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Perpetual Traffic
The Invisible AI Underbelly That No Marketer Knows About...Until Now (PART 1)
00:29:00
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- [00:00]
A
So many facets of AI that I can't keep up with it. The person in charge of Meta can't keep up with it. No one can. We just have to adopt it and integrate it into our lives.
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B
I don't think people realize how big of a change this is. Silicon Valley's biggest companies are already planning on pouring $400 billion into artificial intelligence.
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A
With a V. How you can leverage it for your own personal use case as we continue to adopt the way we did to personal phones.
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B
You're listening to Perpetual Traff. All right, so before we get into today's show, I just want to remind you that we are running a special right now. We only have seven of these left as of right now. We announced this to Perpetual Traffic a little less than a week ago. We've already sold four of them. I think we're on our way to selling a fifth. But we are offering something that no other agency on the planet is offering, which directly relates to today's episode because it taps into all this AI stuff we're going to be talking about here today. And it is the Creative diversification package that we've created over at tier 11. There's only one way to succeed with Andromeda right now, and it's through creative diversification with data with Capi Imports. First click Capi Imports, which you also need to have in order to optimize the algorithm for the right sorts of things that we're going to be talking about on today's show. Sort of the mechanics of why all this is happening. But what you really care about is performance for your advertising. So we are offering through the end of the year, an insane package where you buy the creative diversification package, which is 30 plus ads, all the 10 different ad formats, five to six ads every single week, every new week, and you get that ongoing as you can iterate and figure out what's working best. We've talked about this many shows before. The best types of ads are the ones that are actually getting the most spend, not actually the ones that are getting the most conversions. And you get the media buying, who knows how to manage those ads as well as the data behind it for free. So you buy the creative diversification package, you get the media buying, and you get the 211 data suite for free. It's the best package that we have ever offered as an agency, hands down. Now, qualifications, you have to be comfortable with spending at least $10,000 on agency services and willing to spend upwards of 30 to $50,000 per month. In spend. Otherwise this stuff doesn't work. This is for companies that are maybe a little bit more on the mature side, but that's okay. Those are the ones that we're sort of pre qualifying here. So to reiterate, you buy the creative diversification package, you get the media buying and the tier 11 data suite for free. Like I said, we have seven left as of right now. And you've got to be comfortable with spending at least $10,000 a month on agency services, which does not include ad spend. Check it out over at tier11.com CD. That's tier11.com CD. Check it out today. Be one of the seven lucky businesses that get it before this offer is over by the end of the year. Now onto today's show. Hello and welcome to the Perpetual Traffic podcast. This is your host, Ralph burns, founder and CEO of Tier11, alongside my amazingly well traveled co hosts, well, Lauren, founder.
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A
Of Mond for like I think essentially never in Orlando.
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B
Say you're never in Orlando. Where actually do you live now?
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A
I live where my suitcase is at the moment. I just, I, I live in Orlando. My house in Orlando. Right.
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B
In name only, really.
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A
No, I've spent a little bit of time. I just, I'm on a west coast tour. That's the hard part.
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B
Right.
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A
Like, so I've been. Today I'm in Vegas, I'm going to Austin and San Diego and at least Phoenix. Another time was in Utah, San Jose last week. There's a lot.
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B
Well, you know, you, you get around. Today you're in Vegas, you're at like a, a luxury resort or a luxury like retreat somewhere just living where it's a fabulous airbnb.
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A
The detail. I don't know. I. Lyft took me here. Today's episode brought to you by the great Lyft ride that I had like this driver. So, okay, hold on. Side note, I know we're going to be talking about like AI and, and like emerging technologies and how we leverage it and such, but I took this driver. He's born and raised in Cuba. His English, minimal at best. He's lived here for three years.
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B
Minimal, Minimal at best.
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A
Minimal. Oh, I spent the entire time speaking to him only in Spanish. But I also had a friend in the car who doesn't speak a word of Spanish. So they used, each of them used the AirPods 3, a hundred percent. So they used the AirPods 3 and were translating to each other. Sometimes I'd have to translate back into English because the AirPods 3 didn't catch it but then our Cuban driver told us he lived in Russia for five years and he's using Groq. So he's driving a Tesla. So Elon Musk owns Grok. Elon Musk owned Tesla. There's a natural integration and he says he's been learning and practicing English using Grok in the Tesla, talking to her and it will self correct his pronunciation. So then he was showing us he was speaking to Russian to Grok and then it was translating to us in English.
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B
That's incredible.
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A
And it was just like the accessibility that we now have. This is a gentleman who works in Vegas. Everyone is from all over the world. Like, what do you do?
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B
It's amazing. I mean it's very relevant to today's podcast, which is all about hint, hint, AI sort of big picture stuff. But that's just one example of how widespread this is. But behind that, just think about the computing power that's necessary in order to be able to have all of that happen simultaneously. It's, it's almost staggering. That's like thousands of GPUs, Nvidia GPUs being utilized in data centers throughout the, you know, the, you know, the Southeast, because you're in Vegas probably like within miles. Southwest, you're actually located.
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A
Yeah.
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B
South. Oh yeah, I guess that's the southwest. Yeah, you're in the Southeast. Sorry, I got my east and west confused. It's like my left and right. It's very confusing.
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A
Yeah. Regardless, it's like the point is a lot of solar panels, you know, we.
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B
Could, we could actually solve the world's energy crisis if we just took New Mexico and West Texas and just covered them in solar panels. I read that the other day. Our West Texas and New Mexico friends that listen to the show probably aren't going to be very excited about that. So we'd have to cover over their homes. The point is, is like this stuff creating like such monumental change in the industry. And I, I don't think people realize how big of a change this is. And we're really only on the dawn of it. I saw an analysis the other day. Remember when the Internet came out, you're probably in like junior high school, sorry, not knock on you, maybe elementary school. But the Internet bubble lasted from 1995 to about March 2000, early 2000. So it was a five year span. So a lot of people that are thinking right now, there's a great analysis that was done by this. I'll leave links in the show. Notes is from investors Business Daily where they Analyzed this, they said we are not even close to a bubble. Now these guys, they obviously they want to pump more money into their funds and the stock market goes up. More money that goes into the market, obviously the better. A lot of these dudes make billions, billions of dollars. The point is, is the Internet bubble lasted about five, almost six years. We're in about year three of the AI bubble. And I'm air quoting that right now because remember when GPT came out it was 2022, but that was two years.
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A
After we've already been using AI. So that was like the advent of the new bubble because it had further adoption. I've been using AI for over a year and a half and OpenAI was one of the models on Jarvis Now Jasper that I had been using for at least a year and a half prior.
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B
But I think the iPhone moment for AI was when ChatGPT came out.
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A
Agreed.
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B
You know what I mean? It's like it was the big moment now. The moment where you know, it had its breakout, like it's singular event, it's big bang moment. Jensen Huang from Nvidia actually talks about this as back in 2012 when, and we were just talking about this before we hit record, when this little company called Alexnet entered a competition for three researchers that were in Toronto, Canada. Props to my boys up in Toronto. Unfortunately they lost this week World Series. But anyway, they entered a contest where they used this AI model, this large language model to be able to identify, I believe it was 4 million images. 40 million. It was either 40 million or 4 million was. Anyways, these three researchers and this Alexnet, it was like it was actually at the time, I think it was like the largest mechanical Turk test usage ever. In time, you remember Mechanical Turk, you'd pay somebody like $2 an hour to do like all these menial tasks. Well, they labeled all these individual images and and then they threw it into this thing called Alexnet. And Alexnet then grouped them together like dogs, animals, vegetables, you know, office furniture, all of that.
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A
This sounds like an episode of Silicon Valley. Like what Jimmy O. Yang did on Silicon Valley.
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B
Exactly. So this is 2012. And the funny thing is is the three people that engineer that first thing called Alexnet, one of them ended up founding OpenAI and two of the others went to two of the other large language model users, two of the largest large language model users at that point in time, and bought the technology. Guess which companies those are? Think, think algorithms, think advertising, think Amazon feed suggestions. Some of my feeds.
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A
Instagram and Meta.
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B
You're thinking those like Instagram Meta. Exactly. Meta and Google were the buyers of this technology, which then completely transformed the suggestion engine inside Meta and Google and subsequently YouTube, which is a tremendous suggestion algorithm. You take this for granted now because like when you log into Netflix, hopefully you get Netflix. But like they do the suggestions, like I, I log into my wife's account, it's all like, you know English, you know love stories, you log into mine, it's all sports and war.
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A
Oh my gosh. Wait, side note. Ralph, do you know the best thing that you can do to sabotage someone is you go into their Netflix and then just like cocomelon or anime shows or just shows in the opposite direction of what they like and you mess up their algorithm.
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B
Don't.
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A
River. I'm not saying I've ever done this to anyone, Paige, I apologize. But that's like my favorite way to mess up a suggestion. Eng.
- [10:56]
B
It is so funny. It is so funny because like whenever we're watching something on a Friday night, I'm like, oh, who's whose Netflix are we gonna watch? Like, well, we have to watch mine, of course. Like, I don't want to watch. I don't watch it online because I don't want like 15 ways to lose a guy showing up in my fee. You know what I mean? You know, I want like Band of brothers in the Pacific showing up and like, you know, Thursday Night Football. Anyway, the point is, is like that suggestion I wrote was the origination all the way back to 2012. So the reason why we have all these algorithm changes right now and this great thing that we call Meta Andromeda, the basis for that, the foundation for that was this thing called Alexnet, a great podcast series called Acquired. I don't know if you listen to other podcasts, but these guys did a whole breakdown of it and where we can go into detail, leave links in the show notes. Amazing podcast. They're super like tech nerdy programmer guys. Totally. Like not my thing, but I love their show because they basically deconstruct different businesses. And Nvidia, they have like a three or four part series on it, which is incredible. Which, as you might know, Nvidia is the GPUs that power AI. And that comes originally from the fact that they were the chips that powered all of the video games, because it is able to process all of these pixels, all of these animations all at the same time, as opposed to a cpu, which is an incredible thing, still processes everything in a linear fashion one thing at a time. So that's why we have these large language models today. And that's why these Nvidia chips are just like everywhere now. And that stock is now worth like 5 trillion in market cap. Can you freaking believe that? Like Nvidia 5 trillion.
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A
I think that it's going to be funny because like in like five years we're going to have. As we continue to colonize the moon, there are going to be more startups where trillion becomes a new billion.
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B
It is, it is. I remember when they topped 1 trillion in market cap and then Tesla did it, Meta did it, and Google was right after that. So it's like this wealth that's being created right now from AI is insane. So if you think there's a bubble, you can have opinion one way or the other. However, if you look at the longevity of a bubble, it's usually longer than three or four years. Now, to your point, you know, there was Jarvis and then it became Jasper. Jasper because they got in trouble with Ironman. Right? Was it Jasper first or was it Jarvis second?
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A
It was Jarvis first. And Disney wrote them a cease and desist letter saying, you can't use Jarvis. It's the name of your AI assistant. And they had referenced how like, yeah, just like Iron man, we are your assistants. So just like Jarvis's Ironman, we are you to your marketing team.
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B
Yeah.
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A
Oops.
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B
A little bit of copyright infringement there. Oops. So today we're going to get into. We can certainly talk about Alexnet, the evolution of Alexnet. I'll leave links in the show notes for this one because it's just, it's so fascinating how it's all sort of happens now, but this is a presentation. If you're listening to this, we'll go through it as much as we possibly can. I would love your take on this because this was a presentation that I just recently did to the Tier 11 internal team and the Tier 11 internal team. We have a monthly call on AI innovations, specifically inside the agency space because there's lots of tools, there's tons and tons of tools. Still need a human in the middle of it.
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A
Yeah, there are so many tools that it's hard for anyone to even keep up with it. Like I told you, I got to meet with Meta's AI introducer essentially, like his role is to test and present AI tools to the thousands of product marketers, product managers in Meta's ecosystem. And like, he's full time dedicated to testing and trying to then encourage implementation across the Meta entity. And he's exhausted from his job and that's his full time gig.
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B
This is full time gig. Yeah. So we now have like my HR guy. Half of his role now is AI adoption within tier 11. And we actually. So one of two things that I over indexed in our company is HR because I think people development is super important because happy people create happy customers. It's just that's the way that it is. It's my management philosophy. That's a whole other podcast if we ever want to talk about. Secondly, AI is the tool that makes great employees, extraordinary employees if it's deployed the right way, good employees, maybe even very good or great depending, but ones that don't adopt it are being left behind. And so I'm not saying that we have a problem with that specifically, but we want to be in the vanguard of it. We want to be the ones that are actually pushing the envelope on that and using these tools, not in a deceptive way by not, not telling clients, but using them as, leveraging them to do better work. And it's all powered by these investments in these companies now, which is like in the trillions and trillions of dollars. So I think my team maybe didn't quite connect the dots and I think a lot of people don't connect the dots into how big tech is investing so heavily in this. And this is just recent. Last week, a lot of these big tech companies, Google, Amazon, Meta, you talked about before we hit record here today, Tesla, they're investing trillions into data centers, into, you know, server farms, all of this stuff. And they're doing it like this is smart money. This is, they realize that. And Zuckerberg even said it, he's like, we're actually, we're lacking computing power, we need more. Right now we're in a dearth of compute, which is crazy to think about it, especially with the Andromeda update, which we talked about so much here, which is all powered by AI. So before I get into the presentation, thoughts, concerns, questions, confessions, one thing that.
- [16:49]
A
Lings mind is this. Not just the private enterprises that are investing like they're government entities. I mean, what's coming out of the Middle east and this serious investment that many of the royal families are making into server farms and into producing the support so that they can become an AI hub, right? Like we have tech hubs, Charlotte's emerging in the United States, San Francisco and Austin are big ones. And there are global ramifications of governments. Trump has currently been doing a big investment into the Texas area. Like it's at a global scale. And I think the long and short of it is it's not going away. It's continuously evolving. We're in the early stages of the bubble like period. But you have to take in consideration that this isn't new. It's over a decade old and it's going to continue and continue to grow. And a lot of the things that we're familiar with from a sci fi perspective are coming to the forefront. And if you've been afraid or like hesitant to adoption, I think a lot of things that you're going to show and what we talked about beginning of this episode is like how you can leverage it for your own personal use case as we continue to adopt the way we did to personal phones.
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B
Yeah, exactly. 2022 was the iPhone moment, but the big bang moment was back in 2012, sort of with this Alexnet. And that's sort of the way that it's been explained. And I can't disagree, like it was on our radar, but all of a sudden OpenAI was what, the fastest to a hundred million downloads for an app in history? Yeah, like there's a reason why. There's a reason why, because it is so incredibly powerful now. I tend to go towards Gemini more these days, but either way, like this stuff ain't going anywhere, so.
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A
And you're only thinking about the west ones. Like, like there's ones in France, there's a bunch that are coming China all the time. Like there's, there's. We're so limited. I mean, depending on where you're listening in from. And if you're watching on YouTube, like let us know where you're watching in from because you can comment. Well, it's just the. Again, the, the globalization, like we are so leveraged to only know or biased about what we can consume in the west because we don't have that same exposure. Like, I honestly have not heard much about what is coming out of India with regards to AI. But I can tell you from the space exploration stuff because I work with clients that are in space related materials. The amount of presence that India has on the moon, Russia and China eclipses what anyone listening likely thinks because it's such a strong investment that I imagine that the same is being applied in AI. But we are, you and I both live in the United States and what we're exposed to is predominantly Western tools of AI. But like what China and some parts of Europe are coming out is exploding on this space. I mean everyone talked about Neo the robot, right? That's also an emerging technology leveraging AI and There's so many facets of AI that all that is like, the confession is, I can't keep up with it. The person in charge at Meta can't keep up with it. No one can. We just have to adopt it and integrate it into our lives.
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B
So funny. The person at Meta can't keep up with it.
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A
Best as we can.
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B
That's so funny. It's like, if he can't just keep up with it, like, how can we all keep up with it?
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A
But we don't have to keep up with all of it.
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B
Right.
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A
Like I said, there's a new tool that comes out like every other day, if not thousands of new tools every day. And a lot of them are just like interface hacking of leveraging a tool. Like what Jasper did. They borrowed two other systems. They built Jasper off of OpenAI and several other models. And it's just the accessibility of using AI more and more. And I know that when you talked about this, this is really cool because it's how your team is adopting it. So if you're listening to it, this, if you're currently using AI a little bit or not enough, like, one, it's okay, we're figuring this out together. And two, here are some examples that Ralph and his team are actually using. Yeah, so watch.
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B
And I think this is just really explained sort of the breadth of what's happening and to make people realize that what's happening right now is just the very, very beginning. It's really just the start. I mean, we don't even, I don't even want to go into like agents and all the other sorts of things, which is sort of the next evolution of it. We can talk about that in future episodes. But let's talk about the here and now as far as AI is concerned. So if you're watching on YouTube, of course, it's perpetualtraffic.com forward/YouTube, if you're listening. Definitely. Check it out over there. So here is market values as a share of the S&P 500's total value. So S&P 500 is 500 of the what Wall street deems the most relevant, not necessarily largest, but influential stocks on the market, largely dominated by the tech companies, which are commonly referred to it as the fangs. And this is a chart here that actually shows market values as a share, S&P's total value. So basically you can see from 2015 through 2025 into 2026, Tesla, Meta, Amazon Alphabet, Apple, Microsoft, Nvidia. Their value is, if you aggregate all of that together that's about 25% of the value of the total S&P 500.
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A
No, 35% is Bob.
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B
Oh, it's 35%. 35%. 35% of the S&P's total value is driven by stocks that are heavily invested and or rely upon artificial intelligence. That's incredible. And Apple isn't even doing a really good job of it, quite honestly. Like, we all know the Siri sucks. I mean, Siri really does suck, but. And they're so behind everybody else. But the point is, is like they're heavily invested into AI. So Silicon Valley's biggest companies, these companies here, are already planning on pouring $400 billion into artificial intelligence this year. 2025 with a B.
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A
Well, we know that 65 is from Mata.
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B
81 now is from Meta.
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A
Oh my.
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B
Believe it or not, I'm going to slide on my. It's incredible. That next chart actually sort of blow your mind. So. And they all say, this just came out last week. This was, this was as of this recording last week, you know, early part of October, late part of October. They all said collectively, it's nowhere near enough. So you're spending this, but you're like, we still have a long way to go. So if you think we're in an AI bubble right now, it's hard to believe that that's the case. Now. The Internet was overbuilt in the 2000s, 99 and 2000, but I, I don't think we're anywhere close here. Like, the question is, is how we're actually power it and where the water is going to come from. That's what my wife always says. Well, you know, they suck up so much electricity and so much water. I'm like, yes, they recycle a lot of the water, but the electricity, yes, that's a problem. So the point is, I'm not exactly sure where all that's going to come from, but let's set that aside. So here's another graph. So this is investment capital expenditures quarterly for the big four meta Alphabet, which is Google, Amazon, Microsoft. Obviously these guys are heavily invested into AI capital expenditures into AI meta. In 2025, we've been saying 61 billion that they are investing in 2025. Well, it was actually 71 billion. They upped that another 10 billion this year just for the final quarter. So they went from 61 billion to 71 billion investing in all of this stuff, which is data centers, all the things that we're going to talk about here in just a second. But they are projecting in 2027 $115 billion in investment.
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A
It makes me want to throw.
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B
I mean, can you believe that?
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A
Why do my ads cost as much as they do right now? What the heck? Because they're getting ready to raise, probably the reason the money to fund this.
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B
Well, hopefully that investment will make your ads more efficient because of the Andromeda update. But they've really like we've been talking about the Andromeda update here. We. We'll leave links in the show notes to all the shows that we've done on it. You know, with content diversification, all the other sorts of things that are so important. But the point is, is like they Zuckerberg direct quote from. He says we are running in a compute starved state. A compute starved state. Even with a $71 billion investment in 2025, there's such an appetite for more compute, which is basically more servers, more data centers, more GPU chips to power all this stuff. So Microsoft will double their data center output over the next two years. Double their data center output. Like if you're living in these neighborhoods. And I'll show you one of them, it's middle of nowhere, just a second here. As will Google, Amazon and even Apple, lo and behold, who is being kind of left behind with all this. But still, they're not even on this chart. These companies thought that they were catching up, but recently all reported, all of them together, that they're actually short on capacity even with this type of investment. Can you freaking believe that?
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A
I'm out of lots of words. I'm like, the best is it's staggering. Like this is unreal. Like all I keep thinking was like, okay, well I need to go buy acreage of land in West Texas and sit on it until they eventually convert that into data center land. Like, it's just power is the new level of gold. Yeah. Unless it gets like eminent domain saying we surrender this land and it's now ours. Says the government of like, oh, but okay, so for those that are not.
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B
All those ranchers that are just like, you know, just like rubbing their hands together like, oh, my 400 acre farm, I can sell it to Microsoft. Of course they sell them Solar access.
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A
Is the new petroleum. Yeah. Fair.
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B
Yeah, exactly.
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A
Oh man.
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B
So crazy stuff. All right, so I hope you enjoyed today's show. That is part one of a two part series here. Like I said, if you are not watching along, you maybe you were listening along. Check us out over our YouTube channel at perpetualtraffic.com forward/YouTube. You can follow along to the presentation there, see the graphics. Some of this stuff is absolutely mind blowing. How much is now being spent and the reason why they're spending all of this is because they realize all these tech platforms, they realize that this is the future. And specifically for Meta and for Google and the advertising side, Amazon as well as Apple as well as a lot of other tech companies we really didn't even talk about here today. One of the keys to all this is being able to have creative that is diversified. And yes, once again you can get the creative diversification package if you qualify. Once again, you buy the creative diversification package which is the only way to leverage Midnight Andromeda right now. We've talked about it many times here on the show. You get the 10 creative types, you get fresh creative every single week, five, six, seven creatives every single week, a minimum of 30 plus per month, which is what feeds the algorithm. And you buy that package, you get the media buying and the Tier 11 data suite for free. We have never done this before. This is an insanely great deal to set you up for success. However, you have to qualify, you have to be comfortable with at least spending $10,000 a month on agency services. And that does not include ad spend. So check it out over at tier11.com CD. That's tier11.com CD and of course, wherever you listen to podcasts, leave us a rating and review. We'd love to hear from you about this episode and any other episodes and and all the show notes are of course over@perpetualtraffic.com for part one of this two part series on how AI is revolutionizing the industry that we all operate in here today. So on behalf of my amazing co host, Lauren E. Petrulo, until next show, ciao. See ya.
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A
You've been listening to Perpetual Traffic.