Episode 82: The end of SEO as we know it? Featuring James Cadwallader of Profound

You're listening to Retail Soundbites.

Hello everyone, and welcome to the Kantar Retail Soundbites podcast for the week of March 31st. I'm Barry Thomas, our senior global thought leader serving clients on global commerce, marketing, and future-tense topics. Thank you so much for tuning in and joining us on every show is my pod partner, Rachel Dalton.

Hi everyone, I'm Rachel Dalton, head of retail insights for North America here at Kantar. Our podcast is intended to share knowledge and insights on both North America and international retail and restaurant verticals. We kick off each podcast with a news and notes section to share innovative and impactful stories from the past 2 weeks. And then we introduce our Kantar experts and/or guest speakers to share insights on critical topics in commerce today. So today we welcome back our guest, James Cadwallader, who's been with us before and we're excited to have him back. He is the CEO of Profound.

All right, Rachel. Well, I'll kick us off with just a weekend highlight. Do want to note, James is just an absolute winner. I mean, just this morning I'm reading an article from The Information, actually posted it on LinkedIn, uh, with some of his quotes on what they're seeing with AI answer engines. And so this is going to just be a fascinating conversation. So on the weekend, Rachel, I'll try to be quick here. You know, Leslie and I own this medical spa called Signature Image Medical Spa, and we were part of an amazing marketing event with Kennesaw State University where they they had basically students from all over the region, you know, all types of schools within the South, Southeast attending this event on Saturday. And so there were speakers and lecturers and SMEs talking about everything from brand positioning to AI and marketing. And we were the title sponsor. And so it was kind of neat, Rachel. There were 11 teams of college students that were presenting ideas on our business. It was so cool.

Wow, that's cool. Built-in thinking there and research for you, which is awesome.

I mean, Rachel, you would have loved it. I mean, the energy, the insight, it was just way, way more than we expected. And my bar was pretty high, so it definitely surpassed it. Just an incredible event. Shout out to Kennesaw State University and Lori and everybody over there. But there were just sort of 3 learnings that were just, I thought, interesting just to share. There's certainly more than this, but I'm just saying 3. One is that 2 of the 11 teams that presented had data science majors working with the marketing team, looking at all of our digital data, presenting very sort of data-backed marketing recommendations. In fact, you know, one of those teams won, no surprise. So that was just good to see, you know, that these, this Gen Z is, they're definitely integrating data science with marketing. Secondly, the path to purchase, you know, coaching on just the digital journey, social media was unbelievable. And so these, you know, young consumers really understood how to connect more effectively just with consumers and especially Gen Z. And they do look to have some services with a med spa. And then I think for any business, you know, the 3 takeaways for us is we have to improve our logo. We got some work to do there. Secondly, we're going to hire somebody professionally to ramp up the digital side. That's the hardest working asset for us 24/7. That thing's just working for us, baby. Right?

Yeah. Yeah, totally.

And then the social media campaigns were as good as any agency I've seen for small business. It was just impressive. So there you go. And all the thank yous to Leslie, who really runs that spa. But KSU is a real sort of marketing factor here in Atlanta. Rachel.

Yeah, amazing. That's so cool, Barry. I love that. I love that story. My weekend was pretty low-key this weekend. We've kind of gotten back to our Friday night pizza and a movie, which is kind of like what I do with my boys on Fridays a lot. We watched Mufasa. So that was kind of fun. And then, um, just saw some friends. And, um, my little guy now, my 8-year-old, is, um, really into our church choir. He sings, uh, in the choir, and the choir is pretty impressive. So, um, he gets some good voice training with that, and he's, he's pretty into it. So, um, so that was Sunday morning. It's always fun to see him up there. So pretty totally low-key weekend, which, which was good. Sometimes you need those.

Yes, I need one of those. And you know, so many stars, uh, musical talent, they started off in church, Rachel. So you never know.

Yeah, good, good Good point. Good point, Barry.

All right, news and notes. Let's kick it off. Six-pack of news and notes. I'm starting off with a story from Investopedia. Americans changing eating habits includes simpler meals out and value grocery stores. So the economy is changing how Americans are eating, no surprise. And consumers are just eating out less and relying more on discount grocers while managing a rising cost of living. Bank of America is all over this article with some great data. They're just talking about how people are shifting, you know, even in restaurants from casual restaurants to fast casual. And QSRs in some cases, more convenience stores, meals are happening just because it is convenient. And they're coming across with incredible price points that are frankly better value in many cases than the big QSR chains. And then at retail, we're just seeing more and more, just like Walmart talks about, buying smaller packages of food. And then restaurants weighed in with Darden Restaurants. You know, they're the big behemoth with Olive Garden, LongHorn Steakhouse, etc. And they're just saying, hey, we're, we're just not serving as many households that have household income of $50,000 and lower. Like, they're just not coming in like they used to. And then the diners that do come in, Rachel, it's all about check management. I mean, there are just fewer appetizers, tap water instead of that Coca-Cola or Pepsi, etc., and just cutting back on dessert. So it's just really interesting. And this article is fantastic on kind of summing it all up.

Yeah, really interesting. I mean, just really speaking to the continued challenges in our economic environment, and people are still budgeting. I think you're seeing that at all income levels really of just paying attention to what you're spending and trying to just be more frugal in general. So Barry, my first article is out of CNBC and it's about TikTok Shop. And I thought this was interesting just because we have the kind of pending date, expiration date coming up on April 5th, which is the date the US government gave to ByteDance, the owner of TikTok, to sell TikTok to an American company or risk being banned in the US. So that's pending. So this article popped up It just talked about TikTok a little bit about its history. It's TikTok Shop in particular, its US operation, operations, which launched in 2023 and already has 47 million shoppers who spend $32 million on average every single day, according to data by Capital One Shopping, which was referenced in this article. TikTok offers not only the low prices that you would see on a Temu, for example, but it's also in this discovery-rich social platform. And social shopping environment that, that a Meta would bring. So it's a perfect combination. And eMarketer was also in this article and reported that TikTok Shop also added more buyers on its platform last year in 2024 as compared with Meta and Pinterest in the same period. One of the reasons we think it's so successful is that, and was pointed to in this article, is that shoppers stay in the app platform versus being directed to an external website to purchase. And that's likely one of the reasons that TikTok Shop is performing well, but also it's TikTok, so it's a place for inspiration and discovery and people love it. Also, its algorithm suggests products based on engagement, which is how it serves up its content to people on the platform as opposed to just looking at shopping habits. And it's also TikTok Shop's created new opportunities for influencers on the platform. So essentially now we're at this place where we're a few days away. It's April 1st. April 5th again is that expiration date. Date. And I think all eyes are kind of watching what will happen with TikTok in a couple of days. So we'll see.

Great story. You know, we've produced some amazing content on just how important TikTok is to brands and retailers. And, you know, Trump has talked overtly about, hey, you know, he sees the value in this because so many of his voters are on the platform. So I can't imagine it's going to shut down. But I guess we'll find out this week, Rachel. All right, I'm going to kick us over to Digiday. Now, you know, Digiday is just a fantastic publication on all things digital, but certainly retail media networks. And they just had a great piece come out on retail media competition, smaller networks versus really the behemoths Amazon and Walmart. And so just, you know, for 2024, overall retail media was about $140 billion in global sales or global business. And You have to remember that about 85% of all of those dollars, they just go to two places. It's so simple. It's Amazon and Walmart, leaving only 15% for the smaller retail media networks. And as Amazon and Walmart continue to grow their networks and their audiences, you know, they do become a bit less unique. So this is an opportunity for smaller retail media networks with their niche audiences to kind of capture business. Brands, generally, per this article and talking to some of the CPG brands, they are eager to diversify their retail media investments, which kind of presents the case for smaller retail media networks. And so what they offer generally is they are more nimble. In many cases, they're providing data more transparently maybe than some of the bigger players. And they can also create sort of customized solutions for individual brands. We have so many of these networks, Rachel, and so if you're one of the smaller or just, you know, if you're not one of the two big, two or three big leaders, you just have to look for meaningful difference, we call it at Kantar, to kind of find your way, right?

Yeah, totally agree, Barry. And it's interesting because we're just about to embark on some business-to-business research where we ask brands and we ask retailers a host of questions on retail media networks. And one of them is, you know, if you can name one emerging network beyond your top top 2, Amazon, Walmart, but even kind of your top 5 in the US, who would that be and why? Because there are some really interesting examples of smaller players that are emerging that either have a specific target market that you can't reach very easily otherwise, or, you know, that may be more open to being more transparent or, you know, working with you more collaboratively as a brand to showcase the metrics that you need to continue to invest more. So there's lots of opportunities and challenges in the retail media network space. So it will be interesting to see kind of who are those new players that kind of can stand up to the big, the big ones. So out of CNN Business, Barry, is the article, and there have been many written on the topic of the Dollar Tree announcement that it's selling Family Dollar, which it purchased about 10 years ago and is now actually selling for $1 billion, which is substantially less than what it paid. I think it was $9 billion that they paid. It will be sold to 2 private equity groups. and the, it's expected that it will, pass through regulations and be approved by next quarter. So it's pretty, the expectation is a pretty short-term sale. Family Dollar has approximately 8,000 stores and has a product assortment that's priced anywhere between $1 and $10 on average. Really a store that appeals to the lower income shopper, in the US market. And it's had a lot of challenges and some of those challenges Dollar Tree really hasn't been able to get, get, get over, things like messy stores, you know, of course higher prices. Challenge with inflation, competition from retailers like Walmart, you know, expanding too, too much too soon. Last year, in fact, Family Dollar announced plans to close about 900 stores and also, you know, that it was for sale. So unfortunately, just this, this purchase didn't work out for Dollar Tree. Dollar Tree expected that the acquisition would help it better compete, but it just turned out it wasn't a fit. It struggled to manage Family Dollar stores and drive them to success.

Yes. You know, Rachel, every time I've been in a Dollar Tree, I really like the price points, the smaller packaging, but the stores look like a hurricane just came through, sadly. So don't you think, I mean, with the right owner and just improving execution operations, I mean, I think this chain could turn around.

What do you think?

Yeah, I mean, I think there's always potential, and especially a store like Family Dollar, it's so well positioned for those really low price points, which is a necessity for, for the lower income consumer. So there, I feel like there's a lot of opportunity there. Just somebody needs to come in and kind of clear, get, get it right. So we'll see what happens.

Totally agree. All right, last story, self-serving here, but I did write a blog which I think is on a pretty interesting topic, and this is heading to North America. Is it here now? Not exactly, but it's coming. The question is just this concept of social walls and how social walls are turning stores into interactive billboards. You know, static store displays are out as retailers usher in social walls more often to make shopping more interactive and immersive. And by showcasing real-time social media content, real-time influencer posts, in real-time UGC, these sort of higher-energy, more immersive digital screens can turn stores and restaurants into more dynamic, ever-changing, frankly, you know, better experiences. And then more than engagement tools, social walls power in-store retail media media, of course, giving brands valuable space for sponsored content and influencer partnerships, and then wiring in social commerce. And so there's 4 examples across the world where this is emerging. Telfar, which is a luxury retailer in New York City, best in class. If you see that, you could, you could certainly, you know, want to want more of that in a retailer. Future Stores, which is that new store in London, which is absolutely amazing. It was designed specifically for the TikTok Gen Z generation and social walls are all over that store. It's pretty awesome. And then Bunnings over in Australia is doing this. And then Outlandish, which we wrote a blog on, which is a super incredible, highly, highly, highly innovative, you know, retail and social concept, also has these social walls. So I just think it's something that we'll, we'll see in more retailers, certainly, Rachel.

Yeah, I mean, really cool. I mean, I think one of the big opportunity areas, as we know, for retailers outside of Amazon is sort with it. How are they going to turn their in-store retail media into something that actually is compelling besides just having screens, which I don't think will really be kind of what brings success to omnichannel retail media. So this is certainly it. I mean, especially, you know, people are shopping, they're on social all the time. Like, this is where the discovery is happening and the shopping in many cases has started. So I think, you know, it will be interesting to see and see how this pans out in the future of that connection of social to store, like the retail feeding social and social feeding retail kind of integration, I think is pretty fascinating. Okay, so just finishing us up, Barry out of Grocery Dive. I love Trader Joe's. I shop there quite frequently. And so I saw this article, it caught my eye. And it's about how Trader Joe's is not at all focused on technology, but still is a very successful grocer. So leaders on on one of Trader Joe's recent podcasts, which is called Inside Trader Joe's, talked about how it drives success. And it just said, you know, we don't have robots in our store. We are focused on the social experience of shopping itself. Trader Joe's is known for its very well-liked store associates and also very helpful store associates who they describe on the podcast as fun to talk to, really helpful, go out of their way to help shoppers in store when they need it. There's a lot of like human-to-human connection and they're smaller spaces as well. So it feels like more community-oriented. Trader Joe's doesn't track its shoppers' habits at all with data, which is like what every— everyone else is doing in the space. Trader Joe's is kind of bucking up against the norm. Instead, they say they just look at their store shelves and they see what they sell. Trader Joe's execs also pointed to retail media, speaking of retail media, being having retail stores employing retail media because they don't have a differentiated shopping experience and they need to attract shoppers to select products and services with technology because they haven't been able to create this differentiated shopping experience which Trader Joe's has. So just really interesting story of how a retailer can be very successful without technology, including no e-commerce platforms, but totally success-focused on that kind of human-to-human connection.

I love this story and it totally contrasts what I wrote about, which is social walls. Like Trader Joe's would look at that and say, what are you doing? We don't need that.

Yeah, exactly.

But I think the common theme here to me, Rachel, is that limited SKU retailers in so many cases are the better retailer. Trader Joe's, Costco, Aldi, Sam's, they don't need retail media. They have such a compelling proposition that that's just noise. And I just think that's a really interesting contrast. That's probably the best build we've ever had on the podcast of like, here's something over on the left and then over on the right. So I just really, really cool contrast there.

All right, Barry. Well, super excited to have James Cadwallader back on our podcast, and he's also joined us before at a previous Kantar event. So super excited he's back again to chat with us. James is the CEO of Profound, It's tryprofound.com, and that's a New York City-based startup revolutionizing how brands manage their presence in AI-generated responses across platforms like ChatGPT, Gemini, Perplexity, and Copilot. Since its launch in August 2024, Profound has become the leader in the emerging category of AI visibility technology, trusted by global brands such as MongoDB, Indeed, Rippling, and Ramp. Before Profound, James co-founded Kyra, kyra.com, which is a martech platform that connects Fortune 500 brands with content creators at scale. So welcome back to our podcast, James. Super excited to have you on again.

Thanks, Rachel. That's a great intro. I appreciate it. I feel like you could, I could just record that and use that over and over again in various scenarios.

Thank you.

Oh my gosh. Well, you know, Rachel, we often talk about startups. Well, goodness gracious. I mean, we are with a young startup leader and I just want to give a shout out out to James. Every time I talk to him, I'm learning something new around marketing and AI. He's helped many of our clients around this sort of new search base, new ways of marketing. And I just want to thank James again. Had me up about, I don't know, a few months ago and just met with Dylan and the team. Rachel, just a bunch of young all-stars. It was like The Matrix in there. Screens are going.

Oh, it's super cool.

I mean, they're reinventing marketing. I mean, it's just amazing. So James, we're just kind of hyped to have you on and like, what's going on at Profound? How's it going? You're growing and it sounds like everything's rocking.

Yeah, well, thanks for having me. Yeah, always stoked to chat with you folks. And yeah, I think it's definitely going. It's 100 miles an hour is probably an understatement. We— yeah, we're based here in New York City. We launched about 7 months ago. And yeah, it's like, it feels like 7 years and 7 days both at the same time. We're a team of 13 now. I imagine if we spoke again in 2 weeks, that number would be closer to 20. Yeah, predominantly an engineering team. My co-founder Dylan, who was previously at Uber, yeah, he, you know, he's really rallying right now because we're in the midst of a sprint where we're looking to sort of move fast towards a big launch that we're anticipating will go live around mid-May. But yeah, I mean, it's very high octane. It's very exhilarating. People ask me sometimes if it's fun. I don't know if fun is the, the, the immediate, the term that immediately springs to mind. I think like exhilarating is more accurate.

And just for folks who may not know, what, you know, tell us a little bit about Profound and what you're doing.

Yeah, sure. To sort of wind back, like how we came across the idea for Profound, it was myself, my co-founder Dylan. We were, we were trying to think of a business to work on. We were at an accelerator in New York City called South Park Commons. Which is a great place. It's like an incubator accelerator program where you, you know, early, minus 1 to 0 is their motto. So it's for, you know, technologists who are trying to think of their next big idea will go and sort of congregate. And it's, you know, they always say there's a fine line between exploring your next idea and just being unemployed. And yeah, it kind of gave us a nice structure to turn up every day and, you know, that we would go to the the studio, which is down near Cooper Square in Manhattan, and essentially just try and think of what to work on. And, you know, this is the beginning of last year, 2024. And what was funny is it was kind of one of those ironic moments where we were using Perplexity nonstop, uh, to research business ideas. So we were looking at all sorts of weird and wonderful ideas. And it was kind of this meta realization where we realized that we actually hadn't used Google for like days as we, as we were researching, or weeks. And yeah, that, that, that was that kind of meta realization, like, huh, well, you know, we weren't using Perplexity because it was novel. We were using it because it was just outright better than traditional search. Like, we were, you know, instead of— for anyone who's not familiar, the idea here is using LLMs as a search alternative, meaning if the old, you know, when ChatGPT first launched, you had the large language model that was pre-trained on a snapshot of the internet for all intents and purposes, and users could query that snapshot of the internet. But it was very much a snapshot of the internet, which is why anyone that's familiar, you'd remember getting that response, you know, as of my last training data. What Perplexity did, or I should say what they pioneered, they're a fantastic team, I have endless respect for that team, they're just one of the best in the world right now, is they had the realization that search requires real-time information. So instead of querying the user, querying the large language model directly, instead a web search would be run and then the user prompt, the original user prompts like, hey, what's the best sneaker I should buy for a marathon? The prompt gets given to Perplexity with maybe somewhere in the region of 5 to 15 web pages that support the prompt that have been derived from the prompt. And then Perplexity uses a large language model as a reasoning engine effectively to decide which parts of the web pages that is being supplied answer the prompt. Then it would just go and synthesize an answer, essentially removing the need to click the blue links in the first place. And this new architecture for us felt super obvious because instead of getting a list of blue links, you simply just get a pre-synthesized answer. And this all sounds very obvious now, but it was a bit less obvious at the beginning of last year. And so myself, myself, my co-founder, we kind of went all in on this and said, hey, we believe in this future. This, this seems obvious to us. Either Perplexity will continue to win here and it will take over everyone is scenario A, or scenario B is that everyone else will realize that this is the future and do the same as them. And I think what we've seen is scenario B unfold as ChatGPT, when an integrated web retrieval. So we have SearchGPT, or just ChatGPT Search now is what it's kind of known as. Um, obviously, you know, everyone else has followed suit. We've seen the same with Gemini and Grok, and, um, even Deepseek, we use web search, and Claude, or Anthropic Claude, introduced web search last week. And I think what this represents really and truly is one of the biggest platform shifts in the history of the internet. Um, traditional search has— is still really the biggest monopoly on the internet. Um, you know, Google captured it in the early 2000s and they haven't let go. Um, and it still accounts for like an inordinate amount of Google's revenue, is still really attributed to search advertising despite lots of new business lines emerging over the years. And this really is the, is the first time that we've seen traditional search come under threat from new players. And I think as we move into this new world, everyone, it, there's a lot of comparison. What I've learned through running Profound is just one of the things I've learned. One of the thousands of things I've learned is just how much human beings love heuristic. We love to look at the past as a way to understand or predict the future. And I think it's not a great— it's not great for when you're thinking about technology because I think what we want to do is look back at traditional search or SEO or SEM and say, okay, this is like that, but for AI, I think there are some paradigm reasons. This is like fundamental reasons. This is completely different. And I'll explain the kind of what I would describe as the foundational reason this is completely different. If you think of traditional search, I mean, the search engines really prior to search engines, there was a literal, a book, like a phone book of websites that you would go to. This is in the late '90s. You'd have a phone book when the internet first launched and you know, you would go through the phone book and type in the URL. And then obviously that, you know, as, as the technology proliferated, it became easier and easier for people to create websites. There are millions of new websites being born every day and it just wasn't going to fit. You know, you couldn't update this book quick enough. So the search engine was born and obviously, you know, there were many search engines before Google, but they introduced PageRank, which really allowed them to to, you know, come to the market with a better product. But fundamentally, what a search engine does is it connects the end user with a website. So if you— or a consumer, in the case of, you know, in this setting where I'm talking to you folks, it connects a consumer with a brand. So if I'm looking for those— that marathon sneaker that I was speaking about, I'll end up on nike.com. I'll go in maybe top of funnel, Nike's publishing content about how to run a good marathon and I triple down maybe over multiple visits. I'll end up converting and buy a pair of marathon shoes from Nike. Google's just connecting. It's a two-party system. In this new world of answer engines, what I, what I pose in why it's so different is because this is a three-party system. You have the end consumer as we had before, you have the brand nike.com, and then sat bang smack in the middle between these two parties is the answer engine, which is like a monolithic opining entity that really captures the relationship with the end consumer. So I just converse with ChatGPT now and follow up. So, you know, if I've got questions around, you know, the particular type of hiking shoe or marathon shoe, and ChatGPT will own that relationship. I don't need to click through into the website. I think this is the biggest kind of mindset shift that every brand needs to understand is you are no longer trying to create— you, you, every brand on the planet is about to lose the majority of touchpoints that they have with the end consumer. They will be taken by these answer engines. And the brand's responsibility now is to communicate thoughtfully your product, your brand values, anything you might want the answer engine to communicate on your behalf has to be communicated to the answer engine. So there's a middleman now for all intents and purposes. So that two-party system versus this three-party system is a fundamental change in the world of marketing. And I think it's going to, it's going to change the, the economics of the internet will change. I think that everything is changing based on this. So brands have to communicate with retrieval agents that are actually crawling the information on behalf of the answer engine so the answer engine can communicate with the end user. It's almost weirdly similar to influencer marketing. To an extent. Think of it like one big monolithic influencer that has opinions and points of view and is talking with 5% of the world's population every week.

Yeah.

Wow, James. I mean, Rachel, we haven't had it put quite like that. I mean, so, you know, what are the brands struggling with? Because, you know, they're making this transition, trying to make this transition to answer engines. They're probably still building a website primarily for human users. Yet your narrative is telling us maybe more importantly, are the crawlers, etc. How are brands responding? How are you helping them?

I mean, I think there's a philosophical one, which is, you know, do you want to get on board or not? Because I, you know, I challenge— I don't know if it's Sundar himself, but I know some of the team at Google have been kind of touting this idea that the click-through rates are huge in answer engines, but I don't know. We're not seeing much data to point towards people clicking out of answer engines, clicking the links that answer engines are providing, which I think maybe, you know, I think might change. There's lots I could speak to there about where we think it will go. But right now, I think people tend to just ask questions, get the answer. If they don't get the answer they want, they send a follow-up question. And if I do find, you know, I think the confusing thing here is if I, you know, say if I'm researching dog food on ChatGPT and I, you know, I use ChatGPT to do the research and I find the dog food that seems to fit the bill, I'll typically go over to Amazon or maybe Google to finish off the purchase right now. So there's this like iceberg of unattributed traffic and commerce that it's just not accounted for and it's very hard to account for it. But yeah, I think brands have this philosophical dilemma, which is, okay, do we allow all of our site to get crawled or scraped, if you want to use a more provocative term, meaning that we will get, in theory, we will show up in the answer engine responses. Or do we want to block the answer engines from extracting the information from our website? Because that's our information, that's our content. We worked hard on that. Why should we let an answer engine just regurgitate it on their behalf? Which I think feels kind of similar maybe in some respects to like streaming and CDs back in the 2010s, that dilemma where, you know, there are certain artists or labels who just didn't want to get on board with what was happening. If you want my knee-jerk reaction, it's probably I wouldn't. I think you're swimming against the tide with this one.

Yeah. So I was earlier, I was going to say, like earlier in the conversation, there's a quote you used, James, which I was like, wow, that's such a powerful quote. I want to pull it out and put it in, in a document where you said something to the effect that every brand is going to lose that immediate connection with their consumer. That's like a powerful statement and it just actually further reinforces the fact that you kind of just have to take the risk and get on board as a brand because you could stand to lose a lot more if you don't. That's kind of what I'm hearing.

Yeah, I think, yeah, you have to, I have to sort of tread a line with, I don't want to, I think it can undermine the point if I get, you know, if I sound too dramatic or like hyperbolic. With these statements, but I do think answer engines are a better technology than search engines. I think getting the answer that you want saves you time and energy rather than having to thumb through blue links yourself. And the better technology, the same as, you know, going back to that streaming and CDs analogy, the better technology tends to win long term. You know, there's always nuance. Yeah, well, the answer engines hallucinate. Well, yeah, that was what we said with CD, you know, with streaming originally, there's a ton of like quality, audio quality loss, right? And people say, yeah, you don't get the same quality as you get with CDs. But everyone knew deep down that it was a better technology and the better technology tends to win over a long enough— because these answer engines are only going to get better. They're only going to get more accurate. They're only going to get— the answers are only going to get richer. And I think probably again, just to continue the analogy or continue the comparison, I think streaming really started to proliferate in 2005, and it really was only in 2015 when CDs started to become niche, or niche as you would say in America. So it might take a decade. I'm not necessarily saying that, hey, all traditional search traffic is going to fall off a cliff this year. I think it's quite reasonable that this could take, you know, half a decade or a decade to really become— and it will be like boiling a frog, right? It will be slow and you probably won't, you probably won't notice it.

Yeah, interesting. I was going to ask you that, what you thought your prediction on the share of traditional search versus, versus a new generative AI-driven search. And it's about 5 to 10 years out, but a slow decline as opposed to it's going to stop automatically.

I think so. I mean, you know, I can see To give you a measured response, I can see a world where it's faster.

Yeah.

You know, we have like Google, Google introducing AI mode this year. ChatGPT is just proliferating, you know, more and more. You know, when I said 5% of the world's population talking to answer engines every week, that was actually an incorrect statement. It's 5% of the world's population talking just to ChatGPT every week. Oh, well, I mean, yeah, their growth is like unheard of. And they've also just become the kind of— they've become ubiquitous. You know, my mom uses ChatGPT. She knows what ChatGPT is. She doesn't— she's not, you know, she's not familiar with Anthropic Claude, or I don't even know if she uses Gemini. Um, and I know that's, that's, that's a huge pressing point because if you— I think Sundar Pichai, the CEO of Google, made quite a profound statement at at the end of last year, which was Gemini to hit 500 million weekly active users by the end of 2025, because it's become like a consumer arms race. But for the last few years, we've had this, an arms race on the foundational model. So who can spend the most on the pre-training or who can spend the most on the data? Everything coming down to the LLM. But really what's happened, there's been this kind of, as all of that's been going on, OpenAI has kind of flanked the competition and really taken the, you know, taken the race by just, by just winning consumer minds. Everyone uses ChatGPT.

Right. James, I wonder if we can talk a little bit about retail media. And with AI search embedded in retail platforms, how do you see it redefining digital shelf strategies and advertising for CPG brands? And wonder if you can talk a little more about that and whether, you know, traditional ad spend will shift towards more AI-driven, you know, intent-based placements.

Yeah. Well, I guess this kind of speaks to that question, Rachel, but it maybe doesn't answer it directly, but I can go back that afterwards. I think one thing that we're going to see possibly this year, probably this year, is shoppability fold into answer engines like ChatGPT. So instead of me clicking out to Amazon or Google to buy the dog food that we just mentioned, right, there will be shop, you know, shoppable UI within ChatGPT. And now the question mark that I have around that, I, I think, you know, there's just a, there's an event horizon that's impossible to see beyond, is will there's, there's kind of two options that seem likely. Either one, there will be a UI, like a dedicated UI. So if I'm, I don't know, Chewy as an example, I will be able to go and set up my brand page or my brand widget of some sort within ChatGPT and list all of my products there and control it like that.

Yeah.

And then the user can, you know, when, when we're talking about dog food, it can, you know, the user can go in and purchase through ChatGPT. The kind of more sci-fi option too is agentic shopping. So actually there's no need for the brands to actually do anything. It's just ChatGPT will just go and send a user agent that's equipped with some sort of virtual credit card or some sort of payment agency so that it can go and shop on the user's behalf and actually just can just carry out the purchase without needing to have the brand onboarded per se. The latter would be more exciting and more interesting. I don't know if it— and arguably like more effective because, you know, then OpenAI wouldn't need to wait for you know, all these brands on board, it can just like rip. It's just you build a piece of technology and it can just go. Um, I'm sure there'd be some sort of like human in the loop approval, etc. So I don't know. Yeah, I think the TL;DR is that I think we're going to see shoppability. But people will shop within ChatGPT. I think people consume media within ChatGPT. Within the— and by ChatGPT, I'm just lazy. I'm using it as a lazy— that could be Grok, that could be Gemini, that could be Perplexity. I mean, Perplexity, about obviously they, for anyone following them, they've, Perplexity has launched Perplexity Pro Shopping. I mean, the team is super innovative. They kind of, they're a little bit of a canary in the coal mine where they tend to give everyone a nice glimpse of what the ChatGPTs of the world are going to roll out. So yeah, I think to speak to your question, yeah, I mean, we Actually, we do a lot of analysis on Amazon Rufus as an example. I can't remember the stat. I probably, I could, yeah, I should probably find the stat or I could send it to you afterwards. Maybe you could put it in like the show notes or something. But there's been some stats that Amazon have released about Rufus saying that it's actually got like super high user adoption. So some of our bigger CPG customers were knocking on the door, knocking on the door of Profound saying that, hey, we want to be able to see what's going on with Rufus responses as well. So we've started tracking Rufus. You know, I think Walmart now has some level of generative search as well. I question if the user behavior— I think there's just a kind of general product question that I have around the likes of Amazon and Walmart. You know, do people really want to have like Is it a conversational environment? Because I consider myself very much an early adopter and like, you know, I'd say I'm usually pretty, a pretty good reflection of what an early adopter profile would look like. And I still use Amazon like Amazon and Walmart like Walmart. Yeah, that could change.

Yeah. Yeah. Gives you more information and makes it more convenient because everything's served up to you, but you may not ask additional questions. You might just say, okay, great, I found, I found what I need directly through Rufus, and that's it. The conversation stops. But yeah, hard to say.

I can see, uh, for sure, I think there's a lot of people that would agree with your thesis that for routine sort of habitual products, still human in the loop, etc., but those purchases are just going to be handled by Gentec. That, you know, that— I mean, please don't waste my time with that. Just that, that'll But the real more sort of in-depth experiential shopping needed comes through these platforms, which become so much more powerful. I mean, don't they? I mean, don't they just like, whoa, if you're a brand, it's a little concerning. I've heard, you know, some big brands we all know well, a bit concerned about that in some of the bigger agency groups as well as they lose influence, which is what you opened up talking about.

I was going to ask, James, because you said earlier, you know, with the Chewy example, that Chewy might have like a widget within like a ChatGPT. Does that mean that there is— there, that would be one way to eliminate the risk of that like lost connection? So Chewy theoretically operating that way will still be able to kind of see the purchases and own that data? I'm curious about the data, the kind first-party data and any risks there from both, well, primarily retailers who have the most robust samples of first-party data, but even some brands. And if you have any thoughts there.

Well, I mean, I think that I wouldn't convolute the two things too much. I still think Chewy is gonna have a sort of P0 question of like, okay, but do we show up? In the first place? If I ask, you know, where's the best place to buy dog food or something, does Chewy get recommended in the response by ChatGPT? And then the second part is like, okay, well, when it does, can I then easily shop Chewy without having to click out of ChatGPT, without having to go and visit their website? And so there's— I think the widget part that we are referring to, or some sort of domain within ChatGPT, kind of will solve for this attribution. Problem right now because I mean, I'm surprised any, you know, we're seeing customers who are getting hundreds of thousands of visits, direct click-throughs directly from ChatGPT. I think that should be, I think it's wise and sagacious to assume that that is tip of the iceberg. I think for every click that you're getting through ChatGPT now, you could probably, it wouldn't be crazy to assume that there's 50 or 100 other people who have not clicked and instead just, you know, dipped out of ChatGPT into a new window on their phone or on their browser and gone directly to Amazon. That's what I do and that's what everyone I know does. We, you know, a lot of the time the sources that are provided as well will be like publications or, you know, citations to blogs, etc., rather than like shoppable links. Um, so yeah, I think we are underestimating the amount of commercial activity that's happening in these answer engines. Um, and people are excited about what they can see. So imagine once we can attribute what they— imagine once we can attribute what they can't see.

Yeah. I think we, we talked a little bit about, I think Barry, we were gonna talk about the death of SEO as we know it. We talked a little bit about that already. You know, looking 5 to 10 years out, maybe traditional search declines and generative AI search increases. But James, anything else you'd want to add to that in terms of, you know, how traditional SEO strategies— will they become obsolete entirely, or any specific things besides just getting on board that brands can do to just ensure they continue to be visible? In sort of this, this world?

I, I definitely don't think SEO will die. Uh, I think quite, quite the contrary. I think potentially, I think there's a kind of, there's a, there's a spectrum of, let's say, you know, SEO types. There's, there's very technical, some of the, some of the, you know, the SEO teams that we deal with, like Mike King at iPoolRank, like super technical, super forward-thinking, super locked into the technology. Um, and yeah, I think that type of SEO specialist will be one of the most sought-out marketers on the planet because I think that, that job, you know, I think SEO has had this kind of like sort of, you know, neglected child in the marketing stack kind of energy surrounding it for some reason. And I think this— there's going to be a new breed of SEO. Let's call it AEO for all intents and purposes, that answer engine optimization or, you know, AI optimization specialist will be a very sexy, sought-after profile of marketer. Because I think how your brand, because of that three-party system that we spoke about, it goes from being, you know, a kind of vitamin to a painkiller. It goes from being a nice-to-have to an absolute must-have for every brand. So I think, yeah, by no means do I think that SEO will die. I think it's going to evolve a lot. And I think the strong, more technical SEO specialists who are out there today are about to become very, very sought after in the marketing space. I think in terms of the actual category itself right now, your AI visibility, it's kind of like, think of it like a pyramid, almost like a sort of like Maslow's hierarchy of needs, but the marketing version where the table stakes there's a table stakes of SEO or search visibility right now because ChatGPT is using Bing's index as an example. Or obviously Google's using its own search, Google search index, or, you know, we're seeing Claude is using Brave's index. So there's a sort of table stakes of are we visible? Are my pages visible in traditional search engines? It doesn't actually matter too much if you're rank 1 or rank 10 or page 1 or page 2. So that, that's, that that doesn't— that's kind of been abstracted away at this point. But you need to be indexed essentially, right, to have any form of AI visibility. So think of that as like kind of table stakes. But then built on top of that, it's like, okay, well, is my content optimized for answer engines rather than human beings? And then on top of that, it's, you know, is there technical optimizations on the page? So, you know, is there You know, a lot of these crawlers don't render JavaScript, so it's very important to ensure that your, your content is schematized well, um, on the backend so that it, the, these retrieval agents can easily and thoughtfully crawl and retrieve the information that they need to retrieve. So it's kind of like everything's built on the foundations of traditional search, but I think over time what we will likely see is it will fork away more and more from traditional search metrics like ChatGPT undoubtedly will, will create their own index at some point, meaning that correlation with Bing, the Bing index will go to zero. Hmm. Right now we, we, right now we've, we just released a bunch of analysis. We see a correlation between ChatGPT visibility and Bing. Visibility somewhere between 12% and 20%. So it's already pretty uncorrelated, but we expect over time that will go to basically zero. Oh yeah.

To me, it feels as if like generative AI search and just the— if you're a brand that's on— I know you said it doesn't matter so much as long as you're indexed, but if you're a brand on page 5 or 6 of the search results, someone isn't scrolling that many pages. It feels as if there's a better opportunity if you get it right with the answer engine piece that you might be more visible than you are today in traditional search.

I see that. Exactly. Right, James?

I mean, you've run these reports for us with these big food and beverage brands and gosh, you see so many of these smaller challenger brands, they're way up there where they shouldn't be really, James, but I guess they move quicker to adjust, right?

That's pretty cool, I think. Yeah. Yeah.

And then, I mean, we, we've, we saw something very cool last week. I'll kind of anonymize it because I don't think I should, but, um, yeah, it was, it was, it was a customer of ours. They were using our platform for a found and they identified, because what we do is we show you what's going on. So we show you how visible you are in the answer engines. So we, we will show you, hey, you tend to show up in 50% of responses around the topics that matter to you, but then we show you why. So we'll show you the citations that are driving that visibility or lack of, um, in your industry. So we'll show you where the answer engines are going to get all the information. You know, if you're Ramp, where are the— aren't you Ramp, the fintech company? Where is ChatGPT going on the internet to answer the questions about best corporate credit cards, for example? So knowing why that's happening is very, very important. Um, and I'm simplifying this, it's a— there's a bit more to it than that, but fundamentally that's the kind of workflow of our customers. So yeah, this customer, the anonymized customer that I was mentioning, the user of Profound, they were digging around in their citations and they found that there was this— it was this one Reddit post. It was just a— it was a— it was a Reddit post that was just driving this inordinate amount of AI traffic. Wow. And it was as simple as they went, but by knowing which Reddit post, it wasn't an obvious one. This Reddit post wasn't like a front page of Google all-star Reddit post. It was like, for all intents and purposes, it looked pretty random. Yeah. And they went in to the Reddit post and dropped, I guess, quite a self-serving comment on the Reddit post and they saw that within 24 hours they saw their AI visibility tick up. I mean, it wasn't like it wasn't— it didn't go through the roof, but it had an instant impact on their AI visibility. And I'm not— and for, for what it's worth, I'm not saying that's like the strategy for everyone. That's not, you know, that's kind of like a bit of a one-off, but it's quite interesting just to see, you know, this, this stuff is very tractable.

Yeah. Um, James, sort of on the, on the flip side of, you know, being findable, if, if you, if you might not be as findable in more traditional search, but just wondered You know, we see AI-driven personalization, we know it enhances convenience, but also does it risk narrowing consumer choices too much? I wonder if you could talk a little bit about the flip side of that and how can retailers and brands ensure that AI search expands discovery rather than reinforcing existing preferences of consumers?

I mean, yeah, I think that's a really, really good one. I think we— again, that, I mean, I'm kind of going back to the philosophies here, or that we, we— everyone is itching to use heuristic on traditional search. Oh yeah, Google's personalized. Yeah, Google's personalized. But what we are about to see in terms of personalization in these answer engines is just a whole new level. Um, and I mean, that on its own is kind of just enough to completely change the landscape for brands in terms of discovery. The way that we approach this, and this is honestly my, this is my honest best response, but it definitely is a bit self-serving for Profound. But we send, we're able to send prompts through different personas. So that's how our customers are. That's one of the ways that our customers are using Profound. So we can send 100,000 prompts as a 35-year-old man from Texas with interests in motorbikes and barbecue, for example, and see how ChatGPT is personalizing the responses to that person versus a 50-year-old woman from California who's interested in knitting. So you start by focusing on— brands should pay attention to this personalization. And think of it as an opportunity. But yeah, I think, you know, this is, this is day zero of that personalization. And once we have generative advertising come to be, I think generative advertising combines two things. It's not just generative. By generative advertising, I mean net new ads being created on the fly that did not exist before. So an ad that didn't exist ever is created net new based on your conversation, Rachel, that you're having with ChatGPT. Right. Combining that generative ad with a conversational user interface, those two things together will be a marketing unlock like we've never seen before. The power of that advertising. Is going to melt people's brains because, you know, being able to— what are these language, you know, large language models, dare I say it, are very good at language and being able to perfectly synthesize a message to a specific user at a specific moment in a conversation when it's when it's that, that exact moment when they want to see an ad or a suggestion will be like nothing we've ever seen before. I believe. I think the generative ads will take a bit. They'll take a bit of time to unfurl that. I can't imagine them coming anytime soon. I agree with you, James.

Coca-Cola CEO Quincy just spoke about this at the Adobe conference. One sort of other take on this would be for a lot of consumers, this could drive paranoia just because of all all this hyper-personalization that is just a bit too surreal for just, you know, a human to kind of deal with it. It does move them to things like live events, etc. But boy, we're just heading into a completely new world. No question, man.

Yeah, it's like one-on-one in the exact moment. So it's like the two together just in terms of targeting. So it's kind of wild to think about. James, just to finish up our conversation, wonder if you can kind of talk big picture. Of what's next in AI search?

I mean, I think we've covered some of it, you know, thinking about shoppability, thinking about generative advertising, thinking about agentic browsing, thinking about, I guess, you know, AX versus UX, the agent experience, like brands preparing their content for agents to be able to navigate, understand, and interpret the information. Will be very important. I think if you want to go bigger picture, I mean, I can go all the way, Rachel. I can take it into— I can go to like Stanley Kubrick levels with this one. I think what we've seen— I mean, we're expecting things like consumer hardware developments, you know, like OpenAI are working with Johnny Iaev's new company on hardware, which is very exciting. It'd be great to see something that either replaces or lives alongside the iPhone that is, you know, built with more, you know, built with Gen AI in mind. I think that'd be very interesting. I'm very interested to see what those, what those guys do. I think Yeah, what we're going to see is just this proliferation of, you know, these— this monolithic entity, which is ChatGPT or Gemini or Grok. I think it may be more fragmented. I don't think we're going to see a monopoly in the same way that we saw in traditional search. I think there might be 5 or 10 big players in this space. And yeah, I think they will capture all consumer attention. When it comes to information retrieval, and brands will have to play ball in this new environment. And if you want to get— if you want my sci-fi take, I think what we're going to see is, is like embodied AI. So I'm talking, you know, humanoid robotics or drones capturing first-party content Because right now, think about it, any information— like, these aren't— the GenAI is not creating net new information. It's just regurgitating content that humans are creating, maybe with AI as a copilot. Humans have to synthesize the ideas or the information. But I do believe at some point in the future, embodied AI will be able to actually capture the information in the same way that a reporter or a journalist would. Um, think about it like that. Um, and I think that, that, that will be very interesting. Um, yeah, well, we live in interesting times. Yeah, that, that, that's maybe 10 years away though, so yeah.

Well, this is an awesome conversation, James. Um, really great to have you on the podcast. Um, I learned a ton, and, uh, Yeah, exciting to kind of see what you're working on next and hope, hope you'll come back again. Appreciate it, pal.

Yeah, thanks so much for having me. And for any brands listening, it's tryprofound.com. Sorry to do the shameless plug, but yeah, we work with some of the biggest brands in the world to help them understand and control their AI presence. It's software, it's some of the best technology in the world when it comes to optimization. So yeah, feel free to reach out.

All right, Barry. Well, that was such an amazing conversation with James. I loved it. Here are our top 5 takeaways for the audience. The first is just talking about AI visibility technology, and James discussed how Profound is revolutionizing brand management through AI-generated responses across platforms like ChatGPT, Gemini, Perplexity, and Copilot. Since its launch in August 2024, Profound has become a leader in AI visibility technology, trusted by many global brands. Number 2, we talked about the shift from traditional search to answer engines, and James emphasized the transition from traditional search engines to answer engines, highlighting the fundamental change from a two-party system, which is consumer and brand, to a three-party system, which is consumer, brand, and the answer engine. Number 3, we talked about the impact on the brand-consumer relationships. And brands are expected to lose direct touchpoints with consumers as answer engines will mediate these interactions. This necessitates brands to communicate effectively with answer engines to maintain visibility. James talked about the advanced level of personalization in AI search, which will significantly change the landscape for brands in terms of discovery and consumer engagement.

And number 4, you know, we learned more about generative advertising. That's it. Generative advertising and shoppability. The potential of generative advertising where ads are created like on the fly based on user conversations was highlighted as a future marketing unlock. And then James predicted that shoppability will be integrated, no question, into the answer engines, allowing users to make purchases directly from platforms like ChatGPT perhaps is sort of doing a bit of this now, and it kind of makes the use of websites with purchasing perhaps a bit less, you know, not needed. And then on the future of sort of SEO and answer engines, traditional SEO will evolve into AI optimization with this sort of new breed of SEO specialists becoming highly sought after that can really adapt to this AI generation. The focus focus will shift, you know, from optimizing content for answer engines rather than human engines. So you're really expecting more traffic, more digital traffic to your sites from AI assistants, bots, and then AI agents in large part, you know, stimulated by the large language models, ChatGPT, etc. So it's definitely a new day in marketing and maybe, you know, your new customer going forward are the large language models. All right, Barry.

Well, that brings us to the end of this episode. Thank you so much again to James Cadwallader for the great discussion. We hope you enjoyed our show. And as always, thanks for listening to the Kantar Retail Soundbites podcast.

And if you would, please reach out to Rachel and I on LinkedIn if you have any questions. We appreciate any reviews you can provide. And just thank you to Victoria for producing and marketing our podcast. And we will see you in 2 weeks.