Search is the digital advertising format that enjoys the highest investments in the United States. In 2022,
stood at 99 billion U.S. dollars. It accounted for over 40 percent of the
, ten percentage points ahead of the second largest format - display. Search attracts more ad spending than TV, which was the most invested-in traditional medium in the U.S. in 2022. Market research shows that search ad spending will continue to grow in the coming years at a healthy pace to reach 136 billion dollars by 2026. Currently, search engines and online retailers are the top beneficiaries of advertisers’ love affair with search, but changes are looming.
Social platforms disrupting the market
Search engines are losing relevance for
product discovery. A survey carried out in the second half of 2022 showed that they ranked only fourth behind TV advertising, recommendations from friends or family, and online retail websites, such as Amazon or Walmart. Google and Co. were also not among the ten
digital media with the fastest-growing importance for product discovery. Shoppers are increasingly using social media instead. In early 2023, YouTube and TikTok already proved more popular than search engines for this purpose among
Generation Z. The Chinese video platform is working on monetizing this strong position. In March 2023, it launched beta testing for ads in search results for selected clients. If its algorithm can fine-tune search ads to users’ interests as successfully as it does for user-generated video content, TikTok is bound to shake up the search advertising landscape.
Artificial intelligence received with mixed feelings
Since OpenAI put artificial intelligence in the spotlight, the ad industry has been discussing, developing, and implementing AI-based solutions. For the consumer, the most apparent change AI will introduce for search ads will be AI-generated ads, for which both the ad text and the image can be generated on the fly to match the user’s query. Additionally, chat-based search is likely to become commonplace, helping users get precisely the product or information they want. Marketers are optimistic about the changes. During a summer 2023 survey, more than nine in 10 paid search marketers believed
chat-based search ads would be at least slightly effective, and over 60 percent called them very or extremely effective. Even though both above-mentioned use cases sound like a win for the consumers as well, as of May 2023, over half of U.S. adults were
uncomfortable with AI-targeted advertising.
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