Artificial intelligence will certainly revolutionize the advertising market, but what effect will it have on the all-important search market, which is a key component of many advertising budgets and a source of revenue for Google?
“I hate to say it, but I think this kind of thing isn’t too exaggerated, but it’s not exaggerated, because the advent of intelligence in a non-human form is actually a huge challenge to the world. “In the words of Eric Schmidt, CEO of Google/Alphabet, in a recent interview with CNBC about the evolution of AI. He further explained that while the upgrade usually happens over a twenty-year period in most industries, he believes that AI will have an impact on us much sooner, in less than five years, because the infrastructure needed for this generation is already largely in place.
The irony of this from a former Google CEO has not gone unnoticed, as Google is sometimes perceived to be slow to leverage AI in its main source of revenue, Google Search. While Google has always used AI to force its products behind the scenes, it has only recently become apparent how they plan to integrate AI in a more consumer-oriented way.
AI entered the mainstream in late 2022 with the rise of ChatGPT, OpenAI’s generative AI offering. In response, Google introduced Bard, which got a mixed reaction. Bard then evolved into Gemini, and in recent weeks we’ve noticed for the first time it’s time to see how Google plans to integrate generative AI into its search results. The changes are expected to take effect almost without delay in some markets.
Why is this for Irish advertisers and what adjustments can we expect?
By 2024, the Irish advertising market will be valued at around €1. 5 billion, of which only around 25% will be paid to Google. No company has had such a gigantic market share since the deregulation of the sector in 1991. Google is actively participating in Growing Ad Categories: placement in the search market is expected to grow by 4% this year, while YouTube, also owned by Google, will grow by 10%. The percentage accumulates as online video continues to erode the profits of linear TV channels.
However, there are threats. In fact, Amazon is winning the online grocery shopping war globally, with around 70% of product searches starting on its site, compared to less than 30% on Google. In addition, TikTok and Instagram have disrupted the discovery process, with only about 40% of Gen Z platforms searching instead of Google.
Google also faces the high-profile risk of Microsoft’s Bing, which has incorporated Gen AI (powered through OpenAI) directly into its platform over the past year. This means that when you search on Bing, you get search results, just like Google’s. has been offering for years, or you’ll get a single result powered by Gen AI. Bing seeks to create a new habit and potentially a new industry, much like how Google created or at least perfected search.
Google’s announcement last week aligns with Bing’s offering. When a user searches on the platform, they can get popular search results, or they can get a search result and a Gen AI result. Google’s apparent merit over potential disruptors is the sheer amount of knowledge it has.
However, there are two precautions. It’s unclear exactly how the Gen AI result will appear, and for advertisers, it’s unclear where the ad fits into the Gen AI result. For now, Google will run classified ads around the Gen AI result instead of interning it directly. The effects of AI generation seem to be the biggest challenge facing Google. As the industry migrates toward AI-based effects, it faces the shock of a potential decline in search advertising revenue as other people search less.
Is the festival disrupting research?
Search firm Gartner predicted earlier this year that through 2026, classic search engine volumes would decline by 25%, as a more “agent-driven” search strategy, in which AI models retrieve and generate more direct answers, takes hold. We’re seeing this trend, with search volumes dropping in some categories by 10% to 25% over the past 18 months. It should be noted that this is not the case for all categories.
Disruption is taking place, but why is there a steady increase in targeted ad spend?Actually, Google’s products are very profitable. If you have a purpose-driven functionality strategy, nine times out of ten, Google will succeed. This functionality gives Google more wiggle room to raise prices if the CPA target is met, and it’s in fact the easiest option for them right now. Since the trend decreases but the functionality remains, the best option is to increase prices to support the trend. Will advertisers pay for the accrual of this charge?For now, this doesn’t seem to be a major challenge if the functionality is maintained.
At the same time, they will begin to take advantage of the effects of AI generation in their studies, but it is worth monitoring the magnitude and frequency of this update. With 96% of the share of the search market in Ireland, Google is in a strong position to slowly control AI generation rather than employing it for each and every need. The way advertising will be incorporated into Generation AI studies in the long run is the industry’s great vigilance.
Core is in charge of managing this transition.
On the one hand, I resent giving consumers a choice when they’re looking for it.
Consumers will want a detail of transparency about why AI platforms choose one piece of content over another. The news industry has pointed out this potential problem. On the other hand, the question for advertisers is how will Google monetize those results?As a source of revenue, it’s hard to believe that Google prioritizes AI generation over popular searches, but we’ve been through this before. Nokia ignored the smartphone. HMV has ignored virtual audio. Ironically, Yahoo ignored Google.
Eric Schmidt’s prediction that changes will be much faster in terms of AI is the big decision of the moment. Google’s market share indicates that they may not be in a hurry to incorporate Gen AI into each and every search result, but with an expanding festival. from Instagram, TikTok, and now Bing, they may have no choice. For advertisers, the blurred line between their search, social media and AI strategies is the most sensible concern today. Who will win this battle, only time will. say.