Dec 17, 2024 5 min read

SMB AI Gains, Android Lifting Gemini, Claude Conversations, AI Local Search

Dialog: Exchange Number 12

Join us tomorrow, Wednesday, December 18 for Dialog's Year in Review and 2025 Outlook webinar at 9PT/11CT/12ET.

Salesforce: AI Drives SMB Margin Gains

In Dialog's most recent small business survey, we found that 54% of very small businesses were actively using or testing AI (38% were active users). A Q3 global SMB survey by Salesforce (<200 headcount; n=3.3K, 500 US) has a bigger number: "75% of SMBs are evaluating or using AI" (using or testing). Contrast both of these with a Goldman Sachs estimate that only 6% of US companies are using AI.

The Salesforce SMB data suggest that one of the driving factors behind adoption is perceived competition: 80% of AI adopters believe their peers are using AI. This FOMO/FUD mindset is arguably even more prevalent in the enterprise. However, there are a range of positive benefits cited in the Salesforce report: improved efficiency, scaling and increased profitability, among others.

Source: Salesforce Small & Medium Business Trends Report, 6th Edition

In our Q1 SMB survey, efficiency and cost reduction were the primary benefits of AI adoption. But by the Q3 SMB survey other benefits started appearing, including increased revenue/profit. But that is number 8 on the list in Dialog's survey. The Salesforce data aren't segmented by headcount or industry or country. But smaller SMBs are more likely seeing cost savings, while larger SMBs are probably the ones seeing revenue growth.

Saving money and time will continue to be a major adoption driver for local businesses.

Salesforce found the top AI use cases were: 1) marketing campaign optimization, 2) content generation, 3) automated recommendations for customers, 4) natural language search tools and 5) customer-facing chatbots. This is directionally consistent with our data.

Salesforce also reports that 71% of SMBs plan to increase AI investments in the next year; that number rises to 78% for SMBs that are growing.

News & Noteworthy

ChatGPT fourth most downloaded app in the App Store in 2024.
Claude has more perceived emotional intelligence than ChatGPT (NYT).
Amazon may cut 14K managers and AI may be a contributing factor.
BNPL company Klarna essentially stopped hiring because of AI.
Google playing the "long game" with AI.
Google's web-browsing-capable AI tool is Mariner (formerly Jarvis).
Countering OpenAI's Sora, Google releases Veo 2.
Outcome-based pricing gaining a foothold in AI SaaS, but attribution.
Autonomous Waymo has passed human powered Lyft's SF market share.
AI-generated ads carry brand risks; consumers don't like them.
The ACLU critiques AI-drafted police reports.
What would a more socially beneficial vision for AI look like?

Android Boosting Gemini Adoption

In its proposed final judgment, in the "default search" antitrust case, the US Department of Justice asked for a number restrictions surrounding Google AI and self-preferencing. The idea is to minimize the risk that Google would come to dominate the AI era as it dominated search by using its platforms to privilege Gemini.

The court has not yet imposed any remedies – that's coming in Q1 – and the ultimate fate of the case is uncertain but Google is clearly leveraging its owned and operated properties and platforms (e.g., Google Workspace, Android) to promote Gemini adoption.

Source: Dialog Consumer Survey 11/24, n=1K US adults

Beyond the fact that Google is obviously pushing Gemini through every channel and PR tool it has, its ownership of Android is a singular point of leverage around AI. In Dialog's November (search vs. AI) consumer survey we were somewhat surprised to see Gemini close on the heels of ChatGPT in a couple of cases. For example, Gemini was only 9 points behind ChatGPT as the favored AI application of our survey respondents. In our B2B surveys the margin is much greater (roughly 2x or more), outside of larger businesses.

As the chart above reflects, Gemini adoption is dominated by Android users whereas ChatGPT is more evenly distributed across platforms. Android is the largest operating system in the world, approaching 4 billion users.

A slight majority of our survey respondents (51%) were on Android phones (vs. US mobile OS market share which favors iOS). But the correlation between Android ownership and Gemini usage is clearly there. It would appear that Google's ownership and control of Android are paying and will pay big dividends for Gemini.

What 1M Claude Conversations Reveal

What are people actually looking for and doing on AI? Anthropic sought to answer that question in a report that analyzes 1 million conversations from Claude users over the past two months. It turns out people are basically using Claude for things you might expect: coding (web and app development), content generation and research-related tasks. There are some interesting niche use cases, such as dream analysis, roleplaying games and elder care discussions.

Below are the top 10 conversational categories on Claude by volume of questions/queries.

Source: Anthropic study of user conversations (10/24-11/24)

Claude's popularity is growing but its usage is still substantially smaller than ChatGPT's. We wouldn't draw too many firm conclusions from this data other than the fact that people are asking about a diverse range of topics, which speaks to the overall (perceived) utility of AI.

Dialog Data: 62% Have Done AI Local Search

It appears that Google is finally starting to integrate local business listings into Google AI Overviews. Prior to the formal launch of AI Overviews, local results had been a prominent and regular part of Google "SGE." However, after the launch there were virtually no AI-generated local results. Now that appears to be changing.

By the same token, we know that people are doing local search on ChatGPT and other AI tools. In our November consumer survey, we asked whether they had used an AI tool to find a local business. Almost two-thirds (62%) of our respondents said they had. We did not ask about satisfaction with results. But this illustrates that people are and will continue to conduct local searches using AI. And as results improve it should only increase and reinforce the behavior.