Made possible by

​Illuminate. Connect. Activate.​

Verve’s global omnichannel advertising platform redefines what’s possible beyond walled gardens. Verve illuminates, connects, and activates high-fidelity signals that drive outcomes for brands, agencies, and publishers at scale.

Learn more

Marcus Johnson (00:00):

Verve's global omnichannel advertising platform redefines what's possible beyond walled gardens. Verve illuminates, connects and activates high fidelity signals that drive outcomes for brands, agencies, and publishers at scale. Learn more at Verve.com.

(00:20):

Hey gang, it's Friday, April 10th. Yory, Suzy, Nate and listeners, welcome to Behind the Numbers, New Marketer podcast made possible by Verve. I'm Marcus and joining me for today's conversation we have with us three folks. We start with the [inaudible 00:00:34] living in New Jersey. It's Yory Wurmser. Hello.

Yory Wurmser (00:37):

Hey, Marcus. How are you?

Marcus Johnson (00:39):

Hey, fella. Very good. How are we?

Yory Wurmser (00:40):

I'm doing great today.

Marcus Johnson (00:41):

Good, good, good. I'm also joined by a VP of content, heads up our retail desk. Also host of our market podcast, Reimagining Retail Living in New York City. None other. Suzy Davidkhanian.

Suzy Davidkhanian (00:51):

Oh my God, is there a drum roll?

Marcus Johnson (00:52):

No, none.

Suzy Davidkhanian (00:53):

Oh, come on. You made it sound like there was. I'm so excited to be here. This is my favorite episode to do.

Marcus Johnson (00:57):

The title's ridiculously long. That's the only reason. Production, I swear, if you put a drum roll in, I'll be furious.

Suzy Davidkhanian (01:04):

Take control, Marcus.

Marcus Johnson (01:05):

I'm trying. Also, so early. We're also joined by our lead voice on AI, principal analyst also in the city, sometimes. Nate Elliot.

Nate Elliott (01:14):

Guten tag, Marcus.

Marcus Johnson (01:16):

Hello. Oh, okay. German. Today's fact. So the average American will spend how much money during their lifetime on coffee. Any guesses?

Nate Elliott (01:31):

$100,000.

Marcus Johnson (01:36):

Suzy, this is where you chime in with the guests.

Suzy Davidkhanian (01:39):

I don't know.

Marcus Johnson (01:41):

Okay, good. Yory?

Yory Wurmser (01:42):

I'm going to go with 40,000.

Suzy Davidkhanian (01:44):

Your question wasn't specific enough.

Marcus Johnson (01:48):

It seemed fine. Nate and Yory were able to venture a guest.

Suzy Davidkhanian (01:51):

Is that if you have an espresso after dinner that counts, or no, it's just the coffee that you have in the morning. You know what I'm saying?

Nate Elliott (01:56):

I think that's all included in the average.

Marcus Johnson (01:58):

Yeah. Yeah. Thank you. Thanks, Nate.

Suzy Davidkhanian (02:00):

What country are you in?

Marcus Johnson (02:01):

Oh my goodness, America.

Suzy Davidkhanian (02:05):

I don't know.

Marcus Johnson (02:05):

The average American.

Nate Elliott (02:06):

He did say US.

Suzy Davidkhanian (02:06):

Oh, he did?

Marcus Johnson (02:08):

Is the American abroad? Do they live over here? Are they on vacation? Right.

Suzy Davidkhanian (02:14):

You're totally right. I don't know. 50 grand. I have no idea.

Marcus Johnson (02:15):

No, don't even bother because you're away. 121. Nate's pretty close. 121,000 dollars. Luxembourg spends the most at close to half a million. That's too much, okay, Luxembourg

Suzy Davidkhanian (02:27):

Well, they probably live longer.

Marcus Johnson (02:30):

Someone needs to visit Luxembourg and let them know no one else is drinking that much coffee.

Nate Elliott (02:33):

They drink that much coffee, I don't know if they do live longer, Suzy.

Marcus Johnson (02:37):

It's five cups a day. That's too much. Americans will consume about 26,000 cups of coffee during their lifetime, an average of just 1.2 cups per day, which is surprising. Luxembourg, five. And then you've got Finland four, Sweden and Norway two and a half. Every other country less than too.

Suzy Davidkhanian (03:00):

Don't believe this. In France, they definitely drink at least three or four.

Marcus Johnson (03:04):

But on average, because some people don't drink.

Suzy Davidkhanian (03:06):

At all. Okay, fine. Averages.

Marcus Johnson (03:07):

All right, good. Today's real topic. All right, here's how this episode works. Yory goes first. He's going to get 60 seconds to pitch a what if prediction. These used to be very specific, but highly unlikely. It was too long, so we changed the name to What If. So he's going to pitch a prediction for this year, and then me, Suzy, and Nate and everyone listening will decide if we're going to invest in it. It's shark tank style.

(03:44):

Invest means belief, because we don't have any money. In the prediction, Suzy goes next and so on and so forth. Let's do it. Yory, what do you have for us? What's your pitch?

Yory Wurmser (03:54):

What if Apple delivers on its vision for Apple intelligence? The reason I say that is Apple has been working with Siri, trying to improve Siri for a decade without a lot of luck. Two years ago, they came up with their vision for Apple Intelligence, which essentially integrates everything into a seamless experience for Apple users. And it all revolves around Siri. To this point, they haven't been able to deliver. I'm not saying they will or not, but that's my prediction, that they will actually deliver on that.

Marcus Johnson (04:29):

This year?

Yory Wurmser (04:31):

It's unlikely, but it's [inaudible 00:04:34] .

Suzy Davidkhanian (04:34):

Did you just sell out your...

Yory Wurmser (04:38):

I mean, the thing is-

Marcus Johnson (04:44):

[inaudible 00:04:43] of the episode. So remind people what the vision is. It was something along the lines of someone messages you and says, "Can you hang out on this day?" And your phone is able to just look into your calendar, check places close by because the person said they want to go to a coffee shop, figure out between appointments, it's going to be this far away, you'll be able to make it at these times. It's supposed to help you with those types of things.

Yory Wurmser (05:08):

Yeah. I mean, it takes all that information across your device, including programs like Calendar, what you're writing and integrates it. So it knows you and responds appropriately given what it knows about you. The element that's really up in the air, it's done parts of that already, but it doesn't create a perfect experience right now because most of the information isn't integrated yet. And it also works through Siri, and Siri itself isn't plugged into it completely. So if they can get Siri working through Gemini, working through ChatGPT, whatever extension it uses to actually integrate that and orchestrate it, then it could actually work. It depends on a lot of pieces falling together, coming together that haven't yet come together. But if they do that, then it can actually provide a personalized response and actually anticipate what you need and deliver it.

Suzy Davidkhanian (06:10):

I'm surprised it's not doing it yet, honestly.

Nate Elliott (06:14):

Well, it's not even close, right? Siri is sort of famously one of the worst personal assistants in terms of its effective use of AI. I just wonder though, if it's the Gemini deal that allows them to deliver on that vision, isn't that actually a problem for Apple? I mean, they don't want Siri to keep being as unloved as it has been, which is why they signed the deal with Google, that and the fact they didn't want to keep pouring hundreds of billions of dollars of resources into building language models. But if they have to pay Google every time someone uses Siri and Siri gets better, doesn't that just make it a lot more expensive for Apple to have this tool?

Yory Wurmser (07:03):

I don't know if they are paying a blanket fee.

Nate Elliott (07:09):

I mean, even if they're paying a blanket fee, not a per usage fee, if it works, if it goes gangbusters, everybody loves it and it becomes the hot thing, then Google kind of has them over a barrel when the contract comes up for renewal because otherwise they're signed to whatever terms Google's asking for, they start over from scratch and their version of scratch hasn't been very good so far.

Yory Wurmser (07:31):

I think Apple's bet to this point is that these large language models will get commoditized and they won't be all that differentiated in a few years. So if Gemini works for the interim, while there is differentiation, that's okay with them if it creates lock into the Apple ecosystem. They're really concerned mostly about the devices. Some services as well, but I think if Gemini works, that works for them until they either develop their own or the LLMs are commoditized enough and similar enough that they can switch easily. So I don't think it necessarily means that they're locked into Google. I think it gives Google a really strong revenue stream for the moment, and it could give them an advantage in terms of training their models as well. So it definitely is good for Google. I can see Apple's strategy though in that they may be able to avoid being locked into Google.

Nate Elliott (08:29):

So if you think that they believe all LLMs will be commoditized in a few years, then what does it mean for them to deliver on their vision for intelligence?

Yory Wurmser (08:40):

I think for them, it's creating sort of a unified experience within their devices and their ecosystem, it assumes that they will maintain all that personalized information on the device or they'll protect that information from other platforms. So just as in a lot of their advertising right now, they have privileged view of the data. I think they're assuming that they'll have privileged view of the on device data, and the on device data is what's going to run a lot of this stuff. So I think that they see this as a way of safeguarding their device advantage rather than giving away the data that they now control.

Suzy Davidkhanian (09:32):

So you know what? I don't understand. Of course, I have an Android, so there's already that. But my Android 10 years ago, I'm rounding, told me when a flight was going to be late before I even knew. And then I think people weren't ready for it. And so it was creepy and they stopped with a Google Assistant, but it was not LLM based. So why does Apple even need to do it through an LLM? They should be able to do that within their own ecosystem. Surf the news, see your emails, know what flights you're taking, know where you're meeting people, ping you and the subway is delayed. What's the LLM piece? Why do they need Gemini for that?

Nate Elliott (10:08):

I mean, it wasn't an LLM, but it was machine learning.

Suzy Davidkhanian (10:10):

It was AI. It was regular, but it wasn't... They were doing that well before we were talking about the generative piece of the LLM. That's the whole piece right now.

Yory Wurmser (10:21):

Yeah. I mean, that was Google now. They gave up on it because, as you say, consumers just didn't want it at that point. The LLM part now is that it's really about Siri. Siri, if you can just say what you need through Siri, it can interpret that much better than it can now. Siri is not very good. So by integrating the LLM part to that, making Siri actually a real personal assistant, instead of a robot sounding, not very good assistant, then you can actually have a lot of utility that doesn't have right now.

Marcus Johnson (11:02):

Last quick question for me, then we'll decide if we're going to invest. Is this going to be a bit of a light switch moment where all of a sudden you're saying they don't have access to certain types of information? Is it going to be that all of a sudden they do and this thing becomes incredibly useful just like that? Or is this going to be that every year you kind of notice that it's improving a little bit?

Yory Wurmser (11:23):

They have access as a company to this information. It's a matter of stitching it all together. So I think you'll see when it works, and this could be this year, in the unlikely situation, it could be longer down the line. You'll see a big leap in its capabilities, and then you'll see incremental improvements beyond that.

Marcus Johnson (11:43):

Okay.

Nate Elliott (11:44):

And when you say that Apple wants to focus on their device leadership, I think everyone wants to know when are they going to bring back the Newton?

Suzy Davidkhanian (11:52):

You might have to tell people what that is.

Nate Elliott (11:54):

Yeah. Don't know? Google it.

Yory Wurmser (11:59):

So Nate is trying to age us.

Nate Elliott (12:04):

It's not that hard to age us.

Yory Wurmser (12:06):

No, no, it's true. That's why I love doing the audio podcast.

Suzy Davidkhanian (12:13):

Oh my God. Did you just ask to come on the retail one?

Marcus Johnson (12:16):

No.

Suzy Davidkhanian (12:19):

Yeah, I totally just did.

Yory Wurmser (12:20):

Newton was a mid '90s device. It was kind of the predecessor to the iPad. It was a computer. It wasn't a single slab in a screen, but it basically was the same idea. It had a, not a stencil-

Nate Elliott (12:39):

A stylus.

Yory Wurmser (12:41):

The stylus. Thank you. It had a stylus. You could interact with it with a stylist. It was Steve Jobs' baby as he returned to Apple in the mid '90s, and it was a flop. But a lot of the learnings from that led to things like the iPad, the iPod. It was really instrumental in the design of Apple going forward, but as a device, it flopped, and that's the reason none of you know about it.

Marcus Johnson (13:17):

Stylus for kids is a pencil with no lead. All right, let's move on.

Nate Elliott (13:20):

Stick. The plastic stick.

Marcus Johnson (13:24):

Exactly. Are you in?

Nate Elliott (13:26):

That they're going to realize the vision this year?

Marcus Johnson (13:30):

I just realize kids aren't going to know what pencil is, are they? Anyway, yes.

Nate Elliott (13:33):

It's a plastic stick. No, I'm sorry, Yory. I don't think there's any chance to realize a vision for Apple Intelligence this year.

Marcus Johnson (13:39):

No, for this year. Okay, Suzy.

Suzy Davidkhanian (13:41):

So wait, I thought it was that they're going to partner with Gemini to get to the beginning stages. Is it that it's going to be actualized this year?

Yory Wurmser (13:52):

Yeah, because they've already partnered with Gemini.

Suzy Davidkhanian (13:55):

Right. Obviously I should know that, but I got the impression from you saying it that they were, but that part I already got, but that it's going to be completed. Their whole thing is going to be said and done and ready to go.

Yory Wurmser (14:07):

Yeah, by the end of the year.

Marcus Johnson (14:13):

[inaudible 00:14:13]. Come on, Yory.

Suzy Davidkhanian (14:14):

I got that they're already working on it together, but this is like the Warner Brothers one from Paul Verna. Okay. I am sorry. No. Me too. I'm a no. I want it to be a half.

Marcus Johnson (14:27):

So it's a no from Nate, no from Suzy, no from Yory, it seems. I'm going to go half. I'm going to go half in.

Yory Wurmser (14:33):

It needs a boat. I'm going to say it's going to happen.

Suzy Davidkhanian (14:37):

I think that there's just too much red tape for it to all happen now and to be at that master peak point of achieving the vision.

Marcus Johnson (14:46):

All right. Half a point. Suzy, you're up.

Suzy Davidkhanian (14:49):

Okay. You guys ready? I love doing these ones. Okay. So first I have to give you the what if statement. What if Abercrombie, who is already leaning into lifestyle brand momentum, evolves beyond just selling products and retail and moves into more off-premise experiences like fitness or spas or hotels or coffee shops. So it can show up in consumers' daily lives, not just when they're buying products?

Nate Elliott (15:21):

Can't wait to see the Chiron for that. It's going to cover the entire screen.

Marcus Johnson (15:24):

Ask for one sentence headline.

Suzy Davidkhanian (15:26):

That was a whole run on sentence.

Marcus Johnson (15:28):

Yes. All right. I'd say elaborate, but is-

Suzy Davidkhanian (15:32):

Okay, no wait. So there's three. Yes, yes, of course you need me to. So there's three reasons why. Retail is already moving into hospitality. We're seeing this sort of need to deepen the engagement with consumers. And so if you think about Tommy Bahama has a restaurant, Ralph Lauren has both coffee shops and restaurants. Restoration hardware has this really hard to get into brunch place in some of their locations. So it's already happening. Equinox has hotels that they're working through. They have spas in their gyms now. So there's that. On the other end, consumers are shifting their behavior in this K economy everyone's talking about. People are spending more on experiences than they are on things. So how is Abercrombie going to keep the money if they're not doing more experiences? But also for Abercrombie itself, they own multiple brands. Some brands are doing better than others.

(16:22):

I don't know if you guys have heard about their athleisure brand, YPB, which is called Your Personal Best. It's like their private label athleisure brand, and they kicked it off in 2022 ish. And I think that was when the conversation was more around denim versus athleisure and what category is going to win. However, that's the wrong way of thinking about it. It's much more about capital B brands, lifestyle brands that are going to win. And so that's what they did. They built out a bunch of different from Hollister to this brand to a few other ones to have sort of a whole ecosystem. And the next component of that is experiences. And we all know, we talked about this, they were the ones that had the stores that you had to go visit in the '90s because the scent was really, really strong and they had people in the front who were dressed a very specific way, welcoming you.

Nate Elliott (17:16):

Male models is what you're referring to.

Suzy Davidkhanian (17:18):

Yes, they were welcoming you and people would wait in line to go into the store. So they already have that experience thing sort of covered a little bit. Abercrombie Inc, not just the brand, all of it. Plus they've reinvented themselves so their product is better, but I still believe that to really be a lifestyle brand, which is what they're working towards, they also need some experiences to go with it.

Yory Wurmser (17:42):

Do you see any evidence that they're moving that direction?

Suzy Davidkhanian (17:45):

I see that some of their brands are doing better than others and that every retailer is thinking about if people are not buying as much and if we're moving into resale and recycling, what are some of the other things that we need to do to get more money in our pockets? And before you ask me like, oh, it's very expensive to put up a gym, I don't know that they need to put up a lot of things. They can either carve out space. Some of their stores are gigantic to do a little coffee shop, but they can also do popups and co-activations and maybe down the line get a little bit further into creating their own sort of retail and/or restaurant spaces that are... So many retailers are closing stores that there's a lot of empty inventory. So I think, will they go at it alone 100%? Probably not, but I think there's room for them to be able to experiment in a cheap kind of way.

Nate Elliott (18:37):

So your actual prediction or what if then is that they will do marketing activations with fitness brands?

Suzy Davidkhanian (18:44):

With fitness brands, with coffee shops, but I think it'll be branded Abercrombie. I don't think they'll be like Equinox brought to you by Abercrombie. I think it'll be Abercrombie, and then maybe there'll be a light touch on the Equinox if that's the right sort of co-consumer.

Nate Elliott (19:03):

Well, that's my question is who's going to do this with them, because Equinox doesn't tend to do anything with a light touch. I know you've thought of Peloton, but they missed that window. If they wanted to buy Peloton, they should have done it two or three years ago. And now Peloton seems to be doing well enough that they're [inaudible 00:19:19] for sale. So who do they actually work with that is meaningful?

Suzy Davidkhanian (19:24):

So I don't think it's just gyms. One of my original absurd, highly unlikely but very specific was that because they have this brand that nobody knows about that's truly an athleisure brand that's doing relatively well for the few that know them, maybe the way to get into that fitness ecosystem is, Marcus, literally this is-

Marcus Johnson (19:44):

Upside predictions.

Suzy Davidkhanian (19:46):

I'm following exactly what the request was.

Marcus Johnson (19:49):

All right, sorry.

Suzy Davidkhanian (19:50):

So I did think about, would they buy something like not a mirror because someone else has them, but something in that sort of world, I don't think there's anything that's distressed enough for them to do that that would make sense. And then that only takes a component of this whole ecosystem that makes it a brand that's a lifestyle. So that would only be in the fitness world. And one day that might not be as big of a thing or it's sort of saturated market. So for me, it's beyond the fitness. It's like coffee shops.

(20:19):

And I think coffee shops, as we heard, people spend a lot of money in lots of different places and it's not that expensive to put up a coffee shop. So I think there'll be little different things that they can do to be top of mind in that ecosystem.

Nate Elliott (20:34):

Do Gen Z go to coffee shops? I mean, I'm listening to this and I'm thinking the thing that makes most sense for this brand, this set of brands and for the age of their average consumer is a bar or a dispensary. And those are both far too complicated and laden with regulations and everything else for them to go into that space. Coffee shop doesn't sound like a real natural fit for 24-year-olds who wear Abercrombie or Hollister.

Suzy Davidkhanian (21:03):

I mean, I think you'd be surprised at who their core customer is and what they do. Yeah.

Marcus Johnson (21:08):

Gym, they care a lot more about their health than most previous generations of the same. [inaudible 00:21:13]

Suzy Davidkhanian (21:12):

They also do coffees and juice bars. Yeah, I don't think they would do their own gym right now, but juice bars and coffee bars, I think you'd be surprised at how Baba Boba tea, whatever that thing is. There are lots of different, I say coffee, but there could be lots of different iterations of this idea of a third space.

Yory Wurmser (21:33):

They should start in Luxembourg. That's me.

Suzy Davidkhanian (21:35):

Oh yeah. Five coffees a day. Actually, one of the things-

Nate Elliott (21:38):

That Yory wins just for that.

Suzy Davidkhanian (21:41):

If I'm taking a page from Yory's book, one of the things I was thinking about was that's a customer that maybe doesn't have a high disposable income. And so are they going to be doing these sort of activations and other things or are they going to be buying clothes? But they're also the ones who care a lot about the environment and are minimalizing their purchases and are more into the experiences and the Instagram pictures. So there is a chance that that could happen more. Plus I think it's about at some point, there's, I was going to say name a brand, but I'm not going to say it, but there are some brands that are doing these things that I'm not a purchaser of, let's call it Restoration Hardware, but I still went and had dinner there or brunch there because it's like a cool thing to do.

(22:23):

So I think it'll also open up the aperture of who the consumer might be, especially given that they've already reinvented themselves and their clothes are not really teeny boppery anymore. Their core assortment is more elevated.

Marcus Johnson (22:38):

All right. Time to vote. Yory.

Yory Wurmser (22:42):

I'm going to vote for it.

Marcus Johnson (22:45):

He's in.

Suzy Davidkhanian (22:46):

Wow.

Marcus Johnson (22:47):

All right. That one vote already means that she beat you, but it's a

Suzy Davidkhanian (22:51):

Well, I took a page from his book and I gave you a potential as to why it was not going to happen-

Nate Elliott (22:55):

And that's what I'm going to go back and give Yory a point for his Luxembourg reference.

Marcus Johnson (23:02):

Point for the reference. [inaudible 00:23:05]

Nate Elliott (23:05):

I'm not going to vote for it. Not because I don't think it'll happen, but because if the argument is they're going to open up one or two Boba tea shops in the next year, that seems like a fairly low lift that mimics what literally every other retailer has already done. I mean, Barnes & Noble's had coffee shops in their stores for 35 years, so I know we're not calling this the highly unlikely podcast anymore, but I think it unfortunately stumbles on the fact that it's just a little too straightforward.

Marcus Johnson (23:42):

It's out. I'm hoping. 1.5. Well played. Nate, you're up.

Nate Elliott (23:50):

All right. What if Google starts paying the websites whose content it uses in AI responses?

Marcus Johnson (23:59):

Oh, okay.

Nate Elliott (24:01):

So there's a lot of talk about how AI is in danger of killing the open web. We know that the low single digit percentages of people who see an AI response actually click through on those responses and go see the website that the content actually came from. Likewise, we know that a lot of the responses are based on the training data for which there isn't even necessarily a website. And there's been a lot of movement and speculation on the publisher side to either individually or collectively take action against the LLMs, including OpenAI and Google to try to make some money for this, what they deem unfair use of their content and their information and for what they would say is the stealing of their traffic and their visitors. So lots of companies like the New York Times, groups of publishers and book authors have filed lawsuits against LLM companies, but we're also starting to see legislation.

(25:00):

The IAB a couple of months ago announced that they would be working with Congress to pursue legislation to force publishers, force the LLMs to pay publishers. We know that in other countries, there's movement towards this as well. And one thing we know about Google is that faced with imminent legislation that would make them do something anyway, they tend to just go ahead and do it. So when Australia said, "You need to start paying news publishers a few years ago because you're not sending any traffic to news publishers." Google didn't like that, but they actually did start paying some amount of money to publishers.

(25:37):

And this is a place where Google can actually use its enormous leadership in the online advertising space as an advantage. OpenAI can't keep spending this amount of money forever without making any money back. Google, on the other hand, makes hundreds of billions of dollars per year.

(25:55):

Paying publishers is not just something that might preempt government action. It might actually put their competitors like OpenAI into a tough spot. So I think that it won't be enough. The publishers will still say they're owed more, but I think Google will start paying publishers at least some of the time when they use a publisher's data in their AI responses.

Yory Wurmser (26:17):

So Perplexity is doing a little bit of this already. Do you see Google taking a similar type of approach like per crawl or per... How do you see it working in practice?

Nate Elliott (26:32):

I don't think they want to do per crawl. I mean, so the problem is these LLMs, as you know, crawl billions of pieces of content, and then in any one response to a user prompt might mention surface or leverage maybe four or five or six of the pieces of information that they've collected. It's important to these tools to crawl the data, to build the version of the world that the LLMs live in and to know which pieces of information are most relevant. But part of that process means deciding that literally billions of pieces of content are irrelevant for any given user prompt. So I think they're much more likely to pay publishers when either their site or their page is directly cited by the AI response or when information or content that was first found by the LLM on that publisher is used as part of the response.

Suzy Davidkhanian (27:34):

But if the publisher information that comes up in whatever the LLM response is ahead of the payal, right? By default, the LLMs crawl... I don't know if crawl is the right word, but they go horizontal. They gather all the information that is publicly available. Why would they need to pay for that? That's already public.

Nate Elliott (27:54):

Well, two reasons. One, even public information comes with attacks on users, which usually comes in the form of advertising. And because LLMs essentially capture those users and don't send them, they make a practice of specifically working to keep the LLM user on the LLM, on the AI platform. They often don't surface links at all. When they do surface links, they encourage users to reprompt the chatbot. They're working really hard to keep people on the AI platforms and not send them away. And by now, send them away, they're taking the advertising revenue from the publishers who the AI webinar-

Suzy Davidkhanian (28:31):

That's a publisher problem, right? So the publisher can just close the gate instead. It's a publisher

Nate Elliott (28:37):

Problem until it becomes a legal problem. And as I said, there is legislation in the works in the United States and in a number of other countries that would compel Google to do this.

Suzy Davidkhanian (28:46):

And what would the legislation be like? What is the-

Nate Elliott (28:49):

I mean, the reality is the AI chatbots are visiting these sites. They are not humans consuming ads, which is the revenue model of the publisher, and then they're going back to their own platform and encouraging people to not visit the publisher whose information they use to answer the user's question. So I mean, it's not very hard to envision the United States Congress or other national or state provincial legislatures from creating laws that would compel the platforms to do this. And one of the benefits that Google has, one of the advantages they have over every other company that's a serious player in AI platforms is that they can actually afford to do this. If this becomes the standard, OpenAI, Perplexity, Claude are all out of business in a year or less, and Google's still doing fine based on the quarter trillion dollars in search ad revenue they make every year.

Marcus Johnson (29:47):

Is there a version of this that can be a sustainable business model for publishers where they're going to get compensated enough to agree that, yes, this is the new way that the internet works?

Nate Elliott (30:00):

I don't know that they have a choice. I mean, I think for a lot of publishers, they're either going to get these pennies or they're not going to get anything at all for being crawled and used by the chatbots. And so the pennies are better than nothing. I mean, I'm genuinely worried that there will be a publishing apocalypse of some level because of what's happening right now. Clearly there are publishers who are able to charge enough money to keep themselves alive in terms of subscription fees and able to keep things behind paywalls. And those companies are less at risk, though they're not home free either. And there will be some other companies who can figure out how to scrape together the pennies that they're given as licensing fees by the LLMs along with the pennies they make per user on showing ads to the people who do still show up on their sites.

(30:55):

But I think it's going to keep getting tighter for publishers as it has been getting tighter for publishers for decades.

Marcus Johnson (31:03):

Vote time. Yory.

Yory Wurmser (31:07):

I mean, I kind of made this prediction right at the end of last year, so I'm in. I mean, it's totally very convincing and you're much more fleshed out. I'm totally in on this one.

Marcus Johnson (31:20):

Suzy?

Suzy Davidkhanian (31:20):

I'm a no.

Marcus Johnson (31:23):

I'm out just because I don't think it will happen this year because it's already April. Yeah, I think it's definitely possible, but I think because of the timeline, I'm out. But that means drum roll now. We didn't need one earlier, but we can have one now to build suspense. But if everyone's been counting, they know that Suzy wins today with one and a half points.

Suzy Davidkhanian (31:47):

This is my first time.

Marcus Johnson (31:47):

A very low score. It's kind of like a soccer game if they give out half points. 1.5 to Suzy and Abercrombie evolving beyond retail into a lifestyle style brand. Nate had one point. Google's starting to pay for its content on its AI uses. And Yory's had half a point for Apple delivers on its vision of Apple intelligence. Well played folks. That's what we've got time for for today's episode. Thank you so much to my guests. Thank you first to Suzy, today's winner.

Suzy Davidkhanian (32:16):

Thanks for having me.

Marcus Johnson (32:17):

Of course, of course. Thank you to Nate.

Nate Elliott (32:18):

[foreign language 00:32:2-]

Marcus Johnson (32:19):

Always because you're going to Germany soon. Is that why?

Nate Elliott (32:25):

Yes.

Marcus Johnson (32:29):

Okay. I just got it. Yory, thanks for being here, Frank.

Yory Wurmser (32:30):

Always great to be here.

Marcus Johnson (32:31):

Yes, Cindy. Thank you to the whole production crew, of course. In the background, Danny, Lance, and Luigi, yes, in the background helping us out with this one. So thank you so much to those guys. And thank you to everyone for listening in to Behind Numbers and EMARKETER podcast made possible by Verve. Have good weekends. That's it. We'll see you Monday.