AI-powered martech news and releases: January 16

Will pure-play AI companies ever be profitable? If OpenAI is any indication, it’s hard to see how.

The problem for any company creating these generative AI systems is that the more people use them, the more they cost. So what would be a success for most businesses is actually a cash drain. Consider: OpenAI’s ChatGPT has more than 300 million weekly active users — more than any other pure GenAI company. It also has the lowest churn rate of these companies, retaining more than 70% of paid subscribers after six months. Sounds good, right?

However, earlier this month, CEO Sam Altman wrote“Crazy thing: We’re losing money on OpenAI pro subscriptions right now! People are using it much more than we expected.” (Pro subscriptions cost $200 per month.)

This is the exact opposite of economies of scale. Instead of costs falling as production increases, they rise. The costs are derived from the computing power used to run ChatGPT. It requires large investments in data centers and huge amounts of electricity to run them.

GenAI companies are hardly the first tech companies to face this problem. It’s endemic to ride-sharing apps like Uber and Lyft and music streamers like Spotify, all of which are now making money. In 2024, Uber and Spotify reported their first profitable years, and Lyft had two profitable quarters.

But … their overhead is much, much lower than GenAI. Spotify turned positive thanks to 2,000 layoffs and a cut in its marketing budget. Last year, OpenAI lost about $5 billion on revenue of $3.7 billion. I doubt OpenAI is spending $1.3 billion on marketing. OpenAI also suffers from the commodification of GenAI. There is no significant difference between the GenAI offerings, which means buyers will look at price first.

Pure play GenAI companies have all the elements of an asset bubble: lots of money coming in, and no clear path to profitability. The same cost issues are persistent games that aren’t clean. Google, Meta, Microsoft and others are making enough money elsewhere that the costs of AI won’t cripple them. However, at some point investors may become nervous about these huge outlays.

And, by the way, The Wall Street Journal reports that Google CEO Sundar Pichai wants 500 million people using the Gemini AI-powered chatbot by the end of this year.

Here’s this week’s roundup of AI-powered martech releases:

• Quad/Graphics introduced At-Home Connect, a direct mail platform that combines the convenience of email with the impact of print marketing. The platform integrated data-driven design and precisely timed messaging to enhance multi-channel marketing campaigns.
• Ardis Technologies incorporated Axle AI Media Asset Management with its DDP storage system. This gives users the tools to generate proxies, organize media assets and use the powerful search features within the DDP ecosystem.
• Simple.fi launched Simpli.fi Autopilot AI, a comprehensive tool that enables advertisers to effectively manage multi-channel campaigns. The platform offers simplicity, control and a pay-as-you-go model with no minimum spend.
• Searchspring in combination with Cleves to create Athos Commerce, an integrated e-commerce product discovery platform. Athos Commerce offers AI-driven search, personalization and sales capabilities.
• Algolia launched Shopping Guides, a content generation tool that uses artificial intelligence to create informative articles for e-commerce websites. These guides provide customers with valuable insights at different stages of their journey.
• High touch launched Hightouch for Offsite Media Networks, a platform developed with Databricks. This solution enables retail media networks to build and activate AI-enhanced custom audiences across media channels.
• pisacX.ai introduced a new platform for simplifying the content workflow. It offers tools for project management, bulk content generation, WordPress integration and SEO optimization.
• StellaAn AI marketing platform, launched with features to automate social media marketing and customer engagement. It helps small businesses create data-driven content and manage multi-channel campaigns.
• Reply.io has launched an AI-powered solution for TikTok Messaging Ads. This allows businesses to manage TikTok messages and conversations from other popular channels on one platform.
• Well said announced the “Caruso” model for its AI voice platform. Caruso includes AI Director, a feature that allows users to adjust the emotional intonation of AI voices.
• PlayMaker launched as a platform for managing and optimizing sponsorships in sports and entertainment. It uses AI to automate asset management and provides tools for collaboration and risk management.
• adapt launched Adjust Growth Copilot alpha, an AI-based solution designed to answer marketers’ questions and provide them with insights to help them achieve their goals.
• Apollo introduced its “Win Deals” solution, which uses AI to automate tasks such as pre-meeting research, meeting scheduling and call recording analysis.
• Lucidworks released its AI orchestration engine, enabling companies to manage their generative AI initiatives. The engine provides tools for data collection, machine learning operations, and security.
• parcelLab launched pL Copilot, an AI assistant that helps teams optimize customer communications and identify areas for operational improvement. It also launched an AI Email Editor to automate email personalization.