I recently needed to have a hot water expansion tank installed in my house. The first plumber who came to mind is widely advertised on local radio. The company’s online reviews suggest that they do good work, but one added that they are expensive—and it’s probably because they have radio ads running at all hours.

Remember that, from a quality management perspective:
• Anything that doesn’t add value to the supply chain is waste. Its cost must be reflected by higher prices, lower wages, lower profits, or a combination of these things.
• Anything that annoys the customer, such as ads that are invasive and can’t be skipped, is of negative value and utility, and contributes to poor quality.

Traditional advertising costs a supply chain’s stakeholders money, but it doesn’t add value or utility. It’s actually a holdover from times when, if you didn’t advertise in your local newspaper, nobody outside your neighborhood would even know your business existed. People were, and are, free to discard the classified advertising section unread, but prior to the internet they had to read it if they needed something.

Even when radio and television became commonplace, advertisements were about the only way, aside from word of mouth, that potential customers could find sellers to meet their needs. The internet has changed that situation to the extent that most sellers need to rethink their approach. Although ad-blocking applications are widely popular, customers who have unfilled needs will send their robots to talk to the sellers’ robots—if the sellers have them.

The key takeaway from this article is that if you’re a seller, your robot had better be able to serve potential customers—or they (or their robots) will find somebody else who will.

The internet’s footmen are coming

“My robot will talk to your robot” is simply today’s variant on the behavior of aristocrats who didn’t want to waste their time on business, shopping, and other mundane activities.

The British television drama Sharpe’s Regiment, set in the 19th century, includes an example in which two aristocratic villains have the following conversation regarding incriminating papers:
“My footman has the books.”
“Then give them [to] my footman.”

The servants handle the books; their employers don’t even touch them. This could, however, have depicted completely lawful and respectable business transactions in that era as well.

The same aristocrats also regarded it as beneath them to do most of their own shopping and delegated this task to servants as well. The internet has now positioned almost everybody, regardless of his or her socioeconomic status, to behave like those aristocrats when it comes to advertising. We can proclaim, “Don’t show me your ads on YouTube, social media platforms, or television; if I want something, my robot will talk to your robot.”

The Harvard Business Review (Jur Gaarlandt, Wesley Korver, Nathan Furr, and Andrew Shipilov) says, “AI agents will search for consumer goods more broadly, swiftly, and comprehensively than humans. To compete in this new environment, brands and retailers will have to embrace AI agent optimization (AAO)....”

In fact, the handwriting was on the wall even before radio and television ads existed. In 1994, Jeff Bezos took the first step toward becoming one of the wealthiest people on earth by founding the online bookstore that would later become Amazon. Amazon, and now Wal-Mart and numerous other platforms, enable users to shop by keyword, and often with specified criteria such as price ranges and buyer rating rankings.

The Montgomery Ward and Sears mail-order catalogs were the Amazon of the 19th century, enabling people in remote areas to buy things that weren’t available locally. (This was made possible by the U.S. Postal Service and a growing railroad system.) Other retailers followed suit. However, unlike later radio, television, and YouTube ads, those catalogs didn’t interject themselves into the content you consumed. They stayed on your shelf until you needed something—or just wanted to daydream about things you didn’t have.

The Amazon search engine is far from perfect. It often returns, at least in my experience, results only remotely related to the search keywords, with sponsored listings pushed to the top. For example, I recently tried to find an electronic car air cleaner that doesn’t produce ozone. Ozone is harmful to people and, even if generated when the car is unoccupied, possibly harmful to the fabrics and plastics in the car. I wasted a lot of time on Amazon before I asked ChatGPT to find what I needed; it returned some brand names that are certified as ozone-free.

The takeaway is that people can now go to ChatGPT or some other AI to do product research instead of watching ads or even searching Amazon, Wal-Mart, or a similar website.

Real estate and automobiles

Local papers still feature real estate ads, and they probably cost a lot of money. But how many people actually read them for anything other than entertainment? A home purchase is something that happens only once or twice in most people’s lifetimes, so ads aren’t going to suddenly create a desire to buy a house.

Suppose, however, I do need a house. If I put “find local homes for sale” in Google’s search bar, the AI responds, “To find homes for sale in Wilkes-Barre, Pennsylvania, you can utilize online real estate platforms like Zillow, Realtor.com, and Trulia, or consult with a local real estate agent....” If I put my ZIP code into the search bar at Realtor.com or Zillow, I get an extensive list of houses for sale that I can sort by various criteria. This list is far more extensive than what I’ll find by looking at a newspaper’s classified ads.

TryHoma is a house-shopping AI platform currently available only in Florida. But the fact this is possible means the model will probably be adopted elsewhere, and it could pose a threat to traditional realtors as well. As the site says, “Look up any home, calculate your best offer, and submit on official forms. No agent required.”

The same goes for car advertising, the cost of which is built into the price of new and possibly some used vehicles. The car dealer might add an advertising fee that I would refuse to pay because it adds no utility to my purchase; I don’t get a better car by paying a fee ahead of time. I doubt that car ads create a sudden desire in most people to buy something that costs $35,000 or more new, and even tens of thousands of dollars when a couple of years old.

But suppose something goes wrong with my current vehicle that that can’t be repaired. I can go straight to Autotrader.com, Edmunds, or Carvana, enter my zip code, and find thousands of vehicles for sale in my area. I can add criteria such as model year, noting that a used car with a couple of years and perhaps 40,000 miles on it still has most of its useful life remaining but costs far less than a new one. There are also AI-powered car shopping assistants such as CoPilot and Car Gurus that seem to make traditional advertising obsolete.

That means sellers can advertise all they want, even raise their prices to pay for the advertising, but will come in as noncompetitive if my AI servant or footman discovers them at all—and these footmen are now widely available. In contrast, pushing ads to unreceptive audiences is a good way to get them all sent to the internet’s cornfield.

Do ads catch customers or sellers?

Ronnie Garrison, writer of a fishing blog, says that fancy lures are designed to catch fishermen rather than fish. It’s also well known that fancy, decorated dog treats are designed more for people than their dogs. Humans are among the few animals that care about the appearance of their food; a dog cares only what the food smells like and will down it as rapidly as possible. “Gourmet” meals and treats are pure markup and waste.

It’s also well known that fancy, decorated dog treats are designed more for people than their dogs. 

Similarly, the purpose of an advertising platform, at least ostensibly, is to put customers into contact with the sellers’ products or services. This is largely true of trade journals and sites like Quality, Quality Digest, and Industry Week, whose audiences are actually looking for the solutions advertised there. These sites also host webinars with valuable information for the attendees, and many of these are informative advertisements for the presenters’ products or services. This doesn’t guarantee that viewers won’t select somebody else, but it does get visibility for the presenter’s company.

In contrast, YouTube and other platforms interject ads into videos or feeds regardless of the viewer’s interest, and charge the sellers by impression, or per thousand impressions, i.e., any time an ad is displayed. Cost is measured in cost per mille (thousand) or cost per view (CPV). Whether the viewer is interested in the ad or buys anything seems irrelevant.

How can platforms make ads valuable to users?

So how can YouTube and content providers make money? Few people object to noninvasive banner ads that appear off to the side. The question still arises, though, as to whether they will result in any sales. Advertisers might be more receptive to paying per click-through than per impression. If the ads are relevant to the content, they might get better results.

On the other hand, informative videos are a good way to generate sales (even though they don’t make money for the social media platform, as far as I know). Facebook Reels are an excellent example. I’ve actually purchased movie DVDs (from Amazon and eBay) after seeing some movie scenes there.

The Ridings Law Group PC posts numerous videos of free legal advice, thus getting its name out and quite possibly gaining clients. In this case, the advertiser and content creator are the same, and they give you something useful in exchange for your time. An attorney on a local talk show gives legal advice in response to questions, thus getting his name into widespread circulation. The same goes for free webinars on quality and metrology, which exchange information for visibility.

Summary

Advertising is a cost, and sellers need to make sure it serves and doesn’t antagonize prospective buyers. Targeted advertising in hard copy and online trade publications informs people with likely needs, while scattershot ads do not. Free educational presentations gain visibility and potential customers as well.

Meanwhile, internet marketplaces have been around for decades, and AI-powered shopping agents are now putting potential buyers into contact with sellers. Their robots will talk to the sellers’ robots—so sellers need to prepare accordingly.