A report from corporate card and accounts payable platform Ramp shows that companies are willing to invest in AI, especially when it addresses specific issues. While spending remained strong in Q2, some headwinds are forming.
Small SMEs raised their spending by 9.4%, with large SMEs at 7.4% and mid-sized ones at 5.5%. That trend may soon end, as trailing three-month spending across many categories declined in June. Recruiting spending stayed flat, even in a strengthening job market.
Longer-term AI investments soared. According to Ramp, many such purchases are devoted to accounts payable; the mean AP spend ballooned 375% YoY. Companies are growing more brand-loyal, as 70.4% who began spending with AI vendors in 2023 are still with them.
First-time AI purchases are dominated by OpenAI and Anthropic. Ramp said this suggests that many companies are focusing on internal models and customer-facing areas.
Software spending also goes to creative functions such as image generation, audio, text, and video. This includes Grammarly, Midjourney, and ElevenLabs, along with design tools like Canva, Squarespace, and Adobe.
Contracting and freelance work continues to be popular. Even as the market favors employers, many are boosting their buys on sites like Upwork. Combine that with AI, and it points to lower hiring ahead.
Ad budgets are tightening, with average spending falling 5.2% in the quarter. Salesforce and airline spending are also dropping.
Mean card spending rose in all top categories. Some are explained by inflation, while others, like SaaS and software, indicate an increase in recurring expenditures and experimentation with new vendors.
Declining spending in more recurring categories is a strong indicator of tightening. In May, only three of 40 categories saw tightening. This ballooned to 16 in June.
Small SMBs cut back on advertising after a lengthy period of increasing it. However, a greater percentage was allotted to travel, even as sector-related costs started falling. They also splurged on freelancing and physical technology. Mid-market companies cut ad and software spending even as they increased nominal overall spending.
Large SMBs increased their spending on FedEx by 8.6%. They also appear to be more heavily relying on freelancers.
Mid-market companies boosted spending on cloud computing. Amazon Web Services was the big winner, with Google Cloud losing out. Apple saw big QoQ spending increases here.
OpenAI and Anthropic acquired many new customers in 2024’s first half. AI-influenced companies Canva and Squarespace fared well. Rising spending on Adobe and GoDaddy suggests that more companies are prioritizing a digital presence.
Report quotes:
“Businesses typically put longer-term contracts on AP, so the sharp rise in AP spend shows that vendors like OpenAI have established themselves as mission-critical business tools.”
“OpenAI, Anthropic, Apollo, Fireflies.ai, and ElevenLabs are vendors that rank highly in both customer count and mean card spend. While the growth of foundation models is not surprising, the popularity of tools like Fireflies.ai and ElevenLabs shows that organizations are willing to pay for AI that solves specific problems.”