What is a value proposition?

A value proposition is just what it sounds like: a statement that clearly explains the value of working with your company. Value propositions justify your business’s raison d’être, after all, if a business has competitors that can do what they do cheaper, faster, and better, then they will struggle to have customers choose to work with them!

It is important to keep in mind that your value proposition only needs to appeal to your target audience. If you provide budget-friendly services then there is no reason to try to woo wealthy clientele with your value proposition. Businesses do not need universal appeal in order to be successful – they simply need to communicate effectively to the people they can serve best.

What is the purpose of a value proposition?

Clearly articulating your value proposition is essential because it tells your customers in clear terms the benefits of your product and your brand. For small businesses, it is rare to be the only game in town, and your target customers are usually shopping around.

Many services are essentially undifferentiated at a broad level – all plumbers fix plumbing, all electricians install outlets, all pest control companies kill bugs. A company’s value proposition helps customers decide to work with them over a competitor.

Defining your value proposition

Articulating an effective value proposition isn’t a quick or straightforward process; it requires a deep understanding of your customers, your product, and your business environment. These are a few of the strategies that we employ at Cut Throat Marketing to develop great value propositions:

Be customer-centric

Customers want to see themselves in your value proposition, but all too often we frame benefits as attributes inherent to ourselves.

“We have the most experienced technicians.”
“We provide the newest and best product.”

Even if both of these statements are true, they do nothing to tell the customer what benefits they will receive when they choose to work with you. Instead, these points could be rephrased from the customer’s point of view as:

“Get your challenging project fixed right, the first time!”
“Experience the latest advancements in technology: faster, more reliable, and easier to use.”

Analyze your product or service

It is common for business owners to be proud of their product or service – after all they have put blood, sweat, and tears into their business and obviously believe strongly in it. However, when deciding on value propositions you need to be objective and assess:

• What problem does my product or service solve? Understanding the core problem your product or service solves is the first step towards determining your value proposition. Remember, it’s normal that your business can’t help everyone; not everyone is a potential customer!
• What benefits do my product or service offer to customers? Don’t just think in terms of features – focus on the benefits that these features deliver.
• What are your customer’s pain points? What is it about your industry that people find annoying or problematic and how does your business address that?

Apple

Apple has established themselves as a leader not just in technology, but in marketing. While their big products like the iPhone are now so ubiquitous that the benefits of promoting it are debatable – other product lines like their Apple Watch still offer examples of incredible value propositions.

“Your family joined at the wrist. Family members who don’t have an iPhone can stay in touch with Apple Watch.” This checks all of the boxes that a value proposition should. Customer centric, simple, and unique. The benefits are easy to understand and the learn more blurb gives concrete examples like providing Apple Pay and messaging to children and older adults who may not have an iPhone.

Lego 

The appeal of Lego is hard to deny, with children of all ages coming together for the simple joy of constructing miniature worlds of colorful plastic. The brand is well aware of their success, but maintains a robust marketing strategy and has some world class value propositions.

“Awaken their creativity” is a perfect example of great value proposition copywriting. It speaks directly to the purchaser (not the end-user, read: child) and tells a parent, grandparent, aunt, or uncle that their decision to give a child a Lego set will encourage their creative spirit. The message is simple, easy to understand, and customer centric. Exactly what we want to see from a strong value proposition!

Colors on Parade

“Fast Fixes for Your Fast-Paced Life.” Colors on Parade is one of our recent website builds that has been producing amazing results, and value propositions like this help their customers understand why they should work with Colors. When it comes to car repairs, time is literally money! Unlike a body shop repair which might take days or weeks, Colors on Parade is able to fix minor damage in just hours!

This value proposition is customer centric and speaks directly to a common industry pain point, and the customer value is simple and clear to see.
Importantly, Colors delivers on this promise – don’t make claims your business can’t live up to, as this is a great way to have your marketing efforts backfire!

Crafting Great Value Propositions

Value propositions are incredibly important, but are uniquely challenging to create. There are no templates to follow, and instead businesses must critically assess their products and services in order to identify value props which resonate with their customers.

At Cut Throat Marketing we are experts at helping businesses determine what their special sauce is made of, and turn it into branding initiatives that boost conversions, increase revenue, and help your business stand out from the crowd!

What are Title Tags?

Title tags are HTML elements that specify the title of a web page. They are prominently displayed on search engine results pages (SERPs) and play a significant role in providing both readers and search engine crawlers with a concise and accurate summary of the content found on a web page.

Why are Title Tags Important for Local SEO?

Title tags are instrumental in local SEO for two main reasons:

First, they provide a brief overview of the page content, thereby influencing the searcher’s decision to click on your Google search result listing.

Second, Google uses title tags to understand the topic of your page and match it with user search queries. Thus, a well-crafted title tag can significantly improve your page’s visibility to potential local customers.

Best Practices for Writing Page Titles

Ensure Every Page Title is Unique

Creating unique page titles for each web page is essential. This helps Google understand that each page provides distinct value and should be indexed separately.

Accurately Describe What the Page is About

The title tag should provide an accurate description of the page content. Misleading title tags can cause readers to quickly exit your page, resulting in a high bounce rate. Bounce rate is an important ranking factor for Google – if searchers return to a Google search soon after visiting your site, your webpage may suffer in the search rankings, negatively affecting your future search traffic.

Remember, Google Might Not Use Your Meta Description

While Google will crawl your page’s hardcoded meta description tag, it is not uncommon for the Google bots to create their own meta description for your page. In fact, a study conducted by AHREFs in 2020 showed that Google actually rewrites a majority of meta descriptions for web pages!

As generative AI is added to more search results, it wouldn’t be surprising for this trend to continue. Google is trying to create the best possible user experience and by modifying your page’s meta description it can match the presented meta description to a user’s search intent.

Harnessing the Power of Title Tags and Meta Descriptions

Title tags and meta descriptions are powerful tools for local search engine optimization – but it is important to use them correctly. By following the best practices outlined above, you’ll be able to craft effective, user-friendly, and search engine-optimized descriptions that can significantly boost your online visibility.

Remember, a compelling title tag and meta description can make all the difference between a click to your website and a scroll past it. Of course, generating the most organic traffic requires more than a good meta title and description – for high performing SEO, consider working with a marketing company that specializes in helping small businesses rank higher and start generating more revenue!

Why is local keyword research important?

Local keyword research is essential for any business which has a physical location or service area. Simply put, your customers are the people who live in your area and so making your business easy for them to find is of paramount importance. By using better local keywords, you enable your business to appear higher in search results when users are looking for local offerings. This is critical because 78% of local mobile searches resulted in an offline purchase within 24 hours. When your customers are performing a local search they are usually ready to take their wallet out and make a purchase!

It is important to remember that the top three ranking pages on a search engine results page (SERP) receive 54.4% of the total clicks for a given search The eight, ninth, and tenth results combined only muster a meager 8.4% of a given search’s click volume! It should be your goal to be in the top three results for any keyword you are targeting.

Google Business Profile (GBP) – a prerequisite for local SEO efforts

If your business does not have a Google Business Profile business listing (formerly Google My Business), then this is where your local SEO efforts need to begin.

Without a GBP your business will not rank on Google Maps and your attempts at maximizing your local search result rankings will be stymied from the start. Check out our article on GBP and local marketing if you don’t already have a GBP listing or want to ensure your listing is optimized.

How to do local keyword research

When brainstorming relevant keywords for local SEO, one essential thing to remember is to make a detailed list of keywords. It doesn’t matter whether you prefer to do this in an Excel spreadsheet, on Google Sheets, or even with pen and paper – but it is absolutely essential that you write down your findings as you go!

Start by researching your competitors

Your local competitors can be a goldmine of keyword ideas. Begin by listing your main competitors and use SEO tools like those available at AHREFs to analyze their websites. Look at the keywords they rank for, the ones they target in their content, and even those they pay for in paid Google Ads search campaigns.

Observing your competitors’ keyword strategies can help you spot opportunities they might have overlooked and avoid their mistakes.

How to track your local keywords rankings

Once you’ve chosen the keywords that you want to rank for, it’s important to begin tracking how your website is performing on them. This will let you know whether or not your local SEO strategy is working, and can help you determine when it is time to refresh old content.

Google Search Console’s (GSC) Search Performance Report is a great, free resource for monitoring your website’s performance and can provide you with data on organic traffic, keyword ranking, CTR (click-through rate), average position, and more.

At Cut Throat Marketing we supplement GSC’s reports with AHREFs excellent tracking tools. Together, GSC and AHREFs provide a comprehensive overview for monitoring keyword performance, identifying trends, and making data-driven digital marketing decisions.

Screenshot from https://blog.google/products/ads-commerce/performance-max/

Creating the Perfect Business Profile

As we discussed in our last video, just having a Google Business Profile is a vast improvement over not having one. However, while a quick and dirty setup is a great place to start, if you really want to get the most out of this free resource, you should take some time to refine your profile.
For those following along, the following profile options are available once you click the “Edit Profile” button.

Business Category

Most of the time people only select one category when they create their GBP profile – but Google allows you to select multiple business categories. Take some time to search through the categories related to your business and choose those that best fit the products or services that you provide. Be sure to select a primary category that best fits your industry.

Optimized GBP = More Customers & Happier Customers

Optimizing your Google Business Profile is one of the best ways to get more customers looking at your business and to make those customers more likely to choose your business. By giving Google more information, Google will know which customers to show your listing to, increasing your access to potential customers. Once customers are on your listing, having all of your relevant information like your correct business hours, holiday closures, and up to date contact information will ensure that you don’t lose prospects who call or visit your location and are unable to reach you.

In Part 2 of our Google Business Profile optimization series, we will do a deep dive into optimizing your GBP service listings. If your business is service-based you’re not going to want to miss this!

Average Order Value

Your average order value is the average amount a customer will spend when they call for service. The formula to calculate it is short:

The revenue of all sales in a given time frameThe number of sales made in that time frame

For example, if you’ve made $300 in a day, and you made 18 sales that day, then the math would look like:

300 ÷ 18 = 16.67

On average, then, a customer’s order will cost them $16.67.

The principle is the same if you take data from an entire month, quarter, or even year.

When you know the average amount a customer spends by using your service, significant financial decisions you might make will be better informed. Raising your average order value is one of the easiest ways to increase your revenue, for example.

Customer Lifetime Value

There are many ways to measure a customer’s lifetime value (CLV), and the formula you choose and how specific it gets depends on the type of business you run or the goals you’d like to achieve. The formula we’ll use for calculating a CLV will give a general result to tell service business owners what they should usually expect from new customers.

We’ll start with the formula for CLV we’re using, break it down, and then make up an example.

The formula has two steps:

1. number of orders × average order value = all customers’ total average spent
2. total average spent ÷ total number of customers = customer lifetime value

Theoretically, if you’ve been open for a few years, and you use all the customers you’ve ever had to make this calculation, then you’ll have pretty solid data to work with and refer to. You’ll figure out how much revenue new customers are going to spend, on average, when they choose your service.

In conjunction with information like your average order value, you can use CLV to hone your marketing goals.

With the sum of the customers’ total average spent ($2,941), we can calculate a typical customer’s lifetime value:

2,941 ÷ 10 = $294.10

This data is much easier to calculate if you have a customer management system in place to track how many orders individual customers have made.

Using a more detailed version of the formula will give you information like customer retention and demographics. This information isn’t relevant for every business all the time, but it can tell you who your marketing campaign should target.

Average Cost Per Lead / Cost Per Acquisition

Knowing your average cost per lead (CPL) and acquisition (CPA) will help you identify the best places to spend your marketing budget. Let’s define the two:

• Lead – A lead is typically measured as anyone who leaves some type of contact information, like a phone number or email address.
  • • Make sure everyone on your team is using the same definition of “lead.” Otherwise, you might have conflicting numbers once you start calculating your CPL!
• Acquisition – An acquisition is a new customer who has been acquired through your campaign or a given media channel.

Calculating either of these is fairly simple – divide the total marketing spend by the number of leads or acquisitions generated.

When you calculate either cost, it’s important to remember you shouldn’t only count the cost of the ads themselves. You should include employee or agency costs, or “ad management” costs.

So, your equation should look like this:

Total marketing costs (including ad spend + ad management)

Total number of leads or acquisitions generated

If your new ads cost $2,000, and your ad management costs $3,000, you’ve spent $5,000 on total marketing costs for this campaign. If you’ve gained 195 leads from these ads in the month since you started the campaign, then:

5,000 ÷ 195 = $25.64

In this example, is an average $26 per lead a good price to pay? It depends. What is your average income – after business expenses – from a customer? Ideally, you should never be paying more for a lead than you would earn from a new customer.

Not every lead will become a new customer. If you’ve acquired 39 customers from the 195 (about 20%), then the math turns out like this:

5,000 ÷ 39 = $128.21

Whether this is a good number, again, depends on your industry and financial aspects like what your average customer lifetime value is. If your average CLV is only $150, then this is a weak number. If it’s $750, then you might choose to raise your ad spending.

Overall, deciding whether it’s more important to use your CPL or CPA in relation to pay-per-click ads or marketing spending depends on your goals. Either way, knowing your average costs for one or both categories will help you immensely as you plan your budget and marketing strategy.

Website Traffic By Source

When you know the main sources of your website’s traffic, you get the most value for your marketing efforts.

There are five primary sources of website traffic:

1. Organic search traffic, which comes from clicking onto your site from a search engine results page.
   This doesn’t count traffic from paid ads that put your site at or near the top of search results.
2. Referral traffic, which comes from someone clicking a link to your website they found on another webpage.
3. Direct traffic, which is when someone types your URL directly into the search bar or uses a bookmark to access your site.
4. Paid (pay-per-click) traffic, which comes from ads (including ads that put your site near or at the top of search results).
5. Social media traffic, which comes from social media platforms. In some cases, this overlaps with referral traffic.
   This is the hardest traffic to track because it’s not always clear where your link was placed in a thread or conversation. Also, the conversation might be inaccessible or completely erased after a certain amount of time.
   Since social media traffic is harder to track except where it overlaps with referral traffic, we won’t talk about it individually in this section. In a later section, we’ll talk more deeply about social media, reach, and engagement.

Best practice is to have as even a distribution of traffic sources as you can. This way, even if the source you get the most traffic from has a sudden, drastic drop in traffic, you’re still receiving a good number of site visitors.

Average Time on Site

The average amount of time someone spends on your site is available on Google Analytics. Usually, this metric can be listed by site domain, or URL, and so you’ll see what the average time spent on any given page is. Context is crucial to keep in mind when you think about a customer’s average time on site. Are they on your home page? A service landing page? A blog post? Length of time on these pages shouldn’t be the same.

For example, a short average time on your home landing page means customers are probably finding what they’re looking for easily, especially if your bounce rate is low. If they tend to spend a long time on your home page, though, it could mean they can’t find what they’re looking for or don’t know how to navigate the page. In this scenario, they’re likely frustrated by their experience. Even if they find the information or next page they need, it’ll impact their perception of your business.

The opposite applies for pages like blogs and even, to a lesser extent, your service pages.

If the average time spent on a blog post is very short, then people probably aren’t reading it. They are, at best, skimming it. If the average time spent on the post is long, then they’re likely reading it properly. A service page is the happy medium of the previous two examples. If people aren’t spending a lot of time on it, then they’re deciding pretty quickly if you have what they need, for better or worse. But, if they’re typically spending a few minutes on the page, then they’re probably looking at it more thoroughly in order to get a better understanding of your services.

Reviews & Feedback Generated

In short: Reviews are critical to your business ranking well in search results.

The more online reviews and feedback your business has, the more trust a user is likely to have. They make it easier for users to find you on Google in the first place, too. Which, of course, increases the likelihood someone will become a lead or new customer.

The detailed explanation: Between 2017-18, 84% of Google searches were “discovery” searches, like “plumbers near me,” and 25% of customers found a business through Google Maps. Over half of global searches are now through a mobile device, so it’s not unlikely this percentage has grown.

BrightLocal’s 2022 Local Consumer Review Survey reported 77% of consumers “always” or “regularly” read online reviews. Almost half of consumers trust these reviews as much as they trust personal recommendations from a friend or family member.

Not only do customers usually read reviews before choosing a service provider, but Google uses those reviews, too – and your interaction with them – to rank where your business lands on Google Maps or other local discovery searches.

On top of it all, a significant percentage of Google searches end with zero clicks to any sites in the search results. 54% of all clicks go to one of the top-three search results. Assuming, that is, there are no ads or search result features, like a “snippet” answer at the top of a page excerpting one of the results.

The more positive reviews you have, and the more you respond to reviews – even when they’re negative! – the better your business will rank on Google and Google Maps. With so many local companies found on a regular basis via discovery searches, online feedback is not a resource to underestimate.

If you’re wondering how to increase your online reviews, we’ve got you covered: How to Get More Google Reviews with Less Work. You might also be relieved to know BrightLocal’s survey found more people considered leaving or did leave a positive review than a negative review.

SEO Rankings

Search engine optimization and ranking is a “secondary” key performance indicator because, unlike the metrics we’ve discussed so far, it doesn’t inherently carry information about how your business is doing or how customers view you.

Social Media Reach & Engagement

Like SEO rankings, social media metrics can be considered “secondary” key performance indicators (KPI). Still, it’s a popular method of maintaining your brand image, building and maintaining a connection with customers, executing marketing campaigns, and so much more.

Your social media reach is the number of unique users who see your content. Seeing it does not mean they pay attention to it, notice it, or otherwise interact with it.

Your social media engagement is the amount of actual interaction your content receives on the social media platform you’re using. This means likes, comments, shares, etc.

It’s also possible to track whether people are becoming leads, or at least clicking through to your site, through on your social media.

Using social media appropriately for your business’ needs will help you with

• New lead generation
• Increasing the number of visitors to your site
• Improving the marketing channels you use to reach customers

A popular method for setting social media KPIs and goals is the SMART acronym:

• Specific. Your goals should be tangible and easy to communicate with the rest of your team.
• Measurable. You can’t track what’s working and what’s not if you have no way to assess your progress.
• Attainable. If your goal isn’t realistic, everyone will have false expectations, and your team could lose morale.
• Relevant. How does your goal relate to your business’ big picture? For example, if you want to increase social media engagement, how does that relate to raising the number of leads you get every month? How do these work together?
• Timely. When is the deadline for determining success (or lack thereof) of your social media project? Keep attainability in mind. For instance, gaining 5,000 followers in a month for an account you’ve just created is probably too timely.

Your timeframe will also help you Evaluate and Reevaluate (optional steps to create the acronym SMARTER) your goals to change course, if necessary, at a good time.

If you decide you want 5,000 new followers in a year and to check progress every month, you’ll (hopefully) identify sooner than later if something isn’t working, if you’re moving faster than you anticipated, or some other reason you might need to adjust your original goal.

As with SEO rankings, your social media reach and engagement don’t inherently correlate with your business’ success. However, if you’re hoping to grow, you should keep in mind at least half of consumers learn about new brands through social media.

You could be losing a significant number of qualified leads because they have no personal connections to you, and you have no strong social media presence. This holds true if your social media isn’t optimized to reach leads who have a high potential to become customers, even if your social media is successful in terms of reach and engagement.

Use marketing metrics to create successful strategies and grow your business

It’s important to understand basic marketing metrics and what they indicate about your business’ performance. It allows you to create reasonable goals for your company and recognize when they’re not going as planned.

If you employ someone for marketing purposes, you’ll understand the information they’re giving you, be able to ask questions, or give useful feedback. In a worst case scenario, you might even be able to realize they’re trying to use these metrics to make their work look more successful than it is.

If you don’t have the time to handle marketing activities yourself or can’t afford the cost of a dedicated marketing employee, then outsourced marketing services might be a practical alternative.

At Cut Throat Marketing, we use analytics tools to study these key metrics and develop a personalized service plan for your business. We’ll produce significant results for you, starting with a free, 30-minute consultation to get to know each other.

A Brief History of Artificial Intelligence

The idea of artificial intelligence is thousands of years old, with Greek mythology containing references to giant brass robots built by the god Hephaestus. Over the next couple of millennia philosophers, mathematicians, religious scholars, and authors wrote extensively about the idea and its potential moral and practical ramifications.

Despite the mental attention given to the subject, AI had to wait until the early 1950s to come into being. These first artificial intelligences were rudimentary things by today’s standards and could only play simple games like checkers or solve basic chess endgame problems.

Within just 20 years these basic artificial intelligences were supplanted by increasingly more capable models. In the mid-1970s there was even an AI developed which was capable of diagnosing and offering therapeutic suggestions for bacterial infections in humans. This AI, called MYCIN, was regarded with skepticism by the medical community and never was used in practice, despite having a better diagnosis rate than non-specialist physicians.

The Different Types of Artificial Intelligence

When we talk about AI, it is easy to refer to them as a collective – unified in the sense that all of them are computer-based intelligences. However, there are actually several distinct methods used to create AIs and each comes with its own advantages, disadvantages, and capabilities.

In brief, here are a few common types of AIs:

1. Rule-based systems: These AI systems use a predefined set of rules or decision trees to solve problems. They are particularly effective for tasks with a limited number of possibilities and clear rules.
   Example: The chess playing AI, DeepBlue.
2. Expert systems: A type of rule-based system designed to mimic human expert decision-making in a specific domain. These systems rely on a knowledge base of facts and a set of rules or heuristics to solve problems.
   Example: The early medical diagnostic AI, MYCIN.
3. Artificial Neural Networks (ANN): Inspired by the structure and function of the human brain, ANNs consist of interconnected nodes (neurons) that process information and learn from data.
   Example: Imagine identification AIs like Google Lens.
4. Deep Learning: A subtype of ANN’s which can learn complex patterns and representations in data.
   Example: OpenAI’s ChatGPT and Google’s Bard are chatbots which utilize deep learning.
5. Reinforcement Learning (RL): An approach to AI where the intelligence learns to make decisions by interacting with its environment, receiving feedback in the form of rewards or penalties.
   Example: Google’s Go-playing artificial intelligence AlphaGo Zero used reinforcement learning to master the game without being told the rules or given human guidance.

Ultimately, this list is just scratching the surface and many implementations of artificial intelligence use a combination of methods rather than relying on just one.

OK, But Is It Any Good?

When ChatGPT first hit the scene in November 2022, it was met with considerable fanfare, but also derision and mockery. The results it provided often sounded awkward and unnatural – leading many to dismiss the technology as nothing more than a silly toy. Despite criticisms, this version of ChatGPT was reported by the New York Times to be able to write prose with fluency approaching that of humans.

The claims of fluency were debatable, but even if the text it produced couldn’t yet replace a human writer, ChatGPT proved to be a powerful brainstorming tool and could be used to quickly generate interesting ideas. Whether you were looking for novel business concepts, a catchy marketing slogan, or a premise for a science fiction novel, ChatGPT could help.

Note: While ChatGPT was publicly released in 2022, OpenAI has been releasing generative AIs since 2018.

This first public release, referred to as GPT-3, was superseded by GPT-4 just four months after it was made available to the public. It is this latest iteration that truly merits the attention and sometimes-hyperbole that the press has been lavishing on AI.

GPT-4 writes uncannily good copy – easily rivaling the average person’s writing abilities and delivering results in a fraction of the time.

Other AIs like Midjourney, a generative AI which creates images, have proven to be capable of making striking and award winning works of digital art. Even photography isn’t safe – with a ‘photograph’ created by DALL-E 2 recently taking first place at the Sony World Photography Awards. The results speak for themselves – AI is currently able to go toe to toe with human creativity.

The Contenders For AI Supremacy

OpenAI is probably the company getting the most attention right now with their ChatGPT and DALL-E generative AIs having reached the market before most of their competitors. However, that is not to say that they are alone in the field and other major tech companies are racing to release their own.

Microsoft – The Money Behind OpenAI

You may wonder where Microsoft finds itself in this battle – and in fact they are sitting squarely behind OpenAI and their powerful ChatGPT system. In 2018 Microsoft invested $1 billion dollars into OpenAI and doubled down on their investment with a $10 billion dollar pledge and a 49% stake in the company as of January 2023.

Microsoft has already added ChatGPT functionality to its Bing search engine, as well as its GitHub Copilot AI which helps programmers create and edit code.

Alphabet’s AI Entry: Google Bard

Previously Alphabet, the parent company to Google, could probably have been considered the industry leader in AI, with their Google Lens offering robust image identification that was hard to rival. Google’s version of ChatGPT, called Bard, was initially shown to the world in February 2023 – but was dealt a serious setback when the AI made a serious gaff during the release event.

Access to Bard is currently limited to those who sign up for a waitlist and functions similarly to Microsoft’s Bing chat as a search-engine meets generative AI.

Amazon’s Additions to AWS: CodeWhisperer & Bedrock

Amazon’s AI is not as well known as ChatGPT or Bard, but their foray into generative AI goes back to June 2022. CodeWhisperer is part of Amazon Web Services (AWS) and, like GitHub’s Copilot, is designed to help programmers edit their code.

As of April 2023, Amazon announced Bedrock, another AWS service which will allow customers to build their own generative AI applications using Amazon’s cloud services.

BLOOM – An Open Source AI Alternative

While most of the contenders in the generative AI scene are well-established tech giants, these mega corporations don’t have a monopoly on the technology. BLOOM, or the BigScience Large Open-science Open-access Multilingual Language Model, is a free Large Language Model that was built collaboratively by over 1,000 AI researchers.

Bloom is unique in that it is free to use and open-source – although it does require significantly more setup to use than its corporate alternatives.

The Limitations of Today’s Artificial Intelligence Models

It is undeniable that generative AIs have tremendous potential, but it is important to recognize that the technology is still quite new. It is reasonable to assume that some of these problems may be able to be solved with time, although some may prove to be intractable issues that are fundamental to the models.

Regardless of if the problems can be solved, it is vital for consumers to know the limitations of generative AI models so that these shortcomings can be recognized and avoided.

Lack of Context

While AI models may seem to understand our world, they don’t actually know how the world works. Instead, they create patterns of text that mimic those that they encountered in their training data to simulate an understanding. This can result in nonsensical copy, sometimes referred to as hallucinations.

This issue can seem innocuous but can cause disturbing results. For example, image recognition models may be able to reliably identify an unmodified stop-sign, but small changes to the sign could cause the model to completely misidentify it. While a human wouldn’t be fooled by the changes, artificial intelligences don’t actually know what a stop sign is and can be misled by seemingly small differences.

Inconsistency Over Time

As it stands today, if you ask ChatGPT, Bard, or any other AI model a question more than once, you shouldn’t expect the same answer. In fact, you may get a radically different answer from day to day!
If you’re trying to write copy for birthday cards or fortune cookies, the lack of consistency may be a good thing! However, if you are producing a white paper on a new product that your company is developing, this lack of consistency may result in content that is contradictory or confusing.

Dependent on Training Data

The most well-known AI models are trained with vast amounts of data which they pull from to create unique outputs. However, any biases or shortcomings contained within the training data will ultimately be reflected in the results. Some may argue that given a sufficiently large training dataset these biases should be negligible, but that is a risky assumption made riskier by the fact that most companies do not disclose their training data.

Ethical and Legal Concerns

While the idea of producing more content, more quickly is enticing to anyone whose business involves publishing – AI generated works are not without their ethical and legal considerations.

First and foremost, passing off computer-generated text as text authored by a human is morally questionable. A major tech website, CNET, recently discovered that its readers were disturbed and unhappy to learn that a considerable amount of their content had been produced by AI. In the face of reader backlash, they stopped producing AI-generated content and returned to the time-honored tradition of human-powered writing.

Another issue is related to the first, although has less to do with reader satisfaction and more to do with responsibility. Namely, who is responsible for the content generated by an AI? If it turns out that biases in the training data result in biased outputs, is the company that created the AI model at fault, or the company who used that AI model to create content in the wrong?

Compounding the issue of responsibility is the fact that many of these generative AIs do not cite their sources – instead simply presenting the user with an output that is stated as fact. While in many cases the AIs do have their facts right, this is absolutely not universally true and it often requires additional legwork to verify the veracity of its claims.

A practical consideration is: who owns the copyright to AI-generated content? Usually, copyright is framed in terms of authorship – but if an AI model created the content the lines of ownership become blurry. For their part, ChatGPT’s term of service states that “Subject to your compliance with these Terms, OpenAI hereby assigns to you all its right, title and interest in and to Output.” However, OpenAI makes no claims of ChatGPT’s output uniqueness – meaning that multiple users can receive the same output and have legal rights to their use.

Another issue related to the matter of copyright and ownership pertains to the training data that these AI models were built upon. The billions of books, blogs, tweets, images, and more that form the foundation of generative AI models were produced by people who never gave permission to use their works in this manner. OpenAI claims that their usage of copyrighted material was in line with fair use practices – but the matter has yet to be decided on in court.

These and other issues are going to be the subject of additional scrutiny as the technology becomes more mainstream. Right now, it is unclear how these questions will be resolved.

What’s Coming In the Near Future

We said at the outset of this article that we would not speculate on the unknown. However, there are a few clear signs from major tech companies about upcoming products which will rely on these new AI technologies.

Google introducing Bard into their search

Currently, Bard is only available to those who sign up for Google’s waitlist, but it is fairly clear that it will become widely available sooner than later. There are still major questions to be answered about how this will impact Google’s advertising business and what changes this will cause for website traffic and SEO.

GPT Plugins

OpenAI has announced that it will be making ChatGPT plugins available, and is already working with several major companies like Expedia, InstaCart, Shopify, and Slack. It is too early to say exactly how these implementations will work, but expect to see AI-enhanced chatbots hit the market in the near future.

Is AI Development Slowing?

The past year has seen incredibly rapid progress in terms of what AI is capable of, but we’re beginning to see some signs that this development will slow. OpenAI has announced that it is not currently working on GPT-5, although updates to GPT-4 are in the works. Sam Altman, the CEO of OpenAI, has also stated that the future of generative AI doesn’t lie in increasing the size of the training databases but instead will need to come from improvements to AI architecture and model design.

In addition to technological limitations, AI developers might need to contend with legislative hurdles in the near future. In March, Italy imposed a ban on ChatGPT, and now the European Union is considering drafting legislation which would regulate AI. It’s hard to believe that this particular genie can be put back in the bottle, but regulations could further slow the industry’s development.

The AI-Powered Revolution Has Already Begun

Whether or not your business is currently in a place to take advantage of AI, it is impossible to deny that this technology is here to stay. It is easy to understand where all of the breathless hype related to the industry is coming from as AI models are positioned to be as disruptive to business as the development of the internet was.

The next few years promise to be interesting as developments in the field continue, businesses find new use cases for AI, and governments grapple to understand and regulate the industry.