AI is collapsing the marketing funnel, so retailers need to rethink what comes next

AI is changing more than how consumers discover brands. It is forcing retailers and marketers to reconsider the role of their websites, how they connect advertising to business outcomes, and whether the digital experiences they own can compete with the leading AI chatbots.

That requires marketers to look beyond incremental AI improvements, according to Invoca’s CEO Gregg Johnson, speaking at the EMARKETER Future of Digital summit last week. He recalled a recent AI workshop with a CMO who felt her company was doing a solid job using the technology to improve everyday marketing efficiency.

The CMO’s bigger concern was that “nobody is stepping back from their day-to-day job to think about the transformational opportunity that AI affords [brands to] interact with consumers,” Johnson said.

That transformation is already reshaping the purchase journey.

AI is compressing the funnel

For roughly 25 years, the website sat at the center of digital marketing. Marketers drove traffic there, consumers researched products there, and brands used it to generate conversions. That model is breaking down as consumers increasingly conduct their research on AI platforms before ever reaching a brand.

“Eighty percent of those conversations, or…queries, depending on how you want to talk about it, they don't lead to a click,” Johnson said. “They don't lead to your website.”

The effect hits hardest on complicated or unfamiliar purchases, such as healthcare, insurance, mortgages, and telecommunications. Rather than jumping among brand websites to research their options, consumers can conduct much of that research within a large language model (LLM).

“Now, what consumers are doing is they're spending that time at the AI discovery layer in the LLMs, and that means when they get to your website, they're more ready to buy than ever before,” said Johnson. “So, the amount of time that they're spending on your website before they transact is shrinking.”

Marketers need to adapt to a journey in which discovery, education, and consideration increasingly happen outside their owned properties.

Prepare measurement for whatever comes after search

Getting discovered and cited by LLMs is only one piece of the challenge. Marketers also need to prepare for the collision of AI agents, conversational interfaces, advertising, and commerce.

“We're still in the early stages where we're not quite sure what the output will look like, and how is it that ChatGPT is going to sell ads, on one side, and maintain consumer trust on the other side,” Johnson said.

The exact advertising formats may be uncertain, but the underlying measurement challenge isn't new.

“You need to have a really good understanding of where dollars are going in, and you need to have a really good understanding for your business of where dollars are coming out,” he said.

That means building infrastructure that can connect impressions, clicks, and views across channels with purchases, appointments, test drives, contact center conversions, or other business outcomes.

“If you can get those data pipelines really working well together, of how you connect an advertising impression, a clicker, review to a sale, or an appointment booking, or a test drive, you'll be ready when something like ChatGPT comes up and continues to innovate what the ad format is,” Johnson said.

Readiness for AI chatbot advertising depends less on predicting individual formats than on getting measurement fundamentals right.

The website has an AI experience problem

The more strategic question is what happens once consumers reach a brand's website. Consumers are becoming accustomed to AI platforms that are conversational, available around the clock, and able to interpret questions based on what users want rather than forcing them through predetermined navigation. Johnson compared that with a typical brand website.

“Can you talk to your website?” he asked. “No, your general information architecture is ordered around how your products and services are gathered, not the way that the consumer wants.”

That creates a disconnect: Marketers can spend resources optimizing for AI discovery and paying to acquire traffic, only to send consumers from a modern conversational environment into a comparatively rigid digital experience.

“Essentially what you're doing is you're saying ‘thank you for coming to my website,’” said Johnson. “If you really want a great experience, go right back over to the LLM, because you're better off there than you are here.”

The opportunity, then, is to bring some of what makes AI interfaces appealing into the channels brands own.

Brands can bring conversational AI onto their own turf

Marketers should reconsider the entire digital experience from the consumer's perspective rather than through the company's organizational structure.

“If we could bring the best of Claude and ChatGPT to the things that you uniquely do as a brand, what would that look like?” Johnson asked. “What would that feel like from a consumer perspective?”

That question will become more important as AI platforms occupy more of the discovery and consideration journey. Brands that earn an AI citation or pay to bring a consumer onto their properties still need to give that consumer a reason to stay.

“You need to step back and actually think more holistically of what the brand experience can be [within the new customer journey],” Johnson said.

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