AI is everywhere now, and with its rise, more people are starting to spot it—and not always in a good way. It's cheap, it's accessible, and that's attracted a whole bunch of folks who might not have the best intentions. Scammers, spammers, and other unsavory types are jumping on the AI bandwagon, and it's starting to give the whole thing a bad name. So, are we looking at an AI bubble that's ready to pop? Or is this just how it goes when something new and shiny gets overused, and we'll eventually see things level out? Let's dig into whether AI is heading for a crash or just a course correction as people wake up to what it's really doing.
Whether there is a bubble or not, as the world begins to grasp the real-world applications of AI, there will be winners and losers in every industry. This article is, in a way, a follow-up to our article Will AI Replace Artists? The Future of Art and Design in the Age of Artificial Intelligence. In it, we will explore the possibility of AI creating a bubble and that bubble popping. But before we look ahead, first, we have to look at where we have been. Let's review what a bubble pop looks like.
A drop in venture capital funding for AI startups, fewer IPOs, or lower valuations could signal a market correction. You might see headlines like "AI Startup Funding Drops by 50% in Q2" to indicate such a trend. Not something I am seeing yet.
Large-scale layoffs or closures of AI startups can signal financial stress within the industry. News stories such as "Leading AI Firm Announces Layoffs of 30% of Workforce" would highlight these concerns. This also isn't something we are seeing.
Public failures of well-known AI projects can shake confidence in AI solutions. We are seeing some examples of this one. Reports like "AI Gone Wrong: An Updated List of AI Errors, Mistakes and Failures" for example. While the online-chatter-sentiment (hell of a metric, I know) of AI success is currently on a bit of a downtrend, this is still not the case as far as investor interest goes, as far as I can tell.
When tech bubbles deflate, they can leave behind valuable innovations and infrastructure. Let's look at the nearest relevant example for us marketers.
The internet infrastructure built during the dot-com era laid the foundation for the modern internet. Companies like Amazon and Google emerged stronger, becoming industry giants.
Similarly, in the post-AI bubble, robust AI infrastructure, including improved machine learning frameworks and data processing capabilities, could continue to drive Innovation in various sectors. One of AI's most tangible benefits, especially in marketing, is how it simplifies mundane tasks. For example, prompt engineering allows project managers to use AI tools to summarize tasks and start a production calendar very efficiently. But does this mean AI will replace project managers and other roles entirely? No way. Much like the chainsaw revolutionized the lumber industry without replacing lumberjacks, AI will enhance the worker's current capabilities without taking over completely.
There is growing skepticism about AI-generated content, with many believing it needs more depth and nuance than human-created works. Headlines like "How AI-generated content could both fuel disinformation and improve fact-checking" capture this sentiment. AI videos and images being used to impersonate or trick the public is a valid concern that has caused growing trust problems across the internet already, such as Meta trying to flag AI-generated content.
AI and automation have raised fears about job losses among many marketers. Reports such as "Artists Are Revolting Against AI Art on ArtStation" reflect these anxieties. This has been mentioned a lot in multimedia and marketing - I've read suggestions that everything from designers to developers and video editors will be replaced, and I've been seeing a lot more AI art. However, when it is art that would normally have been handled by an artist, they are typically seen as giving the product a low quality, at least in the most obvious cases. This makes sense – AI art as a primary designer is cutting corners, but anecdotally, savvy consumers are beginning to take note and form opinions about products that build their brands around AI art. Brand managers – take heed.
As AI systems collect and use personal data, concerns about privacy violations are increasing, too. AI companies come under intense scrutiny for potential data privacy violations, and there is growing concern about how these companies handle personal data. The Federal Trade Commission (FTC) has emphasized that AI companies must uphold their privacy and confidentiality commitments if the AI models are offered as part of a service. These companies often require large amounts of data to train their models, which raises significant privacy concerns when personal and sensitive data is involved.
Additionally, California's ongoing legislative efforts, such as the amendments to the California Consumer Privacy Act (CCPA), are aiming to strengthen data privacy regulations around AI systems. These amendments include ensuring that personal information processed by AI systems remains subject to strict privacy obligations, highlighting the increasing legal focus on protecting consumer data in the age of AI.
While at the surface level, this might all seem like a negative response at a federal level, the truth is it was unlikely for AI to develop without some amount of regulatory oversight. The addition of regulations into AI indicates lawmakers expect that it will take hold in a longer-term way.
Developing regulations can ensure responsible AI development and build long-term trust and stability in the technology. This regulatory oversight can prevent unchecked growth that leads to bubbles.
A bubble popping doesn't really have to be a dramatic event, either. There is potential for a soft deflation or gradual adjustment in the usage of AI. A soft deflation in the AI market would involve a steady correction, where investment becomes more targeted and focused on sustainable innovations rather than speculative ventures.
So what is a better model of growth than the bubble that expands so quickly it must burst? Even sustained Innovation allows for integration and solid uses to develop the technology. Continuous, measured advancements in AI technology can maintain investor confidence, even if the pace of hype-driven funding slows. This steady progress ensures that AI remains relevant and valuable.
On the other hand, if it turns out that AI isn't a bubble at all, it might represent a significant technological shift, similar to the internet or mobile revolutions. AI's integration into various sectors may indicate a foundational technology undergoing natural growth and adjustment to better suit the industry's needs, not unlike an evolution. This technological evolution could see the role of AI as a tool changing as it integrates into new and surprising ways.
The ongoing integration that we are already seeing doesn't indicate any slowing down. AI is steadily becoming a part of healthcare, finance, and transportation, among other fields. This suggests that AI is not just a fleeting trend but a technology that is here to stay. Companies are increasingly relying on AI for efficiency and Innovation. This reliance and adaptability indicate that AI has a robust and enduring role in modern business practices.
I'd say that, as of this time of writing (late August, 2024), a small AI bubble has been forming that has not popped. Still, the AI industry is experiencing adjustments, and inevitably, there will be more. The market might see a soft deflation, where growth becomes more sustainable and grounded in real-world applications. Alternatively, AI might represent a foundational technology that continues to evolve and integrate deeply into various sectors.
AI continues to be a game-changer in marketing, media, and multimedia. Whether we're witnessing a bubble or a transformative technological shift, AI's impact is undeniable and likely to shape the future of many industries with many diverse applications for marketers beyond content. AI is used in chatbots, virtual assistants, and dynamic pricing. Soon, AI could be utilized in marketing to make incremental improvements in algorithms for ad targeting, improved sentiment analysis, and better customer journey mapping. AI's ability to process data, identify patterns, predict consumer behavior, and, yes, develop content makes it invaluable for marketers, but without a human to parse through that data, it is still rarely worthy of a human audience.
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