that there isn't a risk that those consumers churn? Well, in a moment we'll discuss the big change coming to the integration of shopping and checkout within ChatGPT in a move that one analyst called stunning, although perhaps not for reasons you might think. But first we're going to start with the monetization of these platforms through advertising. So John, tell us what's happening over at the Trade Desk.

John Croteau (7:25)

That's right, the Trade Desk ticker ttd. It's a digital advertising platform that places ads across the open Internet, connected TV on things like Hulu and mobile apps. Well, last Thursday shares in the company jumped over 22% after report that it might partner with OpenAI AI to sell ads within the AI chatbot trade desk needed the win shares had been down nearly 80% from its all time high in late 2024. But then the next day Wedbush analysts lowered the Trade Desk's rating to underperform from neutral citing concerns that optimism around a potential partnership with OpenAI may have overstated the near term benefit.

Ann Berry (8:01)

And this is such an interesting trend because we've seen this whole pattern of partnerships being announced with chat GPT so with OpenAI and causing real jumps up in people's share prices we saw with a number of retailers, remember this towards the end of last year we've seen that with the likes of Salesforce and so on. So as soon as there's some sort of partnership announcement with one of the big LLMs, we've seen these public companies seen their share prices pop up. Just a note on the Trade Desk. I bought this stock I want to say 18 months ago and I've just been woefully disappointed and I was like, you know, this is the future. It's all about digital ads, it's all about real time placements. It's about, you know, the core to the business is putting ads where you can really optimize the return on investment. And marketers are desperate to find ways to really measure the impact of their marketing spend. So the value proposition was there. There's been a question marks around its ability to keep sharing its ability to continue to gain margin. Well after that announcement again that was the Trade Desk having a potential partnership with OpenAI. Analysts thought that actually, actually a move could give the Trade Desk access to more user intent data and that could be a good thing for the Trade Desk because then it could use that data to target connected TV and retail advertising more accurately. So they saw this partnership as an en but then they stopped and they thought about it and actually decided Maybe this puts OpenAI in the business of competing with the trade desk because OpenAI could eventually develop its own demand side platform for third party sellers or build its own in house advertising software platform. And the existential fear that investors have around this is that OpenAI, through these partnerships, are using these as training grounds to get smart on a product or a sector and then basically do their

John Croteau (9:43)

own copycat version of it and to acquire clients. All of it.

Ann Berry (9:46)

Exactly. Only shares in the trade desk were down 4% today. So you can see these sort of huge swings in sentiment as the market absorbs and really tries to think through some of the implications of these.

John Croteau (9:55)

Absolutely. Let's talk about what we're talking about in practice here with these ads. So I think of the data in two ways. You were just talking about this. I could ask AI, a chatbot to suggest a birthday present from my mom and the results could include targeted ads. That's similar to a Google search. We're familiar with that. Or over time the chatbot that I'm interacting with could learn more about me. And so when I go to watch my connected tv, a specific ad is delivered based on my profile. That's way beyond what Google search has delivered to us.

Ann Berry (10:24)

Well, maybe we'll come back to that. Keep going.

John Croteau (10:26)

Correct. And the head of Evercore's Internet research team noted that advertising could become a $25 billion business for OpenAI by 2030. These are estimates.

Ann Berry (10:34)

I'm going to go a bit off the reservation here, which I'm sure producer John is going to make your hair stand on end. But have you noticed or has anyone listening noticed that when you go on Instagram you are suddenly receiving ads for products that you haven't scrolled or you haven't even paused on, but perhaps you've been looking at in your Google search or you've been looking at in one of your newspaper apps.

John Croteau (10:55)

Of course.

Ann Berry (10:55)

Right. So this whole idea that, you know that, that perhaps it's far fetched, this idea that what you're watching on connected TV could actually inform an ad that's getting pushed out to you? I don't think it is. So, and I don't mean to be conspiracy theorist about this, but I'm just seeing that the cross fertilization of user patterns and content consumption patterns seems to me to be in practice right now anyway, particularly when it comes, you know, iOS place platforms.

John Croteau (11:20)

Well, I understand. I used to own a Vizio television.

Ann Berry (11:22)

Yes.

John Croteau (11:22)

And Walmart purchased Vizio brand and not because they were making money off of each sale, but because they could use the television as a data collection device.

Ann Berry (11:30)

Yeah, completely. So it's all out there in different degrees now. It's been reported to just to sort of extend beyond that. Amazon is experimenting as one example, with ads inside its AI shopping assistant, which is called Rufus. And it's also exploring licensing that technology to third parties. And then let's look at what Google's doing. In December, Ad Week reported that Google is looking to introduce ads into Gemini. But the company immediately pushed back saying there are no ads in the Gemini app and there are no current plans to change that. And of course, at the core was Google introducing ads into Gemini has not only the benefit of seeing what you've been looking at on Google search, you've also got Gmail. Right? You see ads coming up there, the whole system talking to each other and just this idea that the efficacy and the personalization behind this could be really next level.

John Croteau (12:18)

I asked Google Search today, I wrote do you have ads in your results? And the overview review was yes. Google embeds ads directly into AI generated search results, including AI overviews and the newer AI mode conversational results.

Ann Berry (12:34)

Absolutely. I mean, why wouldn't they? It's just such a logical extension. And I think also when it comes to search, we've actually been trained to expect it.

John Croteau (12:41)

Right.

Ann Berry (12:41)

This is what's so interesting to me. If we think about consumer behavior and user behavior when it comes to using ChatGPT or Claude, we're not there yet. It's almost like using Google in the days before ads were popping up at the top the sponsored content. So I think we're sort of, you know, it's like Pavlov's dog. We're trained to expect it now on search, but we're not necessarily trained to expect it when it comes to the LLMs quite yet.

John Croteau (13:03)

And to your point, there was a great super bowl ad that ran by Anthropic and if anyone remembers it out there, it cheekily depicted a young man he was training to try to get a six pack. It was a scrawny looking dude and he was asking what looked like a human trainer if he had any advice. And the trainer in an AI stilted voice eventually starts trying to sell the guy some protein powder. He starts by saying, perfect, yes, I can help you get six pack ads. And eventually giving him ads. And so that was a great shot over the bow of like, is this really what you want out of your experience?

Ann Berry (13:39)

Yeah. Is it trusted content? By the way, good stilted AI voice there, John. I like the impersonation. That was great. Well, advertising in chatbots as we said, is still in the experimental phase, but there's something else that's experimental and that's actually commerce partnerships inside things like chat GPT. So this isn't quite as like on the nose as you've looked for something or you've asked a question. Here's an ad. This is where you're specifically going to Chat GPT or the likes with the intention of trying to of making a purchase and you're using it perhaps as a research tool to try to inform the purchase you're going to make. And then the idea is as part of that researching you are then pushed or you receive the option for a link straight to or in app purchasing. So the idea is it's not a hey, here's a surprise as an ad, it's if you're going there with purchasing tent, then we're going to make the actual click and the one click shop actually pretty easy for you. Now back in September we actually discussed on the show the rollout of Instant checkout of Shopify businesses and Etsy product within Chat GPT. And the example was if I wanted to go buy a photo frame and I go on to chat GPT and say I want a blue photo frame from Etsy, that chat GPT would present a couple of options, right? And over time it would get used to what my taste is and to what my patterns of behavior are when it comes to purchasing and customize its suggestion. Well, after the initial announcement of partnerships with Instant Checkout, Etsy shares went up 16, Shopify shares went up more than 6%. Instacart was an announcement that followed in December. Then that stock went up 6% and then Walmart rose nearly 5% hitting all time highs after announcing a partnership too. So for a moment in time it looked as though this idea of shopping inside the chat bots or inside the AI models was actually a really winning move when it came to investors. But times seemed to have changed a little bit.

John Croteau (15:26)

Right. Because no one asked to the consumer what experience they wanted to have.

Ann Berry (15:30)

Yeah.

John Croteau (15:30)

And so this was a major shift that was reported last week by the Information. They reported that Open Air is backing off from handling bookings and other direct purchases through Jet GPT. The company is going to focus on AI as a search and recommendation engine, as you mentioned, leaving the final conversion to brands and retailers own ecosystems.

Ann Berry (15:49)

Right. And it is interesting because we also saw that after the likes of Etsy had announced these partnerships and we saw those immediate increases in the share price, investors sort of went away and thought about it for two or three days. And then we saw those stock increases reverse because investors ultimately said, well wait a second, it means you're not really driving traffic anymore to the ultimate Retailer websites, does it mean that the retailer is losing the relationship with the user? And to your point, you reference bookings, we saw that their announcements were being made with travel companies as well. So it's not just about purchasing stuff and retail, it's about purchasing experiences. And so the market couldn't quite make out its make up its mind with respect to whether the share should go up or down in response to this.

John Croteau (16:29)

And retailers losing access potentially to that data themselves.

Ann Berry (16:32)

Exactly.

John Croteau (16:33)

Loyalty.

Ann Berry (16:33)

Exactly. And data just being everything when it comes to this whole, whole world. Well, OpenAI very interestingly is said to have found that while the public widely uses its tools for product identification and comparison, it doesn't want, it has found that consumers don't really want to be having products pushed onto them. Once inside that it's not conversion.

John Croteau (16:53)

There was, there's an issue of trust there. And I read an analysis that suggests that OpenAI has decided that doesn't want to handle the messy part of commerce, the payments, the cancellations, the refunds, the customer and that organizing millions of SKUs or maybe many millions of SKUs is just not a profitable and easy thing to scale.

Ann Berry (17:12)

And that payments piece, before we leave that, so it's not a public company, but Stripe also announced, remember this Stripe announced a relationship with OpenAI. It looks like that company was going to power the payment side of this. So this is not not getting as much attention because it's private. But that's got real implications too for Stripe and other payments companies that looking to partner. I think PayPal had an announcement in the works too. Well, looking at this reversal, which is OpenAI saying we're not really going to do shopping inside the app right now and instead we're going to have linkages between the retailers, apps or websites and chat. GPT is something that some analysts have called, quote, a stunning admission that consumers aren't there yet. TD Cowan analysts call this a stunning admission and noted that, quote, the new signals that AI platforms replacing apps to become the new OS is either not playing, playing out or at a minimum is pushed back significantly. So this is fascinating and I just want to talk a little bit more broadly about the sell off that we are seeing in software stocks or have been seeing this year. And we saw 2025 be the year in which so many of these tech stocks run up because of the promise of AI. Then they've come back down because the promise that AI can do too much and possibly replace them. And now we're seeing a moment where data points are really coming to the surface. It's around what is working, what adoption is happening and in this case case, what adoption is not happening, which shopping inside the app. This is such an amazingly exciting moment in time and I was encouraged by the things that fail.

John Croteau (18:41)

Yes.

Ann Berry (18:42)

Or at least are failing for now. Because this can all come back because it's really giving us finally tangible evidence that certain things are going to impact people's bottom lines and certain things are still going to take a while or actually not get adopted in the way that we thought that they would.

John Croteau (18:56)

And retailers, investors have responded. Last Thursday, as the story rolled out, shares in Etsy, Shopify and Instac all popped about a half a percent to a percent.

Ann Berry (19:06)

Sigh of relief. Yes. Sigh of relief. And then if you take a look at travel booking companies again, shares on this news booking.com up 8% TripAdvisor up 5% Expedia up 12%. Again, that collective sigh of relief that these companies, at least for now, have got a lock on their value proposition, that things aren't going to change as quickly or as dramatically as maybe was thought. And instead a little bit of a cat. Okay. OpenAI is going to go figure it out. However, I'm just going to say this is one person's view. OpenAI, they move right when they decide to change tack. And we've seen this. Remember when Gemini came out and everyone said, oh my gosh, this is better than chat, GPT and OpenAI went code red and race to get new sort of upgraded versions of their models out. Don't write these companies off. So this is, I see this as on pause as opposed to gone away. That's just my view.

John Croteau (19:54)

Yeah, we'll have to see it roll out.

Ann Berry (19:55)

We'll have to see it roll out. Well, as a result, just to put a wrap around all of it, if it's not going to be shopping inside the app, app, the burn rates of these kinds of companies, the burn rate of anthropic, the burn rate of opening. They've got to get their money from somewhere. We know that they're leaning into B2B and signing up enterprise accounts. But it also does mean that perhaps advertising is going to be top of mind and these businesses are now going to be really motivated to find ways to get consumers to accept some form of ads because that ad revenue is going to be even more important in the absence of the commerce piece of it. Well, let's take a break and when we come back, we're going to to take a spin through the headlines moving the market state. Although I'm already sort of giddy from all this. There's just so much going on. Vaneck believes gold is evolving into a more durable part of a portfolio. And with ongoing global uncertainty, the case for gold remains compelling.

John Croteau (20:43)

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Ann Berry (20:52)

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John Croteau (21:06)

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Ann Berry (21:46)

There it is, the closing bell. It's 4pm on the east coast and the markets wrapping up for the day. While we don't have a ticker tape, let's throw it over to our human ticker, our producer John that's right, stocks

John Croteau (21:56)

stage a major bounce back throughout the day with the S&P 500 finishing up 8/10 of a percent, the Dow up half a percent, and the NASDAQ finishing 1 and 410 of a percent up. Over the weekend. Brent crude oil, the global energy benchmark, rose above $100 a barrel for the first time in four years before ticking back down today after reports that the White House is reviewing a set of options to tame oil prices, including restricting U.S. exports and waiving some federal taxes.

Ann Berry (22:24)

And just to sort of pause there for a second, if you take a look, I've been staring at the screen all day today, John, and you saw the markets totally in the at the beginning of the date precisely because that oil price was up above 100 bucks a barrel. And is the reversal in the oil price as a result of this strategy perhaps of releasing emergency reserves? That basically is why the market ended up today. So just the correlation right now between oil prices and the market indices, I mean, is probably the closest it's been over the last four years and in

John Croteau (22:50)

global trading before these announcements, South Korea's Cosby index shed almost 6% and Japan's Nikkei index was down 5.2% percent. Both countries heavily dependent on Middle Eastern oil.

Ann Berry (23:01)

Yeah, we're going to keep watching, of course, the South Korean market, because one of the key issues there, South Korea, one of the major manufacturers of memory, really critical for these data center build outs and the energy that is required to manufacture that. You know, heavily dependent in South Korea on the imports from the Middle East. Let's talk about Live Nation. Okay, Live Nation switching gears. But this is a, this is a fun one. Interesting.

John Croteau (23:22)

Just last week we talked about Live Nation was getting a jury in. Well, today, Live Nation, Live Nation Entertainment Ticker Lyv saw its stock jump over 4% after the venue operator and owner of Ticketmaster reached a settlement with the Department of Justice.

Ann Berry (23:36)

Well, Ticketmaster as part of this, has agreed to pay roughly $280 million in civil penalties and quote, open source, its ticketing model, which allows competitors to use its technology and offer tickets through the platform. Now, a senior DOG official said today that Live Nation has also agreed to divest at least 13 of its amphitheaters and no longer be able to force artists to use other Live Nation products like its promotion side of the business tied to its venues. That was at the beginning of the reporting. Later today, Live Nation said, actually, we haven't agreed to divest venues because it rents rather than owns some of them. So there's a little bit of noise around what the actual physical footprint's going to be. Nevertheless, the key takeaway here is Live Nation not being asked to sell Ticketmaster. That was a big win. Very interestingly, choosing to avoid going to full trial. Remember, there was jury selection last week where there were going to be some very high profile testimonies from people like Kid Rock and Irving Azoff. So basically, Live Nation paying its way to stay out of the limelight, which is kind of ironic for a company that's based on big public acts and performances. Out of the spotlight, out of the spotlight.

John Croteau (24:44)

Shares of telehealth provider Hims and Hers ticker hims surged almost 40% today after WeGovy maker Novo Nordisk dropped a patent infringement case against the company. Under a new agreement, Hims will now sell Novo's branded medicines through its platform. This comes after Novo Nordisk announced it would sue Hims and Hers last month for selling a cheaper, copycat version of the Wegovy pill.

Ann Berry (25:06)

If ever there was an action, keep your friends close and your enemies closer. That has got to be it. Extraordinary. Finally, Xenon Pharmaceuticals ticker Xen e hit a 52 week high today with shares surging over 45%. And that's after its seizure treatment drug passed a key efficacy trial. The company said it will seek FDA approval of the medication in the third quarter. Number of analysts raising their price targets on the stock as a result. That's it for today's Brew Markets daily.

John Croteau (25:37)

Brew Markets Daily is hosted by Anne Barry and produced by John Croteau, Targa Delatif, Avani La Roya and Emily Milier. Technical direction by Uchena Waugu. Brittany Nataco is our audio engineer. And the president of Morning Brew Inc. Is Devin Emery.

Ann Berry (25:50)

Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place. Sam.