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Cautious, challenged, fragile, hesitant, resilient, sensitive, selective, soft, strategic, squeezed, strained and subdued.
These are all words used by executives to describe customers during Q3 earnings calls. Some sectors are bucking the trend. Beauty and travel, for example, appear to be doing quite well. But the broad trend for mass market brands is one of stagnating growth, and winning customers means getting scrappy with prices, promotions or portions. On the plus side, it’s not Armageddon. At least, not yet. Except of course for companies that are reliant on the open web — whether that’s publishers or ad tech providers — which are seeing their traffic collapse as a result of AI.
But beyond the slightly dismal headlines, companies are doing lots of interesting things to adapt to new technologies and customer behaviours. Below is an assortment of insights from Q3 that caught our eye.
Brian Chesky wants to bring back the social graph. Airbnb’s CEO said the company is taking inspiration from early Facebook and will add more social features to its app. The business rationale is that deeper connections between users will promote trust and lead to more (and more kinds of) transactions. Chesky also said that Airbnb is looking at introducing a loyalty programme.
Southwest claimed to be the first US airline to make flight shopping available through ChatGPT. President and CEO Bob Jordan said: ‘As more customers use AI tools to research, plan, and ultimately book their travel, this allows Southwest to engage earlier in the decision-making process and create a more seamless path from trip planning to booking’.
The global average price per ad on Meta platforms increased 14% year on year. In the US and Canada, specifically, it increased 23%, while in Europe it only rose by 10%. Meta claims that the increases were driven by the improved performance of ads and improved macro conditions. Meanwhile, average price per ad at Pinterest fell 4% in Q3. Swings and roundabouts, eh?
McDonald’s CEO, Chris Kempczinski, agreed with an analyst that the brand had failed to make the most of its massive marketing budget. Kempczinski said that the company would make more effort to use its size to generate ‘talk value’ and drive ‘brand love’. McDonald’s CFO, Ian Borden, said that Q3 had been a soft consumer environment, particularly in Europe. To appeal to cost-conscious customers, the brand is experimenting with more entry-level meal bundles.
During Halloween week, Uber and Uber Eats fulfilled a combined 320 million trips, according to CFO Balaji Krishnamurthy, who added that only 500 of the Uber Eats orders and four of the regular rides came from AI agents. Hilton’s CEO, Christopher Nassetta, also described bookings from AI agents as ‘insignificant’ at the moment, but added nonetheless that they are the future.
Alphabet’s chief business officer, Philipp Schindler, admitted that the rise in AI Mode queries was hampering search revenue growth at Google because of the ‘lower monetization we were seeing in AI Mode’. Although, he added that the company still feels ‘very good about our trajectory here’.
Zeta Global’s CEO, David Steinberg, said the changes taking place at Google are benefiting his ad-tech business. ‘As Google continues to answer more and more of the queries on their platform through Gemini on their own platform, the cost per click has gotten to the point of diminishing marginal return for a lot of advertisers,’ he said. ‘This is not to say that Google is not an amazing company. But for the first time that we’ve been doing this — and we’ve been doing this a long time — we're starting to see meaningful [amounts of] budget move to Zeta from what was in search originally.’
AB InBev now requires all of its commercial leaders to spend at least 30 hours per year in face-to-face interactions with customers. This anecdote came from CMO Marcel Marcondes, during his talk at the Association of National Advertisers’ Masters of Marketing conference in October, rather than an earnings call. Marcondes said that the company was inspired by pilots, who must log a certain number of flight hours to get their licence. ‘That’s the philosophy we have for the people running our brands,’ he said. ‘They need consumer hours, otherwise that plane will be in danger.’ Marcondes added that AB InBev uses the information collected from these chats to create synthetic audiences, from which the company extracts customer insights.
In October, search traffic to Reddit fell on average by 1 million referrals each week. If the trend continues, Reddit’s daily active unique users could fall by ‘a low double-digit percentage’ in the fourth quarter, according to CEO Steve Huffman. In response to the assault on traffic by AI overviews, Reddit is moving towards becoming a ‘logged-in-only experience’.
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