On the Stratechery podcast, host Ben Thompson interviewed Michael Morton, a well-respected Wall Street analyst at equity research firm MoffettNathanson, who sees structural change ahead for ecommerce and advertising courtesy of OpenAI’s ChatGPT.
His arguments are compelling. They’re positive for consumers and chatbots. And they’re bleak for all online advertising related to shopping.
tl;dr: For Morton, it’s all about product feeds for chatbots which, in turn, weed out undesirable products and the marketing spend which promotes them. Consequently, advertising diminishes in retail environments. The precision of the chatbot will give the consumer what they need.
Here’s a selection of quotes from Morton (lightly edited):
On Shopify’s opportunity with ChatGPT:
“[ChatGPT and chatbots are] an incredible opportunity for Shopify and CEO Tobi Lütke is a brilliant, visionary founder. And he saw this opportunity, and very intelligently, immediately started building the Shopify Catalog because if you ask the models what they want, they want API feeds, and don’t make us go do raw HTML scrubs. Just feed us the data, the live data for price, shipping speed, availability.”
On advertising connected to shopping:
“For Amazon, [advertising is] a huge part of their retail business today. For companies like Etsy, it’s arguably all of their profitability, all of these marketplaces have become giant advertising platforms, and I can’t see a world in where for high consideration purchases — this isn’t for everything, this isn’t going to ruin Tide, but for the stuff where you don’t know exactly what you want — I just cannot see a world where the funnel doesn’t get smaller. I’ve talked about fewer clicks, but this doesn’t account for, also, fewer brands. I think there’s going to be less brands over time, and you’re going to have less auction density, which is a problem as well.”
On how chatbot models will impact consumer product:
“The models are going to look through… product reviews. If you’re selling a skin tan lotion, they are going to read the ingredients to see if it’s really a natural based suntan lotion.
So it’s going to consolidate [competitive products], and if you’re one of the really good suntan lotions or really good running shoes, you’re going to be in that model answer every time. So this is a really great thing for you, because now you’re not competing with this player who you know is misleading about what their product is, so over time, it’s great if you’re those guys…”
On the possible rise of brand advertising:
“There’s also a view that is evolving when you talk to people in the industry that [the transition to shopping with chatbots] could make ‘brand spend’ more important again.
It’s funny how the world goes circular, right? So from limited shelf to unlimited shelf, and now maybe back to a more constrained shelf, and then to where everything was brand when everything was performance-based marketing.
Well, now if you’re getting down to a world where there’s a couple of icons — and people are more trusting to the model and the model doing the due diligence for them — some ability for brand recall and spending money on brand advertising could rise in importance again. I don’t know who’s necessarily a winner from that today, but there’s a lot of moving parts to this. Net-net, I think it’s great for the consumer.”
Who wins in this transformation to chatbot shopping, according to Mr. Morton? Amazon. But it doesn’t come without a significant cost: the steady loss of its sponsored ads business.
Morton added:
“I think Amazon should take their time in this with ChatGPT, because it’s important to underline that ChatGPT needs Amazon more than Amazon needs ChatGPT.
If you’re ChatGPT and you’re trying to present an e-commerce offering to the consumer, you can’t do it without 50% of the market. Amazon’s half the e-commerce market, they have the world’s inventory and the world’s distribution network.”
Hear more on the Apple Podcasts app. And read the transcript on Stratechery. (November 6)
From tipsheet: There’s a lot here in this interview (some of it at a “4D chess” level). And it’s not clear to me how new products, and promoting them, fit in Mr. Morton’s vision. But I get the feeling some, particularly in Silicon Valley, believe Morton’s ideas represent at least part of the transformative future ahead.
See a related list of proof points:
- Joe Marchese’s CNBC op-ed on Wednesday.
- or read Tim Berners-Lee’s comments on the FT this week.
- or OpenAI investor Keith Rabois’ comments about Google in August
- or the unexplained cessation of Amazon ads on Google Shopping in July (mentioned by Morton)
- or, finally, see CEO Mark Zuckerberg targeting “superintelligence” at Meta without being able to say what the money-making product will be. He just doesn’t know. But Zuckerberg recognizes it’s possible that the company’s current advertising business model is threatened by AI.
LLMS & CHATBOTS
Developments
- “I want to clarify my comments earlier today. OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word “backstop” and it muddied the point…” (November 5) – Sarah Friar, CFO, OpenAI on LinkedIn
- Google is in talks to pour more money (already $3 billion+) into Anthropic, which could push the AI startup’s value to $350 billion – Business Insider (subscription)
- Introducing the Teen Safety Blueprint – A framework for building AI that protects, empowers, and creates safer experiences for teens. (November 6) – OpenAI
FINANCIALS
Earnings reported yesterday
The Trade Desk reported Q3 2025 results: “The company reported a marginal top-and-bottom-line beat. Adjusted earnings per share of $0.45 topped expectations by just 1 cent, and revenue of $739M was only $19.7M ahead of the consensus estimate even though it jumped 17.7% from last year.” (November 6) – Seeking Alpha
- The Trade Desk Reports Third Quarter 2025 Financial Results – The Trade Desk
- The company’s stock moved up slightly in after hours trading yesterday.
PLATFORMS
Ad spend grows in the U.S.
In a Wall Street Journal article featuring the projections and graphics of analyst Brian Wieser, advertising within the “walled gardens” of Meta, Google and Amazon is rocketing.
Wieser told The WSJ that “U.S. ad spending, including political ads, is expected to increase more than 8.5% this year… If current trends in tech-ad growth persist, … U.S. spending could grow by as much as 10% in 2025.”
And AI gets credit for the growth:
“AI is helping Meta Platforms and Google keep users on apps such as Instagram and YouTube longer by improving recommendation systems. Meta has said that its AI recommendation systems led to a 5% increase in time spent on Facebook in the third quarter. The more time people spend on the platforms, the more ads companies can serve up.”
Read more in The WSJ. (November 5)
From tipsheet: Who has the best AI for ads? Arguably, it’s the largest tech companies in the world where scale on the sell side — along with addressable data — matters. Makes sense.
But, private AI companies are lurking. Still, OpenAI’s Sam Altman has expressed reservations about ads in his answer engine, ChatGPT: (from June) “I think if we started modifying the output – like the stream that comes back from the LLM – in exchange for who was paying us more, that would feel really bad. And I would hate that as a user. I think that’d be like a trust-destroying moment.”
AGENCIES
Stagwell, Palantir unite for AI marketing
Palantir and Mark Penn’s ad agency holding company Stagwell have entered into a partnership which will create an AI-enabled marketing platform.
CEO Penn told Fox Business that the genesis of the platform came out of a conversation he had with Palantir CEO Alex Karp:
“We both looked at how we could take the combination of data that Stagwell has with third-party data and the first-party data from the client, and we could build a flexible AI-based model that I call the holy grail of marketing.
We’ve always wanted to be able to say, ‘Give me those people who you think will buy an umbrella on the next rainy day,’ and to have it figure out who those people are and then launch a marketing campaign.”
Read more on Fox Business. (November 6)
More:
-
Palantir Technologies Inc. and Stagwell Join Forces to Design Product for the Future of Marketing – press release
-
4 takeaways from Stagwell’s earnings—CEO Mark Penn on what’s next – Ad Age (subscription)
SELL-SIDE
Google’s AI tools for publishers
Google has launched new AI tools for brand safety and reporting as well as an AI-powered chat assistant. The company also announced a live event solution which it describes as a “CTV Live-biddable solution for Ad Manager.”
Read: New monetization and AI tools for publishers (November 6) – Google Ads & Commerce Blog
Related: “Google is helping WPP (and AKQA) build ‘Generative Store’ — an AI web experience designed to help brands rank higher not just on Google Search (or AI Overviews), but on OpenAI’s ChatGPT and Perplexity too. I have the scoop…” (November 6) – Adweek’s Trishla Ostwal on LinkedIn
SELL-SIDE
The self-service trend: SSP Magnite & AI
CEO Michael Barrett of sell-side platform (SSP) Magnite made clear on its Q3 2025 earnings call this week that AI’s importance is growing and it’s also driving a self-service trend.
He noted the SSP’s acquisition of self-service video ad platform Streamr AI in September as well as the company’s self-service, buy-side platform for agencies known as ClearLine, which was originally launched in 2023.
From Magnite’s earnings transcript, Barrett explained:
“…the idea with Streamr is to help folks — not just MNTN — but other DSPs that may not have the tools to attract SMB dollars or merchants or agencies. The idea is that we offer the Streamr product to those folks who have direct relationships with SMBs.
The idea isn’t for us to be chasing SMBs ourselves, but to make sure that spend winds up on our platform. And that’s why we’re super excited about the Streamr acquisition because it accomplishes that. In addition, as we pointed out, we get the side benefit of having this AI infusion, this AI-first way of thinking into our technology organization.
And you see that already ClearLine is being built on [Model Context Protocol] rails. And so it’s going to help accelerate our total kind of AI agentic-focused business.”
Read the transcript. (November 5)
TECH
Vector AI ignites Unity ad business
Unity is showing the benefits of its ever-improving AI known as “Vector.”
The company — which breaks its business into “Create” (software tools for gaming and interactive environments) and “Grow” (monetization, ads) — revealed impressive results in Q3 2025 which included 11% quarter-over-quarter growth for the “Grow” segment. See results.
The company said it expected similar momentum for ads in the upcoming Q4.
In a note to investors post-earnings, Morgan Stanley analyst Matthew Cost was buoyant about Unity’s AI and momentum:
“We’re Watching Vector Improve (and Roll Out to More Customers) Every Day: We ultimately believe that Unity has a ‘right to compete’ in the in-app advertising market that they are finally exploiting. The fact that Vector is now driving >20% sequential growth in Unity Ads speaks to the opportunity to iterate on/improve U’s ad targeting capabilities as they scale. We also believe the opportunity to expand Vector to all of Unity’s ad products and customers is only partially captured.
If Vector continues improving at this pace, we expect Unity to be a fundamentally more competitive advertising business going forward and we see significant revisions ahead if Unity replicates even a fraction of the pace of innovation that AppLovin has achieved.”
Applovin has a $208 billion market cap versus Unity’s $17 billion.
From tipsheet: “Unity controls both the publishing environment and the advertising business. It appears to be a young “walled garden” with growth prospects supercharged by AI.
Related: AppLovin Shrugs Off Recent Negative Headlines With A Strong Q3 And Self-Serve Rollout (November 6) – AdExchanger
PEOPLE MOVES
On the move
- Upstream Group’s Doug Weaver hangs up the clicker (November 6) – LinkedIn
- Former Oracle Advertising CRO Mollie Spilman Joins Teads as Chief Commercial Officer (November 6) – LinkedIn
- Former Criteo and InMobi executive Greg Archibald joins PayPal as VP of Global Ads (November 5) – LinkedIn
MORE
- “First there was Model Context Protocol (MCP), then Agent-to-Agent (A2A) … and now Ad Context Protocol (AdCP) – why should we care?…” (November 6) – Salesforce SVP Martin Kihn on LinkedIn
- DoubleVerify launches AI tools for transparency and ad spend (November 6) – Mediaweek
- Creative agency Highdive’s new chief strategy officer on why she left Mischief and how AI is changing the role (November 6) – Ad Age
- Man Who Created AI Holiday Coke Ad Says It Took More Creativity Than You Realize (November 6) – The Hollywood Reporter
- “I’m thrilled that our amazing WPP Media team has been appointed by Reckitt to manage media planning and buying across 21 European markets…” (November 7) – WPP CEO Cindy Rose on LinkedIn