How AI is changing the advertising game
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Inflation cooled this winter, but will it warm up in the spring? For Marketplace, I'm Novosafo, and for David Brancaccio. Later this week, we'll get the latest reading of the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures Price Index. We already have some encouraging news for January. A separate measure, the Consumer Price Index, rose at a lower-than-expected pace of 2.4% on an annual basis. But the devils in the details sent us out those details. We're joined by Lauren Seidel-Baker of ITR Economics. Welcome. Thank you. So Friday's report, was that encouraging to you?
Yes, it was good that we didn't see a more rapid pickup in inflation. But for the average consumer out there who might be feeling squeezed by these higher prices, I want to be very clear, this is not a price trend that prices are going down on an outright basis. This is just saying that prices are rising by a slower amount than had been expected. So there still is a lot of strain across certain ends of the income spectrum. But from a policy point of view, yes, we'd do like to see that number not going up quite so high.
So a lot of the pullback in inflation on Friday was attributed to lower energy prices. Gasoline prices are down more than 3%. Other costs, though, are still going up, right?
Yes, and even within the energy segment of inflation, gas prices are down due to where the global oil market is today, but electricity costs are much higher due to the electrification of just about everything and all of that AI investment, the data centers that are sopping up so much energy. So even within that sector, we could expect to see when oil prices stabilize, there's much more upside kind of built in beneath the surface today.
Now, the Wall Street Journal was out with a story that a lot of companies are planning on more price increases due to tariffs after pausing during the holiday shopping season. Should we expect to see price increases pick up again in the months ahead?
they want to see their bottom line increase. So passing through more of that tariff, we'll probably see that in the next couple of months. I think the overall impact of tariffs, it likely peaks in the relatively near term, unless, who knows, maybe we get new tariffs put in place. I wouldn't be the one to say. But for the average household, again, these are constant pressures pushing up on our budgets.
Lauren Seidel Baker of ITR Economics, thank you very much.
Thank you.
Markets have seesawed over the last few weeks over fears that artificial intelligence will soon disrupt several industries, including software and financial services. AI could also disrupt online advertising. And for more on that, Marketplace with Sibri Beneshour spoke with Gil Luria, head of technology research at the financial services firm D.A. Davidson.
So traditionally, we search for something on Google, see ads, click on some websites, see more ads. Now we just ask AI, how big of a problem is that for advertisers?
It's a problem because the world is going to change a lot for them. We've really fine-tuned the system that you're talking about. And now we're throwing a wrench into all of that and saying, actually, people aren't interacting with the web in the same way they used to. which means a whole completely different type of interaction that you are all going to have to adjust to in terms of what ads you present, how you present them, how you pay for them, how much you pay for them.
Yeah, I mean, we have seen open AI as testing out ads. Is that the future or what else do you think we're going to see here?
We will have ads within the free tiers of ChatGPT and Gemini. That's almost a certainty because they need to pay for it somehow. OpenAI has laid some ground rules for what they will and won't do within ads. But it's going to be a pretty tricky situation for them to navigate because right now we're mostly having these AI chats without any advertising exposure. And as that changes, they need to make sure consumers are comfortable.
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