Old MacDonald had A Farm, AI-AI-O
Last week’s OpenAI announcement of their Pulse Personal Assistant is significant and may usher in an era of ad supported agents. Meanwhile brands are considering Answer Engine Optimisation as the successor to Search Engine Optimisation.
And from his farm he sold great cheese , AI-AI-O
In the old days you’d go to the local market to buy Farmer MacDonald’s cheese. More recently if Farmer Macdonald is digitally savvy and nationally recognised you might go directly to his website to buy his cheese. But if you couldn’t remember which particular clan he came from, or just wanted some generally recognised great cheese, you would start by Googling ‘who makes the best cheese in the UK?’
Provided Farmer MacDonald is prominent on the results page, you might follow the link to his website to negotiate the vending of some cheesy comestibles.
For many products, featuring on the internet’s most viewed page, i.e. Google’s search page, is imperative. You can pay for the privilege by bidding for one of the ad slots that surround the search results for any query that contains a specific word or phrase. In Farmer Macdonald’s case he might bid for a slot around queries containing ‘British Cheese’, ‘Scottish cheesemakers’, or possibly ‘cheesy comestibles’. The problem for vendors is that those slots are relatively expensive so your ad needs to stand out amongst all the other ads for cheese, and the ultimate online purchase needs to be painless. Otherwise , you spend mor on advertising than you earn through satisfying the British love for delicious fermented curd.
Furthermore, some consumers, including me, rarely click on ads rather than genuine search results because I have no way of knowing whether the product in an ad has any merit whatsoever. Over the years, despite Google’s stated position that ads are clearly differentiated from search results, the boundaries have blurred. There is still a small distinguishing label against ads, but the proliferation of favicons (small logos) against websites in the search results as well as in ads contributes to casual users often clicking on ads which they assume are search results. Extremely unusually, it’s easier for me to differentiate because there is a spoken boundary at the start of the search results, which is not visible to sighted uses. I’ll take that as a small win.
For brands, the alternative to buying ad slots is to ensure your product is right at the top of the genuine search results. You cannot pay for this privilege and Google are quite secretive about the ranking algorithm which they constantly tweak. But many things are known to influence the ranking and a whole industry of SEO (Search Engine Optimisation) consultants exists to help with that. In the early days there were many, many tricks employed by SEO consultants to get an artificially high ranking even if the product was not well regarded by consumers. These days the Google algorithm filters out these lazy tricks and does a great job of ranking the results based on fairer metrics such as reviews by reputable publications, references in media articles or links to the brand from other independent websites. Effective SEO today means executing a holistic digital marketing campaign which naturally brings a brand to the top of the search engine rankings.
But everything is about to change. The name of the game is now variously AI Optimisation (AIO), Generative Engine Optimisation (GEO) or Answer Engine Optimisation (AEO). ‘Answer Engine’ in the AEO acronym simply means ChatGPT, Claude, Grok, Google Gemini or other Large Language Models. Although I couldn’t resist using AIO in this post’s title I’ll use the more specific AEO henceforth until we see which acronym wins out.
AEO matters as users abandon raw searches and instead just ask their favourite Answer Engine for recommendations. This will soon also include the Answer engine completing the purchase on their behalf, and presumably earning commission.
For brands it’s critical that “Answer Engines fairly surface the brand’s product. Setting aside just paying the Answer agent provider for preferential treatment, optimising your online presence and marketing with respect to Answer Engines rather than Search Engines feels important, although it is not obvious to me that there is a big difference between high quality SEO and high quality AEO. Under the covers Answer Engines use search engines to discover recent material not in their pre-training data so search result rankings do still matter. But maybe a strong presence in last year’s pre-training data (scraped from the web) will be more important in answering questions than ranking in today’s searches.
Last week, Open AI announced a personal assistant Pulse and their CEO Sam Altman’s enthusiasm for the product included, ‘In regular chat, you could mention “I’d like to go visit Bora Bora someday” […] and in the future you might get useful updates’.
The announcement is careful to frame the unsolicited suggestions from Pulse as being ultra personalised and only relating to topics where you have expressed interest. Phrases like ‘Meant to work for you, not to keep you scrolling’ in the announcement illustrate how aware they are of the dangerous territory they are entering.
To date Answer Engines have been blissfully free from advertising. But the opportunities do feel endless for Pulse to flood you with ads for (allegedly) cheap flights to Tahiti, (unavailable) discounts on eye-wateringly expensive hotels and designer swimwear you don’t need for your imminent trip.
Historically Altman has expressed a dislike for advertising. But it’s worth remembering that the Google founders were also strongly opposed to advertising when they founded the company in 1998; "We expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers." — Brin & Page, The Anatomy of a Large-Scale Hypertextual Web Search Engine (1998).
But many millions of visitors equals potential for many millions of advertising dollars and the commercial imperative became overwhelming. The introduction of pay per click ads minted Page and Brin as billionaires in the 2004 Google IPO. If like ex-Microsoft CEO Steve Ballmer, they had never sold any of their company’s stock, then Page and Brin would now very comfortably rank #1 and #2 on the world’s rich list. That’s a facile observation because ads are not Google’s only source of revenue and also if Gates had retained all his post-IPO MS stock he would have been a trillionaire 4 years ago. But nonetheless, the thought experiment does illustrate the staggering wealth the Pay Per Click model has generated for Google shareholders.
So with the huge amount of funding OpenAI has raised to date, it’s unsurprising that Altman has noticeably softened his stance on ads this year, hinting at an Ad supported free version of ChatGPT
The Pulse personal assistant may be an important piece of Altman’s plans to transition ChatGPT from a very deep money black hole into a Google-style golden money tree.
I have little doubt that ads will appear in a free version of Pulse in due course. Assuming there is also an ad free Pro subscription, I do wonder how much I will have to pay for Pro and whether it will be as wise and unbiased in executing my wishes as my living and breathing human PA. She never tried to sell me more than a few tickets for the annual school raffle, and she had zero incentive to tempt me with stuff I never Genuinely needed or wanted.
I cannot wait for Hobson to come out of stealth very shortly. The Pulse announcement seriously endorses the value of AI personal assistants, and I’m sure a debate around the value of personal data to agentic personal assistants will run and run over the coming years.