Paul Hewett, CEO of In Marketing We Trust is over in Texas for SXSW Austin. And as you would have seen, B&T has set him to work as our on-ground correspondent. Here’s his third and final diary entry.
My last day at SXSW 2026 and the tension that’s been building all week finally had a name. Or rather, a panel that laid it out properly.
“AI is Changing Consumer Behaviour” brought together an MIT researcher, Snap’s CMO Grace Kao, and Australian Allister Hercus from Stoop Studios, and it landed the question marketers should actually be asking. Not how AI changes our workflows. How it changes the people we’re trying to reach. The framing was useful: where is the industry overreacting, and where is it underreacting? The consensus was clear. We’re overreacting to AI as a productivity tool (every brand scrambling to slap AI on their website) and underreacting to what matters more: human connection, creativity, and the fact that people still respond to storytelling, values, and brands that mean something beyond the transaction.
Snap is seeing 55 per cent year-on-year growth in AI usage alongside a simultaneous surge in human creators. That tension, people wanting AI to happen through them rather than to them, is one of the most useful insights I’ve heard all week.
The MIT researcher, Dr. Natalia Kosmyna, added an edge. Reading comprehension drops by nearly half when people habitually avoid difficult content. Brains need boredom. In a world where AI removes every friction, we may be eroding the cognitive capacity that makes us good at our jobs (and good consumers of complex ideas). That’s not a marketing footnote. It’s a structural shift.
Away from the AI discourse, it was refreshing to walk the XR Expo and see a resurgence of spatial computing. Snapchat’s Spectacles were drawing crowds, and watching people wave their hands around at invisible objects was a welcome reminder that the future isn’t just language models; it’s embodied, weird, and occasionally ridiculous. XR was a major theme at SXSW in the pre-AI era, and it’s good to see it hasn’t disappeared entirely.
In another session, OpenAI pulled back the curtain on Stargate, its $500 billion AI infrastructure project being built down the road in Abilene. Multiple gigawatt-scale data centres across Texas. The physical reality of what’s powering these models is staggering, and it’s happening right here.
SXSW 2026 was smaller. Tighter budgets, a literal hole in the ground where the convention centre used to be, fewer activations, and a mood in the hallways that one person described as feeling like a recession. They’re not wrong about the scale. But they’re wrong about the significance. This was the most consequential SXSW I’ve attended. The technology discussed at this event for 4 years is now at a point where it will genuinely reshape businesses, economies, and how we live. That’s not the conclusion of one session. It’s the throughline from Tristan Harris and Anthony Aguirre on AI safety, to Steven Bartlett on culture and psychology, to the MIT and Snap teams on what’s actually happening to consumer behaviour right now.
SXSW has always been ahead of the curve. Austin delivers the texture that no other conference city can match: live music bleeding out of every door on 6th Street, BBQ smoke in the air, and the particular energy of a place that’s been hosting this thing for four decades. But the real value is that this is where thinkers come to share signals before the rest of the world catches up.
If this week is anything to go by, business as usual is over.
I’ll be back.
