AI’s ‘Sputnik moment’: What DeepSeek could mean for marketers

On Monday, Chinese startup DeepSeek launched its new R1 chatbot, shocking the world with an AI model that not only challenged the performance of current US-based industry leaders but did so at a fraction of the cost and power consumption.

The app quickly went viral and topped app store charts, knocking ChatGPT off the number one spot and sparking a $600 billion one-day market cap loss for NVIDIA—the biggest drop in US stock market history.

Venture capitalist Marc Andreessen described the arrival of DeepSeek as a "Sputnik moment," referring to the Soviet satellite launch in 1957 that highlighted a huge technology chasm between the US and its main geopolitical adversary.

Deepseek was founded in 2023 by Liang Wenfeng, a hedge fund manager in Hangzhou, China. It currently employs around 200 people. 

Wenfung previously co-founded one of China's top hedge funds, High-Flyer, which collected over 10,000 Nvidia high-performance A100 graphics processor chips used to build and run AI systems.

The AI space race gets blown wide open

DeepSeek has developed two models, V3 and R1, using an open-source AI model that harnessed larger models, including Meta’s Llama, to train its smaller model, which requires less power.

The company also bought input and output token data from the secondary market to build their models to save time and resources. 

Crucially, the company claims the R1 model is 20 to 50 times cheaper to use than OpenAI's o1 model, according to a post on DeepSeek's official WeChat account.

This places the US’s recent $500 billion AI investment by OpenAI, Oracle and SoftBank into a predicament—a major policy touted by President Donald Trump. 

DeepSeek claims in its paper that the training of DeepSeek-V3 required less than $6m worth of computing power from Nvidia H800 chips—a tiny fraction of the cost the US government is investing. 

Current US policy is to restrict sales of its own graphics processor chips to China, with Trump doubling down on the approach.  

Speaking to House Republicans on Monday, Trump called the development a "wakeup call for our industries that we need to be laser-focused on competing to win".

Wenfeng has admitted the "embargo on high-end chips" has proved a major hurdle in Deepseek’s work.

​​Investors are now questioning whether it’s wise to invest billions in AI companies when a Chinese rival can build a better model and release it for free with an open-source license. 

On Tuesday, DeepSeek also launched Janus, a free and open source image generation model that rivals DALL-E 3 and Stable Diffusion and there are reports that a new Deepseek model, R2, is already on the way. 

‘An opportunity for marketers enabling them to build agents designed for specific problems’

Following DeepSeek’s ascension in the AI market, Mike Follett, CEO and Founder of attention platform Lumen Research, told PMW why this disruption is positive for advertisers, and how it could open the market to greater innovation in tracking and capturing consumer attention. 

“DeepSeek’s success points to a not-so-distant world where foundational AI models are the basis for answers to one of the biggest questions advertisers face—‘are consumers paying attention to our ad?’,” Follet said. 

“Last week, Sam Altman and Elon Musk were AI monopolists. Now, it is clear that competition will reduce costs and loosen the grip hold of the biggest players. This represents an opportunity for marketers enabling them to build agents designed for specific problems, at a speed, scale and at a price that drives ROI.

“Greater competition and choice in the AI market—regardless of the platform—means brands can better scrutinise data—such as Lumen’s—and finally complete the puzzle of consumer attention.”

‘Rather than focusing on individual models, marketers should prioritise integrated solutions powered by advancements like DeepSeek’

Antonio Alegria, Founder at DOJO AI, said that DeepSeek represents a “major milestone” for AI. 

“Delivering performance comparable to frontier models at a fraction of the cost, while being fully open source, marks a pivotal moment for the industry, " Alegria said. “Beyond its geopolitical implications, DeepSeek’s efficiency and accessibility are a net win for application builders up the stack, driving broader adoption and fostering innovation.

“Much of the buzz around DeepSeek stems from the mistaken belief that AI progress was starting to plateau. Instead, this aligns with the Moore’s Law-like trajectory we’ve observed: consistent advancements in capabilities and, more importantly, efficiency. These cost reduction and scalability breakthroughs are not anomalies—they are natural evolutions of the technology curve.

“Marketers may interpret this as a reason to move away from established players like OpenAI, Anthropic, Meta, or Google. That’s missing the point. The real opportunity lies in adopting tools that integrate all available data into an intelligent, end-to-end system. These marketing operating systems will encompass everything from market research and brand strategy to content production and paid performance.

“Rather than focusing on individual models, marketers should prioritise adopting integrated solutions powered by advancements like DeepSeek. As these innovations lower barriers and disrupt cost structures, they pave the way for broader access to AI-driven marketing tools. DeepSeek is just another step in AI’s natural evolution, and its ripple effects will benefit everyone.”

This article first appeared on Campaign sister title Performance Marketing World.