Nov 4, 2024 5 min read

New Search Era, NotebookCRM, Agency Wish List

Dialog: Exchange Number 6

Thinking Out Loud

A New Search Era: Positive and negative opinions have been trickling out about whether the new and improved ChatGPT will be able to take on Google. (Here's our hot take from last week.) SearchGPT is apparently using the Bing search index, although results aren't 1:1. And it's apparently not using Apple Maps (too bad). But usage and traffic are growing. Here's the current breakdown of AI search traffic according to one small analysis: ~70% increase in AI-generated site traffic since August; 87% from ChatGPT, 7% from Perplexity, 4% Gemini. For its part, Google announced more AI in Google Maps.

Will AI Save Siri and Alexa? As AI chat bots have captured users' imaginations, Siri and Alexa look worse and worse by comparison. With iOS 18. and the forthcoming 18.2 Siri is being incrementally upgraded (one new feature: Siri now has "native" local search) and should perform significantly better, with a ChatGPT assist. Amazon, for its part, has decided to use Claude, rather than its own AI tech, for an upgraded "agentic" Alexa. It will offer free and paid versions, which may cost $10 per month. Amazon has spent more than $25B on the platform, which never delivered on its promise.

Investor AI Ambivalence: There's a mixed message coming from investors. They're afraid massive investments into AI "foundation models" and infrastructure won't be justified by returns. Some investors argue these huge investments won't translate into valuable businesses. But they're also afraid that companies not investing will be left behind. Samsung lost a third of its market cap because investors think the company is falling behind on AI. Google, Meta, Amazon and Microsoft will have spent more than $200B on AI by the end of the year. And private equity is spending $50B more for AI "infrastructure." Yet Microsoft said its AI business will soon reach a $10 billion ARR, its fastest product do so.

AI Impact: Bankers and Lawyers but not HVAC Installers: In the past, disruptive technologies and economic shifts have fallen disproportionately on workers. But AI will likely have a greater impact on professionals and so-called knowledge workers. The already cliche statement, "AI won't take your job, somebody using AI will take your job," is naive. Companies will reduce the size of teams or scale back hiring and backfill with AI. Google said last week that 25% of its code is now AI-generated (read: layoffs coming). Wall Street banks will replace expensive Harvard MBAs with AI; legal will equally be disrupted (e.g., fewer paralegals). Sales, financial services and accounting will see a major impact and so on. But auto mechanics, HVAC installers and kitchen are safe.

Can NotebookLM Be Your CRM? Google's surprise AI breakout product is NotebookLM (Gemini itself is not). Since adding the podcast feature, it has gone viral. While Google positions the product as a "research assistant," people are using it for an expanding range of functions, including as a pseudo CRM. I don't think it's a true CRM replacement but Google could easily build a CRM function into Workspace that would be potentially disruptive. And the NotebookCRM discussion hints at how people want simpler, more flexible SaaS tools that aren't painful (read: Salesforce). It's distribution vs. innovation in the next round for legacy SaaS vs. AI startups.

News & Noteworthy

Martech is used for roughly 3 - 5 years, with cost driving replacement.
Does enterprise spending on ChatGPT threaten existing SaaS contracts?
Nvidia to replace Intel in the Dow Jones Industrial Average.
Figuring out SEO and Local SEO for the coming AI search era.
Will AI in Google Maps (now with 2B users) help or hurt its UX?
Zoho partners with Nvidia to build LLMs for its SMB2B applications.
21% of German marketing professionals replacing search with AI.
What if AI is actually good for the movies? – AI's potentially positive impact on Hollywood (NYT) vs. doomsday scenarios (WSJ).
Anthropic (Claude) argues in favor of "targeted" AI regulation.

Data: SMB Agency Wish List

Our early Q1 survey asked how many small businesses were working with agencies or vendors for marketing support. Only 18% said they were. (This is a low number relative to other surveys we've seen.) We then asked that group several what they wanted from their agencies and how they judged success.

As the slide below indicates, a strong ROI was the top response – as you might expect. But these businesses also expressed a broad range of other needs and desires: an agency wish list of sorts. They wanted both strategic and tactical support in areas that are not typically part of what marketing agencies offer:

Help to better understand our customers
Help to improve customer service
Help build our brand
Help to better manage and close leads
Technology/software buying advice
Deep understanding of our business
Help to better understand competition
Help with business strategy

Source: Dialog SMB survey 1/24 (n=1K SMB decision-makers)

Marketing agencies are aggressively embracing AI but they're also concerned about it disrupting them. They worry about pricing pressure, in-housing and being outfoxed by newer, more AI-savvy competitors. There are two ways forward: offer more tools closer to the business' core operations (e.g., CRM, billing), in addition to marketing services, and/or offer value-added services such as customer insights that point the way to improved customer experiences and retention.

What this is data is communicating is the SMB clients' desire for agencies to be strategic partners. AI is central to delivering on that proposition at scale.