IKEA Just Found the AI Strategy Most Companies Missed

0:00Eric Siu:So here's how AI generated IKEA's new$1 billion business line. So have you heard about this?

0:06Neil Patel:Uh-uh.

0:06Eric Siu:No? So IKEA deployed an AI chatbot named Billy, okay? You know Billy, right? Yeah. To handle level one customer service inquiries. It reportedly resolved around 57 % of those engagements without human escalation. Most companies would have celebrated the labor savings and stopped right there. Cost takeout, right? But the more interesting move, Neil, was to study the 43 % of cases Billy could not resolve, Okay, could not resolve. Those unresolved inquiries pointed to customer demand, looking for interior design help. Because you don't want to do it. I don't want to do it. You don't want to do it either, right?

0:38Eric Siu:IKEA responded by spinning up a design consultancy, reskilling customer service employees powered by AI and creating a new revenue stream that generated roughly 1 billion in euros in new revenue in its first year. So automation plus augmentation equals exponential growth. Isn't that interesting? That's awesome. Isn't it interesting? Yeah, it's interesting. It's like AI finds all the edge use cases of things, right? And then it's like, oh, well, I have all this labor over here. Instead of sacking them, why don't we skill them to do something else and maybe even pay them more? And I love that because, you know, you mentioned it head on.

1:11Neil Patel:A lot of companies are thinking about, hey, how do I just sack employees and save expenses? And the right methodology is how can you start thinking about how you can reuse those people, train them on new things and actually create more new revenue streams for the business that's a win win situation do you remember in uh elementary school they would say um recycle reduce reuse

1:34Eric Siu:and close the loop yeah right so like this is the same planet oh yeah that's captain planet that's right only we would know that uh because we're older now but yeah that's cool i i think this is i think that the main takeaway for everyone here is sure like neil you and i like i was just in another meeting this week's like oh yeah we're cutting 50 we're cutting 40 but like we're hearing that over and over. But maybe before you do that, think about because humans are amazing, right? Maybe think about the things that your other your other because your business is a problem solving machine. What other problems can your business solve if you had this labor already?

2:07Eric Siu:And then absolutely, if you need to like last resort, maybe you think about cutting, right? Because we might talk about a lot, but none of us take any pleasure in having to cut people. There's people's livelihoods.

2:17Neil Patel:So, dude, I met up with the company a few days ago, two days ago in canada and we're talking about ai and how it can just make things more efficient so this company is in the medical space specifically like uh i think like hymns and hearse right it's a similar type of business where prescription drugs uh medical advice you know telemedicine all that kind of stuff they have ai cranking out 4500 creatives per month it helped them scale the business from a million and a half a month within a few months to guess how much technically they're doing a million and a half and that took them years to build up and in a few months with 4500 creatives per month and three months later what do you think they got the mrr to 50 million it's a high number it wasn't as big as 50 but close enough it was a little bit more than 20 so to go from a million and a half to 20 plus million in a matter of three months 12 to 240 that's ridiculous yeah yeah and it was all because 4 500 new creatives per month and that was a goal because you know this dude it once you can crack the net and you can get your roi to be high enough, you can scale really fast and they were able to scale their own ads.

3:41Neil Patel:Then you can give all those ads and the stuff that's working to affiliates, which a lot of companies don't think about, but it's still an extremely powerful marketing tool and channel. And then you get all the affiliates to start pushing you as well. And then now you're growing faster on both ends and it's much more profitable.

3:57Eric Siu:That's right, Noah. You need more creative for your business because at a certain point, creative is a limiting factor. It's not even the ad

4:03Neil Patel:optimization anymore it's a creative yeah dude everyone keeps telling me it's like oh yeah you know we're focusing on our campaign structures we're focusing on our bid management and i was saying that to you dude when i meet so many people at conferences even corporations and i'm giving speeches on like you know using ai in your seo and your paid advertising making it more efficient and they're telling me like how they restructure their campaigns or they're running tests on hey should we not bid for our brand name or should we bid for our brand name bidding for your brand name, assuming you're a big company, can cost you a lot of money.

4:35Neil Patel:Because if you don't bid, typically you control the organic listings. And then you should only be bidding when your other competitors are bidding for your name. And in theory, large corporations trademark their name so that you can't have other companies bidding on your name and including your name in the actual ad copy. So you have an advantage there. But when I always talk to companies about paid ads, I always tell them there's two main levers you have over the competition and people don't get it. And when I say they don't get it, they don't really execute on it. One is creative. You talked about that.

5:05Neil Patel:And I would bucket in creative with landing pages and the flow and the whole experience because your creative is not just about the images. It's also about the messaging and you need to make sure the messaging flows. But that is just one thing. And if you can test tons of variations of that, you'll eventually figure out how to get more leverage. The second thing is your first party data. What you upload to the system drastically impacts the output. If you have more data than the competition, it can help learn way better and figure out what people to target. If you're a brand new business with very little data, you are not going to perform as well compared to established business, at least from a targeting perspective versus someone who can upload 200 ,000 data points and just be like, here you go, find more people like these existing 200 ,000 customers.

5:55Neil Patel:And out of these 200 ,000 customers, these 10 ,000 are really our ideal customer profile.

6:01Eric Siu:So you're talking about ads right now, right? And I think something that's interesting because ads have largely been auction-based for a long time, right? So I think an interesting thought here is when you think about the future of pricing, the future of pricing might be auction-based too. And what I mean by that is this. So let's use Ubersuggest, let's use Answer to Public, or let's use ClickFlow as an example, okay? So let's assume all of our tools have APIs on them. So the argument here is that API pricing is going to look a lot more like ad auctions in the agent-first future, okay? So let's say I'm using your API a lot, okay?

6:34Eric Siu:But other people are demanding it as well. Maybe it might just be auction-based, okay? So because you might have like a.md file, the agents can call it and they'll say, okay, let's see who the highest bidder is because they're bidding at such a high frequency. So then it's like, okay, you wanna use our API? Instead of getting rate limited, you'll say, no, just pay more and we won't really limit you. Yes. That's interesting, right? It is really interesting. Quick break. One of our ClickFlow users just told me that they're saving 90 plus hours a month on content alone. ClickFlow is our AI SEO product that actually does the work, not just here's what you should do.

7:02Eric Siu:It does it. It creates content in your voice. It helps you with other areas, such as finding the right internal links and creating FAQs. We spent years making it, perfecting it with our clients so it doesn't just sound like AI slop. You can get a 14-day free trial at clickflow.com. If you're serious about AI SEO, you should check it out.

7:19Neil Patel:Back to the show. By the way, I'm curious on your take on this, and I'll tell you what I think is going to end up happening. I had a discussion with around like six or seven other marketers yesterday on where we think ads are going to go within these LLMs. I'm not talking about just Chad GPT, Chad GPT, Perplexity, Google, etc. Gemini. Yeah, the list goes on and on. Where do you think ads are going to go? like how they're going to look not how they're going to look um or let me rephrase that well actually i don't know how to state the question but more so when i was talking to people a lot of people think that ads are going to look like similar to how they look today but instead um there's just different formats of them so you may see you know more interactive ads or videos explaining things because the ai and then maybe you convince them and do because some people do educational-based ads.

8:13Neil Patel:So instead of sending a text-based article, maybe AI creates a video for the customer if they're looking to reduce their wrinkles and it pitches their product and it does that in real time. I think we're going to start seeing more of that over time, but I think what we're really going to see is all the platforms copy Instagram and TikTok. If you think about Instagram and TikTok, now they're just trying to keep you on platform and do every single transaction there. I know in the past, Google has tested trying to collect mortgage leads or travel or insurance or whatever it may be for certain industries and just keep them on google.com but i believe you're going to start seeing more and more of that let's take banking for example if you're on chat gpt or if you're on google or gemini and you're looking up the best bank accounts for you come to the banks with the best mortgage rates and credit cards based on your income and where you are in life and how old you are in your credit if you're a bank do you really care if they visit your website to sign up or they just sign up right there and then on the llm because the LLM will pass you all the data, right?

9:13Neil Patel:To create the bank account, you're still collecting their name, their email, their social, all the stuff that you need. So you can still target the person. You have all the information. If the conversions are 15 to 20 % higher because they're still on the platform, so it's cheaper for you, wouldn't you just want more conversions to keep them on the platform versus them going to your website? They can log in on your website. Who cares? Let them sign up wherever. Money's money.

9:35Eric Siu:So I think the future of ads is, one, you're going to have more in-app conversions because you're already seeing it with the Stripe API. I forgot what they were calling it, but they partnered up with Stripe, Shopify, and Google had partnered up to do that, right? Agentic Commerce, yeah. Agentic Commerce, something, ACP, Agentic Commerce Platform, that's what it was, okay? So that's gonna happen, but I think you're gonna have a lot of things happening. We had talked about dynamic movies in the past, right? You might watch an Indian movie, I might watch a Chinese movie or whatever, but it's the same movie, but it's being personalized.

10:01Eric Siu:I think that's gonna happen with ads because Google has all of your data already. They have YouTube, they have everything. So maybe you're watching a YouTube video and then all of a sudden it's like, Like instead of, you know how like when people watch soccer games or basketball games, like the ads are dynamic, right? It's going to be dynamic, but it's going to be a lot more tasteful. That's coming down the road, I think. And I think hardcore, you're going to see way more agentic ads because the agents, the speed of agents right now is growing parabolic. So we're going to see a lot.

10:25Neil Patel:Yeah. And when you think about ads, the best example of more of what you're going to see is kind of like YouTube TV. Because if I watch CNBC, which I do through YouTube TV and someone else watches CNBC through YouTube TV, we're going to see different ads because they understand or they have data on us and they can do much better targeting but in addition to that what eric and i are talking about is on the fly they're going to modify the ad copy and the videos to adjust to the individual so it's more personalized and that should help conversions go up as well yep um and on another note i also was having a debate with people on what they think is going to be the winners in the uh AI space when it comes to these LLMs.

11:10Neil Patel:Who are you debating? I was debating some people that work at financial companies and they're publicly traded. They're large. Interesting. So what is quantified as a win? Win being like, who's going to be the leader? It's just like how Google is the leader in search. They say, you know, Emetta is the leader in social media, whether people agree with it or not. The data shows they are the leader, at least by revenue. I believe when it comes to enterprise i don't think claude is going to be the winner i actually think of in the long run it'll be google or microsoft in the long run not short run i'm not talking about the next year i'm talking five years within five i would say yeah within five years you know or for sure within 10 i believe gemini and microsoft are going to be the leaders within enterprise um for consumer i think it's going to vary based on generation i think the younger generation is going to use Gemini way more than chat GPT and we're already seeing this uh did I give you the example uh Ari and Jaden my sister's kids and how they don't use chat GPT.

12:09Neil Patel:Heaton's kids?

12:10Eric Siu:Yeah. No? Oh yeah you did you told me just a while back yeah they don't they laugh at you when you you're like a boomer if you use chat GPT. Yeah because they're like why would you pay$20 a month they're like if we use our homework for chat GPT it cuts you off after a while. Did you see the thing I shared to my Instagram where the guy's like what uh pardon my language but I was I shared a meme to like uh one of those skits right and the guy's like you use chat gpt and he starts dancing what a complete dumbass so that that is kind of how i feel about people who just use chat gpt you know uh and and then sorry i don't feel like you're a dumbass i just feel like it's behind the times yeah i think

12:42Neil Patel:uh claude is doing some really cool stuff yeah i think claude will take a big bite out of enterprise but i think really quickly microsoft and google will catch up when i say quickly i'm talking about within a year or two years. And what they'll do is they'll just say, here you go, you already pay us for our corporate suite. It's free. And companies are going to be like, I could use Claude, which has been great, but this is costing me$5 million a year as a big company. Google's just offering this stuff first for free. I'll take the free.

13:13Eric Siu:And they can afford the losses. Yeah. I think, so there's a couple of things here. I think Anthropic right now has all the, like they have the mindshare. They have all the momentum right now. They've surpassed OpenAI's revenue. Yes. Yeah, you saw that, right? And so it used to be OpenAI had all the mindshare. Chachupi, chachupi.

13:27Neil Patel:And there's a billion dollar run rate.

13:28Eric Siu:Yeah, it's insane. And it was just a couple months ago, it was like... Nine. I believe it was nine. It went from six to nine to 30, okay? So I think there's going to be a lot of players. But to your point, I think who's going to win long-term? I would pick Google over Microsoft because Google actually has the models and they have the... Remember we talked about the entire stack? They have the TPUs. They have everything, right? Yeah. And they have all the data too. So I'm like, I would pick Google and then I like Anthropic over OpenAI just from an execution standpoint.

13:57Neil Patel:So Microsoft has a majority of the penetration for enterprise.

14:00Eric Siu:They have the mindshare too when it comes to enterprise. So like maybe, but they're getting screwed over by OpenAI right now. They're fighting. Who knows what's going to happen?

14:08Neil Patel:But forget if they get screwed over. I don't actually think Microsoft will get screwed over by OpenAI. And here's why. They got contracts. So no matter what happens, they'll just sue and they'll figure out how to get their money. And they made a statement too. I don't know if you saw it publicly. I think it was Satya or someone on their team. They're like, hey, you know, we're not worried about getting litigious. We have our contracts. Everything's in writing. We're not worried about it on our end. We feel very secure.

14:32Eric Siu:I didn't read this full article, but the Sam Altman on New York Times and people are just talking about how it is working with him and all that. And like, you know, obviously he's getting sued by Elon right now. And then like, you know, there's all these. Then there's like the employee that like supposedly like offed himself. like so anyway there's a there's a lot around there where i'm just like opening as a company a little shaky right now but i think if sam goes i bet you brett taylor

14:54Neil Patel:will take it over which is good from sierra yeah i bet you here they'll just buy brett taylor's company he'll take it over he's amazing he's strong yeah he's a strong he's supposed to be the ceo facebook's board right he was he was on facebook's board twitter i know he was on

15:10Eric Siu:twitter's board so he really strong investor very strong operator came from google yeah did really

15:15Neil Patel:well there. I think they bought his company. He did Maps, I think. Something like that. I know Salesforce bought one of his companies. And he was supposed to be the CEO, and then he decided to go do his own thing.

15:25Eric Siu:Yeah, Sierra, which is, they're growing quickly. I think they're doing 175 or something like that. So that is it for today. Please don't forget to rate, subscribe, and we'll see you tomorrow.