How AI is changing the advertising game

Summary

Marketplace Morning Report

Episode Summary: How AI is changing the advertising game

Date: February 16, 2026
Host: Nova Safo (for David Brancaccio)
Key Segment Guest: Gil Luria, DA Davidson
Reporter: Sabri Benishore

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Overview of Episode Theme

This episode explores how artificial intelligence (AI) is beginning to disrupt online advertising, altering both the strategies of advertisers and the way users experience ads. The conversation covers the implications for advertisers, agencies, and consumers as AI-driven search and chatbots change internet behavior. Additional briefings touch on the current inflation landscape and global markets.

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Key Discussion Points & Insights

1. Current Inflation and Consumer Outlook

Speaker: Nova Safo and Lauren Seidel Baker, ITR Economics

• Encouraging inflation data:
  • January’s Consumer Price Index (CPI) rose at a lower-than-expected 2.4% annual rate, cooling inflation concerns ([00:24]-[01:03]).
• Consumer impact remains significant:
  • "This is just saying that prices are rising by a slower amount than had been expected. So there still is a lot of strain across certain ends of the income spectrum."
    —Lauren Seidel Baker ([01:03])
• Energy sector details:
  • Gasoline prices have fallen more than 3%, mainly due to shifts in the global oil market.
  • Electricity costs are rising, driven by demand from AI data centers and electrification.
    • "Electricity costs are much higher due to the electric purification of just about everything and all of that AI investment."
      —Lauren Seidel Baker ([01:44])
• Tariffs may bring renewed price increases:
  • Some companies plan to raise prices again after the holiday pause due to higher tariffs.
  • This could mean continued financial pressure for households ([02:12]-[02:48]).

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2. How AI Is Changing Online Advertising

Host: Sabri Benishore
Guest: Gil Luria, Head of Technology Research, DA Davidson ([03:45]-[07:03])

a) Traditional Model Disrupted by AI Chatbots

• Historically, users searched via Google, saw ads, clicked links, and encountered more ads.
• Now, with AI-powered chatbots, users ask questions directly—limiting ad exposure:
  • "Now we're throwing a wrench into all of that and saying actually people aren't interacting with the web in the same way they used to..."
    —Gil Luria ([04:18])

b) AI Platforms Are Testing Advertising Models

• OpenAI and Google (Gemini) are experimenting with ads in their free chatbot offerings.
  • "We will have ads within the free tiers of ChatGPT and Gemini. That's almost a certainty because they need to pay for it somehow."
    —Gil Luria ([04:55])
• The challenge: Balancing the need for ad revenue with maintaining good user experience.
  • "They need to make sure consumers are comfortable. Otherwise consumers will use their chat less."
    —Gil Luria ([05:18])

c) AI as a Tool for Advertisers

• Dramatic acceleration of campaign development:
  • "What AI now allows you to do is create campaigns a lot faster, both the visuals and the copy... you can actually create multiple versions, test them all, evaluate them and then pick the ones that work within hours or days instead of within weeks..."
    —Gil Luria ([05:36])
• Greater efficiency and flexibility mean advertisers can be more adaptive.

d) Impact on Advertising and Marketing Agencies

• Agencies that use AI effectively will outperform those that do not.
  • "People that use AI well will replace people that don't use AI well."
    —Gil Luria ([06:24])
• The industry is poised for a shift: agencies unwilling to adapt risk obsolescence.

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Notable Quotes & Memorable Moments

• On the persistent strain of inflation:
  • "There still is a lot of strain across certain ends of the income spectrum."
    —Lauren Seidel Baker ([01:03])
• On the seismic change in online ad models:
  • "We're throwing a wrench into all of that... completely different type of interaction that you are all going to have to adjust to in terms of what ads you present, how you present them, how you pay for them, how much you pay for them."
    —Gil Luria ([04:18])
• On AI’s potential in ad creation:
  • "You can actually create multiple versions, test them all, evaluate them and then pick the ones that work within hours or days instead of within weeks..."
    —Gil Luria ([05:36])
• On AI adoption as a survival skill for agencies:
  • "People that use AI well will replace people that don't use AI well."
    —Gil Luria ([06:24])

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Timestamps for Key Segments

• [00:24] – [02:51]: Inflation update with Lauren Seidel Baker
• [03:45] – [07:03]: Main segment – How AI is changing the advertising game, interview with Gil Luria
• [04:05]: Start of advertising discussion
• [04:18]: Gil Luria on disruption in ad model
• [04:55]: Gil Luria on ads in AI chatbots
• [05:36]: Gil Luria on AI as a tool for campaign creation
• [06:24]: Gil Luria on who wins in the AI ad agency landscape

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Episode Tone & Language

The discussion remains brisk, informative, and accessible, matching the fast-paced, business-focused style of the Marketplace Morning Report. Gil Luria’s commentary is concise, insightful, and rooted in practical implications for businesses and consumers.

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Summary

This episode provides a fast yet thorough update on a rapidly changing digital landscape. Inflation cools, but consumer pressure persists, especially with potential tariff-driven price hikes on the horizon. The heart of the episode is an analysis of how AI threatens traditional online advertising but offers powerful tools for those willing to adapt. Agencies and advertisers who embrace AI stand to benefit; those who resist risk extinction. Both consumers and businesses face a new era, with comfort, creativity, and adaptability as the keys to survival.

Transcript

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[Nova Safo]

Inflation cooled this winter, but will it warm up in the spring? For Marketplace, I'm novasafo. And for David Brancaccio, later this week we'll get the latest reading of the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures Price Index. We already have some encouraging news for January. A separate measure, the Consumer Price Index, rose at a lower than expected pace of 2.4% on an annual basis. But the devils in the details and to suss out those details, were joined by Lauren Seidel Baker of ITR Economics. Welcome.

[Lauren Seidel Baker]

Thank you.

[Nova Safo]

So Friday's report, was that encouraging to you?

[Lauren Seidel Baker]

Yes, it was good that we didn't see a more rapid pickup in inflation. But for the average consumer out there who might be feeling squeezed by these higher prices, I want to be very clear, this is not a price trend, that prices are going down on an outright basis. This is just saying that prices are rising by a slower amount than had been expected. So there still is a lot of strain across certain ends of the income spectrum. But from a policy point of view, yes, we do like to see that number not going up quite so high.

[Nova Safo]

So a lot of the pullback in inflation on Friday was attributed to lower energy prices. Gasoline prices are down more than 3%. Other costs, though, are still going up, right?

[Lauren Seidel Baker]

Yes. And even within the energy segment of inflation, gas prices are down due to where the global oil market is today. But electricity costs are much higher due to the electric purification of just about everything and all of that AI investment, the data centers that are sopping up so much energy. So even within that sector, we could expect to see when oil prices stabilize, there's much more upside kind of built in beneath the surface today.

[Nova Safo]

Now the Wall Street Journal is out with a story that a lot of companies are planning on more price increases due to tariffs. After pausing during the holiday shopping season, should we expect to see price increases pick up again in the months ahead?

[Lauren Seidel Baker]

They want to see their bottom line increase. So pass more of that tariff. We'll probably see that in the next couple of months. I think the overall impact of tariffs, it likely peaks in the relatively near term. Unless, who knows, maybe we get new tariffs put in place. I wouldn't be the one to say, but for the average household again. These are constant pressures pushing up on our budgets.

[Nova Safo]

Lauren Seidel Baker of ITR Economics, thank you very much.

[Lauren Seidel Baker]

Thank you.

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[Nova Safo]

Have see sawed over the last few weeks over fears that artificial intelligence will soon disrupt several industries, including software and financial services. AI could also disrupt online advertising. And for more on that marketplace with Sabri Benishore spoke with Gil Luria, head of technology research at the financial services firm DA Davidson.

[Sabri Benishore]

So traditionally we search for something on Google, see ads, click on some websites, see more ads. Now we just ask AI, how big of a problem is that for advertisers?

[Gil Luria]

It's a problem because the world is going to change a lot for them. We've really fine tuned the system that you're talking about and now we're throwing a wrench into all of that and saying actually people aren't interacting with the web in the same way they used to, which means a whole completely different type of interaction that you are all going to have to adjust to in terms of what ads you present, how you present them, how you pay for them, how much you pay for them.

[Sabri Benishore]

Yeah, I mean, we have seen OpenAI as testing out ads. Is the that the future or what else do you think we're going to see here?

[Gil Luria]

We will have ads within the free tiers of ChatGPT and Gemini. That's almost a certainty because they need to pay for it somehow. OpenAI has has laid some ground rules for what they will and won't do within ads. But it's going to be a pretty tricky situation for them to navigate because right now we're mostly having these AI chats without any advertising exposure. And as that changes, they need to make sure consumers are comfortable. Otherwise consumers will use their chat less.

[Sabri Benishore]

You know, on the other hand, to all of this, does AI create new tools or abilities for advertisers?

[Gil Luria]

What AI now allows you to do is create campaigns a lot faster, both the visuals and the copy, and do so in a way that's so fast that you can actually create multiple versions, test them all evaluate them and then pick the ones that work within hours or days instead of within weeks, which is what it would take if a human had to do all that work. So this is a big part of how advertising is going to get revolutionized, especially in the digital context, in the social media context.

[Sabri Benishore]

So that sounds great for a business that's trying to launch an advertising campaign, but it sounds a little less great for the ad agency that sounds like could be partially replaced by AI.

[Gil Luria]

My thought on on AI replacing people is that people that use AI well will replace people that don't use AI well. Digital agencies that embrace these tools and use them to be a lot more productive and create a lot more value for their customers and then for consumers should thrive and do a lot better. And ad agencies and marketing agencies that are stuck in their ways and fail to embrace AI will fall by the wayside.

[Sabri Benishore]

Gil Luria, head of technology research at D.A. davidson, thank you so much for talking with us.

[Nova Safo]

This was great.

[Gil Luria]

Thank you.

[Nova Safo]

And that was Sabri Ben Assure with that interview. I'm NovaSafo with the Marketplace Morning Report. From APM American Public Media.

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