AI-Powered Marketing - Conversations about AI , and digital marketing
The Rising Costs of AI and Its Impact on Digital Marketing | #190
Welcome to another exciting episode of the AI-powered marketing show. I'm your host Keith Bell. And today we're diving into a hot topic that's going to shape the future of artificial intelligence and digital marketing. And that's the skyrocketing costs of developing and deploying AI technologies. So what we're going to do today is we're going to try to delve into the financial landscape of AI and what its implications are for our industry, drawing insights from the 2024 AI index report by the Stanford Institute for Human-Centered Artificial Intelligence. So let's get into this. Welcome to the Digital Marketing Revolution. This is the AI-powered marketing show where the future of marketing is not just imagined. It's already here. Are you an entrepreneur, a digital marketer, or a tech enthusiast? Then you're in the right place. Every day, we explore the cutting-edge tools that help you manifest and monetize your expertise through the power of funnel hubs supercharged with artificial intelligence. Unlock the secrets of turning your expertise into a digital powerhouse. From actionable insights to transformative strategies, we've got you covered. Now, let's dive into the world where AI meets marketing, where ideas meet execution, and where you meet success. Your journey to marketing mastery starts here. Here's your host, Keith Bell, bringing the future of marketing to you today. In recent years, the financial demands for developing cutting-edge AI systems have pretty much gone through the roof. According to the 2024 AI index report, training a state-of-the-art AI model isn't just expensive, it's astronomical. Take OpenAI's GPT-4, for example. This powerhouse model required an estimated $78 million in computational power for its training. And then Google's Gemini Ultra set a new benchmark with training cost of around $191 million. These numbers highlight just how massive these investments are. And this is just the investment into the computational power of the training. I don't know that this includes all the data deals that are going down right now. Case in point, Reddit's deal with OpenAI. Shutter stocks deal with, I believe it's stable diffusion, but I would have to go back and check my notes. But these data deals are making headlines with the cost involved and the amount of money that's being spent. So why are these costs so high? Well, what it really boils down to is modern AI models like GPT-4 and Gemini Ultra need a vast amount of data and computational power. And we've talked extensively about their need and hunger for data. We've even talked about the potential for the use of synthetic data in response to the projected or anticipated. I don't know that it's going to happen for sure. 2026 data drought. For those of you who are not familiar with what I'm talking about, I talked about it in a previous episode. I've also written about it in my newsletter. The AI models right now, the large language models are consuming data so fast that there's a fear in the community that they're going to run out of data. Now, I don't know how that's possible, but in this day and age, anything's possible. So training these large language model involves running complex algorithms on massive data sets using thousands of GPUs or specialized hardware like TPUs, which consume a ton of electricity and require significant infrastructure. Now, I, in my opinion, that's probably going to be more detrimental to the development of AI than anything else, because the current electrical grid infrastructure system in our country is antiquated at best. And with all the green technology initiatives that are taking place, all the legislation that's been passed, that's going to require the infrastructure, the electrical grids to be improved. I would say this will be a hurdle that perhaps we'll have to talk about in another episode by itself, but it'll be interesting to see how that development in infrastructure growth and investment in this country with the electrical grid impacts the development of artificial intelligence. So moving on, it's not just about hardware. Hey, digital marketers, entrepreneurs, and tech enthusiasts ready to elevate your AI game? Check out the AI powered marketer newsletter from Keith Bell, host of the AI powered marketing show. The AI powered marketer newsletter is your go-to resource, packed with actionable insights, cutting edge tools, and the latest news in AI and digital marketing. Whether you're optimizing sales funnels, exploring new AI strategies, or staying ahead of industry trends, this newsletter has you covered. Don't miss out on the chance to supercharge your marketing efforts. Subscribe now. Just click the link in the show notes to sign up today. And remember, the future of marketing is here and it's powered by AI. See you in the newsletter. The broader ecosystem also demands heavy investment, data acquisition, storage, and pre-purposing are crucial. And all these require considerable financial resource. Plus, we need skilled professionals, data scientists, engineers, researchers to design, implement, and fine-tune these models. And let's be honest, their expertise doesn't come cheap. I was watching an interesting podcast video the other day, and I believe it was with Hutton Henry, and I forget who the interviewer was, but he is a, I forget where his expertise lies. I'll have to go back and take a look. But he was talking about how AI is creating a situation where in the past, it would take, let's say, 16 programmers to do one thing. And now, it may only take four to accomplish the same task with artificial intelligence. So two things happens there. One, those four people that are still part of the technology, they're going to be asking for more money. And they're going to need more training, more education, and more investment in their overall growth within the company. So that'll be interesting to see how that impacts it as well. The AI index report shows that in 2023, the industry side of things produced 51 notable machine learning models, while academia contributed only 15. So this shift underscores the financial muscle needed to stay at the forefront of AI innovation. A strength increasingly demonstrated by private enterprises investing in AI, especially generative models has begun to surge because the potential returns in productivity, innovation, and market dominance are immense. So academia is starting to take a backseat to the industry models, like open AI and anthropic and Google and Facebook. All of them are making significant investments in AI. And it's hard for a university, even like, I've got to imagine for university, like Stanford University, even with all of its endowments that it has available to them and all the innovation grants that they probably get. I've got to imagine that it's difficult for them to keep up with the amount of money that's being thrown around like Google and open AI are thrown around. So governments worldwide are starting to take note of these rising costs and stepping in to manage the implications. The AI index report notes that mentions of AI and legislative proceedings globally have never been higher with the US regulators passing more AI-related regulations in 2023 than ever before. These regulations aim to balance encouraging innovation while mitigating risks like misinformation, privacy concerns, and employment impacts. A lot. The host is about to take us on a wild ride through the trivia jungle in his brain. Now, with that said, the word misinformation for me kind of strikes a chord because we've all seen what's happened with the way information is published and put out. And I'm of the opinion that one person's misinformation is another person's fact. And I'm going to leave it at that. And now back to your regularly scheduled chaos already in progress. So what does this mean for digital marketing? The rising cost of AI will likely increase the barrier to entry for developing advanced AI marketing tools. The larger companies with significant resources will have a competitive edge, potentially widening the gap between big and small businesses. Despite these challenges, there are also opportunities with higher investment in AI. We can expect more sophisticated tools capable of delivering highly personalized and efficient marketing strategies. I am literally bombarded. And when I say bombarded four or five, six, every single day with a new AI tool that comes out. It is amazing. And you know, I'm proud to see the innovation that these entrepreneurs are going out and showing by creating these tools that solve a problem. Because isn't that what marketing is all about is finding a solution for someone else's problem? So for example, generative AI investment surge to $25.2 billion in 2023. Nearly octopling from 2022. These tools will be able to analyze vast amounts of data for deeper consumer insights, automate complex tasks, and enhance overall customer experience. So AI driven marketing tools are evolving rapidly. As cost increase, these tools become more powerful and capable of handling more complex tasks. Now, what does this mean for marketers? This means better targeting, improved campaign management, and higher ROI. So stay updated with these advancements and be ready to invest in the latest technologies as they come along. Bear in mind, as you're doing this, evaluate what you as a digital marketer needs the most. Somebody that's involved with SEO may not have the same needs as someone that's involved in social media marketing. Both of them are digital marketing disciplines, but they both have different goals and objectives. So you have to evaluate what's important to you. So in conclusion, the rising cost of AI development presents some challenges. They also drive innovation and efficiency in digital marketing. Marketers who can leverage these advanced tools will be better positioned to deliver impactful and personalized experiences to their customers. It's a very dynamic landscape, very fluid landscape, and staying informed and adaptable will be the key to thriving in this new area of digital marketing. That's all for today's episode of the AI powered marketing show, understanding the financial demands of AI is crucial as we move forward. You've got to stay on top of it. Stay tuned for more insights and discussion on how AI is shaping our world. Until next time, I'm Keith Bell reminding you to stay curious, stay informed, keep innovating, keep iterating, and stay ahead of the curve. Take care and have a great day. Thank you for tuning into the AI powered marketing show. Remember, the future of marketing is not just about innovation, it's about how you harness the power of AI to create extraordinary results. Keep exploring, keep innovating, keep iterating, and join us next time as we continue to push the boundaries of digital marketing. Until then, stay ahead of the curve. Take care. [Music]