Key Takeaways
- Spending on AI-powered search ads in the U.S. is projected to skyrocket from about $1 billion this year to nearly $26 billion by 2029.
- The rise of AI search, offering greater convenience and engagement, may challenge traditional keyword-based advertising revenues.
- Tech giants like Google and Microsoft are integrating AI into their search offerings, while Apple is reportedly exploring AI search for its Safari browser.
- Some businesses and publishers are already adapting to shifts in user behavior and traffic due to AI-powered tools and search results.
A significant transformation is underway in online advertising. Spending on U.S. ads within AI-powered search is expected to jump dramatically, from just over $1 billion this year to nearly $26 billion by 2029.
This surge is driven by the rapid adoption of artificial intelligence and more advanced methods for reaching specific users, according to data from Emarketer.
The research firm notes that companies dependent on traditional keyword-based search ads could face declining revenue. This is because AI search ads tend to be more convenient and engaging for users.
Search industry leaders, including Google and Microsoft’s Bing, have been adding AI features. Their goal is to compete more effectively with chatbots like OpenAI’s ChatGPT and Perplexity AI, which provide direct answers, often eliminating the need to click through multiple search results.
Even Apple is reportedly looking into integrating AI-driven search capabilities into its Safari browser. Such a move could shift its long-standing search partnership with Google.
These developments come amid growing concerns that users are increasingly turning to chatbots for conversational searches. AI-powered search results have the potential to disrupt the business models of some companies.
For instance, online education company Chegg announced in May it would lay off employees. The company cited students’ growing use of AI tools like ChatGPT over traditional educational technology platforms.
Publishers and other websites are also feeling the impact of AI search. “As they lose out on traffic, we’re seeing publishers lean into subscriptions and paid AI licensing deals to bolster revenue,” said Emarketer analyst Minda Smiley.
According to Emarketer, AI search ad spending is anticipated to make up nearly 1% of total search ad spending this year in the U.S., growing to 13.6% by 2029.
The report also highlighted that sectors such as financial services, technology, telecom, and healthcare are readily adopting AI, seeing clear benefits in using it to improve their advertising strategies. The retail industry, however, is adopting AI more slowly.
Recently, Google announced an expansion of its AI-powered search capabilities into the consumer packaged goods sector, enhancing its Google Shopping platform.
