💸 Investors Back AEO

Today’s Insights

Feature

A new generation of agencies are racing to solve a new challenge for brands: how to ensure they show up in AI-generated answers.

With ChatGPT now serving 1 billion weekly users, Google rolling out AI Mode, and Perplexity growing 20% monthly, there is a new way to discover products.

AI can handle the browsing and comparison, then make recommendations tailored to each individual. To drive sales, businesses now need to win over a new kind of customer: bots.

One CEO put it bluntly in an interview with Forbes:

“We’re entering this inflection point where humans no longer need to visit websites... These systems are hijacking that relationship with the end user entirely.” - James Cadwallader, Profound.

To meet this challenge, investors are backing a new crop of Answer Engine Optimization (AEO) start-ups:

How it works

AEO products and services help brands understand how AI systems generate answers by:

• Generating synthetic prompts to test brand mentions

• Identifying which third-party sources (e.g. forums, blogs, review sites) are being referenced

• Tracking which pages on a brand's website are being crawled

• Analyzing the sentiment used in AI-generated responses

AEO services push standard SEO tactics—optimize content, earn citations and links. But they highlight that AI models prioritize tone and trust over traditional ranking factors. It becomes not just what's said about your brand, but how it's said.

Presented by Cousin Labs

💰 Influencer marketing spend to hit $33B globally

In the U.S. alone, content creator marketing spend is set to top $10B this year. Consumer brands like Unilever now dedicate up to 50% of their ad budgets to social media and plan to hire 20 times more content creators.

And when it comes to Creator Marketing…

THIS is the #1 thing the algorithm cares about

• If your video ads were submitted to the Olympics, would they look more like RayGun or Michael Phelps?

• This isn’t hypothetical - this is how algorithms work.

• Meta & TikTok care about video engagement, not media tactics.

• If your agency isn’t talking about creative, run, don’t walk to www.cousinlabs.com

🎧 Google is piloting voice input for AI Mode

Search Labs users in the U.S. can use voice with AI Mode to receive AI-generated audio responses along with relevant links displayed within the Google app.

📊 Google has added AI Mode traffic data to Search Console

Clicks on AI Mode links now register as standard clicks in performance reports. Impressions and positions follow the same rules as traditional search results. Follow-up questions in AI Mode are tracked as new queries in Search Console.

📦 Google is enabling advertisers to offer promotions to first time customers

U.S. merchants on an allowlist can offer exclusive discounts to first-time buyers in Shopping ads. Discounts can be either a percentage or a flat dollar amount off the first purchase.

🤝 Amazon strikes deal with Disney for programmatic ads across Disney+, Hulu, and ESPN

Marketers will be able to buy streaming ad inventory on Disney platforms through Amazon’s DSP. The deal reportedly also combines Disney and Amazon’s first-party data to improve ad targeting.

🛍️ Pinterest Ad Labs is testing an ‘auto-collages’

The feature lets advertisers turn their product catalogs into new shoppable visual collages. The tool curates and groups product images together based on outfit ideas, user engagement, similar products, and items users have saved.

📈 TikTok Shop sales have grown 120% year-over-year in the U.S. 

January sales alone rose 153%, outpacing Shein and Temu. TikTok credits small businesses and livestreams for driving product discovery. Sales from small U.S. businesses on TikTok Shop have increased 70% YoY and now account for more than one-third of U.S. purchases.

🎥 TikTok expands AI suite with a new image-to-video feature

Advertisers can now generate five-second ad clips from images and text prompts. Brands can also create ad videos using only text prompts and bring product visuals to life with digital avatars.

💳 PayPal announced shoppable ‘Buy with PayPal’ ads

‘Storefront Ads’ enable brands to place product ads on PayPal’s network of websites. Targeting is powered by PayPal’s “transaction graph” of 430 million consumer accounts. Users can checkout with PayPal without leaving the page.

🧪 Firefox is testing Perplexity as its default search engine 

Google is still the official default search browser for Firefox. But with Google’s ongoing anti trust court case, Firefox could be preparing to switch or give users active choice. Perplexity’s CEO posted on X: “the end of the beginning” in response to the story.

🧠 Lastly, Reddit launched its own Social Listening Tool

Reddit’s Community Intelligence™ is a new data engine that turns 22+ billion Reddit posts into structured insights for marketers. Two alpha products are included:

1. Reddit Insights – an AI-powered social listening tool that helps marketers analyze Reddit conversations for campaign planning and idea validation.

2. Conversation Summary Add-ons – an ad feature that displays positive user comments beneath ads.

Thanks for reading

And thanks to today’s sponsor, Cousin Labs.

Cousin Labs is a forward-thinking creator marketing agency who are looking for top talent to join their team. Cousin Labs Co-Founder, Paul Marvucic, has even included his personal email for Meta or TikTok experts considering a new challenge and want to get in touch👇

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We’ll be back next week!