Traffic is down, generative AI will make it worse

It’s Friday. Festive heads-up! 🎉 This newsletter is our last blast until January. Catch you on the flip side of the holidays! 🎄✨

DTC's multichannel surge

In the DTC realm of 2023, a seismic shift unfolded. Brands that once swore by a strictly digital existence are now embracing a new reality.

Ditching the digital-only dogma: Allbirds, Casper, and Madison Reed led the charge, ditching the dogma of online exclusivity. Brick-and-mortar and wholesale collaborations became the new normal.

Wholesale rethink: Allbirds CEO Joey Zwillinger dropped a truth bomb in a Q3 call, stating that wholesale isn't just about profit sharing; it's a strategic move to amplify brand presence. The equation shifted, sacrificing a slice of margin for marketing mileage.

Diverse tactics, same goal: On stuck to its direct sales guns, but Figs and Warby Parker went all-in on physical stores. The takeaway? 'Direct' isn't confined to a website; it's about keeping the customer connection intact, be it in-store or online.

The DTC script got a rewrite in 2023. It's no longer about an exclusive online club. Instead, brands are rewriting the rules, dancing between digital, wholesale, and storefronts. In this dynamic dance, success isn't just a transaction; it's a relationship, no matter where it unfolds.

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The paradigm shifts toward data for marketers

Amidst the AI landscape, marketers are increasingly gravitating towards data-driven strategies, fueled by the accessibility exemplified in generative AI, such as OpenAI's ChatGPT. This shift democratizes AI, enabling marketers without advanced technical backgrounds to unlock its potential.

Increased adoption: Survey results reveal a 12% surge in Natural Language Processing (NLP) and AI adoption among marketers from 2022 to 2023, propelled by public engagement with platforms like ChatGPT.

Diverse applications: Marketers are leveraging AI for chatbots, copy generation, and social media listening, seizing advancements that enhance language models and streamline tasks.

Productivity gains: AI adoption is boosting productivity, with tools like ChatGPT integrated into systems for efficient content creation and customer engagement.

AI in data analysis: The democratization of data analysis is evident as marketers shift from building in-house AI tools to training third-party algorithms, reflecting a pragmatic approach to sophisticated solutions.

Model proliferation: Intense competition among tech companies is driving the launch of new AI models, providing marketers with diverse tools featuring unique features.

Regulatory challenges: Despite rapid adoption, regulatory uncertainties, particularly regarding copyright issues, pose challenges actively addressed by legislators.

The dynamic landscape of AI in marketing, marked by increased adoption, diverse applications, and evolving models, necessitates a balance between innovation and responsible usage. Marketers must adapt to a future shaped by technological advancements and regulatory considerations.

Traffic is down, generative AI will make it worse

Publishers are grappling with a traffic crisis as the traditional allure of websites wanes, leaving them with a fraction of their former audience. The decline in referral traffic from search and social media is exacerbating the industry's struggles, resulting in significant job losses. The emergence of generative AI-powered search algorithms raises concerns about irreparable damage, especially as social platforms become reluctant to redirect users outside their ecosystems.

• Shifting landscape: The era of "destination websites" is fading, pushing publishers like BuzzFeed to explore generative AI and novel formats to retain user engagement.

• Struggle for attention: General-interest publishers face an uphill battle in differentiating themselves amidst a cacophony of digital voices, leading to a quest for new strategies.

• Evolution of social platforms: Social platforms, once vital for audience attention, are now hesitant to redirect users, impacting publishers' ability to drive traffic and ad revenue.

• Walled gardens dilemma: Dependence on major tech platforms, such as Google, poses risks as these giants prioritize their interests over publisher partnerships.

• Google's dominance and risks: The decline in Google traffic and the introduction of Search Generative Experience (SGE) using generative AI could further erode publishers' referral traffic.

In navigating this challenging landscape, publishers must focus on compelling content, direct entry, and newsletters to foster reader relationships. Leveraging generative AI tools and monetizing first-party data provides a counterstrategy against the dominance of tech giants. Empowering content creators is crucial in navigating the evolving dynamics of the publishing industry.

Reading list…

• How co-branded giveaways from Olipop, Olly and Not Your Mother’s Haircare attract new customers (AdAge)

• The biggest brand fails of 2023, and what they taught us (AdWeek)

• How DTC brands are testing the waters with Flip (Modern Retail)