The AI Adoption Gap Between Businesses and Consumers
Almost all business are using AI in some respect, but only a third of consumers are. Is that a problem?
Let’s start with a freezing cold take: Artificial Intelligence is here, and it is here to stay. I often think about the hype around blockchain and the metaverse and how quickly it ramped up, and how just as quickly it died down. Blockchain’s downfall was that its main use cases (logistics, at least as this newsletter sees it) are unsexy and mostly B2B-focused (unless, of course, you’re into JPEGs of primates.) The metaverse’s downfall was, put simply, its complete uselessness for just about anything. Plus, we’d already tried it with Second Life - and while that had its moment, outside of a small group of devoted followers, it didn’t really have lasting power.
AI, however, will not suffer the post-hype hangover of its Web3 cousins. As Rishad Tobaccowala points out, AI may well be under-hyped (and RT rarely misses.) In any event, even if you’re anti-AI, you’re likely still using it as its becoming embedded in much of what we do on a daily basis, whether we like it or not.
The Business/Consumer Disconnect
In the past, this newsletter has delved into how consumers view AI and its promises and pitfalls. Bain and Company has recently taken this a step further and has broken AI consumer users into five archetypes. It’s an interesting look at some subgroups of AI users and is worth the quick read.
But there was one stat - thrown out almost as an aside - that piqued TDNBW’s interest:
Businesses have embraced generative AI, with 95% of US and European companies actively using it, according to Bain & Company’s latest research.
Consumers, however, remain cautious. While interest is growing, only 35% say they use generative AI, according to a December 2024 Bain survey—though many likely interact with it unknowingly.
That is a very large disconnect between businesses and consumers when it comes to using AI (or, at least, purposefully using AI as consumers are very likely actually using it without knowing it.) This creates a potential chasm, of which businesses need to remain wary. The last thing they should do is usher consumers towards a product that is advertised as (or otherwise clearly) powered by AI that turns consumers off.
This Isn’t Unprecedented
While not necessarily unprecedented, this phenomenon is unique in that a widely available technology like generative AI and LLMs is being embraced by private sector businesses well before consumers themselves. I like to use the analogy of ordering on a tablet at coffee shops and QSRs - those did not roll out until many, many years after the technology was introduced and everyone, including your grandma, had a basic familiarity with it.
Can you imagine what would have happened if in the spring of 2010 your cantankerous grandfather rolled up to McDonald’s to buy a Number 1 breakfast only to realize the thing standing between his egg mcmuffin and coffee was a tablet? There would have been riots in the streets.
But with time, we’ve come to accept ordering on tablets as normal SOP at QSRs, and even at decent restaurants. The thing we as humans tend to complain about isn’t the absence of human interaction in what used to be a proper face-to-face, but the audacity for the machine itself to be asking for a tip (which, to be fair, is ludicrous on its face and furthers a ridiculous tipping culture that asks a consumer to pay a living wage to an employee base they don’t actually employ.)
And that’s a key point - it’s the cost-cutting aspect of tablets at McD’s that upset people, not the fact that we’re no longer talking to a smartass 16-year-old who would draw on some of his experiences to write sarcastic asides on the internet years later (at least, if you ordered at the 128 South McDonald’s in the summers of 2002 and 2003.) It’s the fact that consumers know this new technology has been implemented not because it’s better, but because it’s cheaper. And that (justifiably) builds resentment.
Look to Client Services for the Answers
This newsletter would argue, however, that AI actually has the potential to improve the relationship between businesses and consumers in a way that tablets at your local fast food joint do not. Smarter people than I have argued that AI may actually help rebuild a middle class. And while I believe that’s a bit optimistic, I do believe its widespread adoption by corporations should make human labor more valuable (and, by logic, more expensive in the form of higher wages.)
So let’s pretend that the coming AI revolution on the business side will spur greater quality of life (or, at least, not completely ruin it.) The pesky issue of this disconnect between business and consumer attitudes towards it remains. It is not new, however, and there are tangible ways to bridge it. The advertising business is an excellent example of this.
While it has become more geographically distributed, the industry is still based in neo-liberal bastions like Boston, New York, Chicago, and San Francisco. Yet the industry markets all types of products to all types of people, even if the creatives and account folks are not everyday users. It’s certainly not every brand, and there are times when agencies are out of their depth on certain products, but as a general rule good agency teams are smart enough to understand a product and consumer even if they don’t use it or belong to the target audience.
How do they do this? They put themselves in the consumers’ shoes, in myriad ways. The company this newsletter calls home has spent of $5 billion dollars on data to do just that (and do it well, though I am biased.) But data and audience segmentation and advanced analytics are simply one side of the coin.
Even if it’s not an everyday thing, they still put themselves in the target consumer’s mindset to try to get a feel for it. As anecdotal evidence, this newsletter has found itself in exurban Indiana walking through a Jewel Osco to try out pre-sliced deli meat in order to try to get a glimpse of potential consumer sentiment in the ever-difficult grocery category - and I’m not even in account or creative. Does it give you a full picture? No. But it’s certainly better than deriving that kind of experience solely from a spreadsheet or SQL query.
Don’t Jurassic Park It
Just because something can be done, does not mean it should be done. Implementing AI agents into a consumer purchase journey, or adding a chat bot that continually bugs visitors to your website, or adding AI-enablement in your product shouldn't be a forgone conclusion. It should be an intentional act, approached with consideration of removing friction from customer and driving top line sales - not to check off a box for AI usage or goose the bottom line with employee replacement.
Before turning to consumer-facing AI, ask yourself the following questions:
What is the problem I am trying to solve? (More crucially - is there a problem to solve?)
Do existing processes or products address this gap, or do I need to build something net new?
If I do need something new, what value would AI bring to it, if any?
If you’re having trouble nailing down these questions as a business, you might not need AI in your products. If you still think you do even while struggling to answer these, you need to take yourself out of the boardroom and into your consumer’s mindset, walking through the journey where they will be interacting with anything AI-enabled. This way, you can see for yourself the value (or the downfall in the case of the AI-skeptic customer) of this kind of approach.
Grab Bag Sections
WTF “Shut Up Brands”: One of the early posts of this newsletter was about brands taking social or political stances. It was, in a word, cynical (I mean, it’s titled “Shut Up Brands.”) I am sorry to report that this cynicism was well deserved.
The New York Times had an article last week about corporate sponsors backing out of NYC Pride sponsorships thanks to the political climate. To be clear, when human rights are under threat the way they are for our LGBTQ+ compatriots, those who have supported this community’s right to simply exist in the past should be doubling down now that they are at risk.
Not so for some major companies tripping over themselves to take dollars out of NYC Pride sponsorships. The assumption of sponsorships like these is that they tend to be performative, but it’s still disheartening to see how quickly corporations cut and run from their previous support of a vulnerable population. Outside of the moral aspect of all of this, this community has incredible purchasing power. Gives new meaning to the old proverb that scared money don’t make no money.
Album of the Week: We took a look at a seminal country album a few weeks ago in Sturgill Simpson’s Metamodern Sounds in Country Music and marveled at its mastery. Since then, I had been looking for more Simpson in my life and found it in his bluegrass album Cuttin' Grass, Vol. 1: The Butcher Shoppe Sessions.
The album is essentially bluegrass cuts of previous tracks of Simpson’s from his catalogue. You’ll see a lot from Metamodern in the track list. The standout songs come in leadoff track “All Around You,” “Breakers Roar,” “Old King Coal,” and “I Wonder” - the latter of which has an incredible love song chorus culminating in “Tell me, am I the only one / Drinking and cursing your name?”
Give the album a spin this week, preferably with a tall mason jar of rye whiskey. The name you curse is up to you.
Quote of the Week: "When a customer enters my store, forget me. He is king." - John Wanamaker