Google is facing an unprecedented challenge to its long-standing dominance in the internet advertising market as AI-powered search tools reshape the digital landscape. According to projections by eMarketer, a digital marketing research company, Google’s share of the US search advertising market could fall below 50% in 2024 for the first time in over a decade.
The tech giant’s grip on search is being challenged by AI tools like OpenAI’s ChatGPT and Perplexity AI, which leverage large language models trained on massive datasets to answer user questions in natural, conversational language. ChatGPT set records for the fastest-growing consumer application user base shortly after launching in late 2022, signaling a fundamental shift in how people access information online.
The impact extends beyond market share numbers. A recent study revealed that younger generations, including Gen Z and Gen Alpha, are moving away from using “Google” as a verb, instead opting for the more generic term “searching,” according to Mark Shmulik, an analyst at Bernstein Research. This linguistic shift reflects a deeper change in user behavior and brand loyalty.
Google has responded aggressively to the AI threat. In March 2023, the company launched Gemini, its own large language model that now presents search results in natural language at the top of search pages. The company has since rolled out multiple generative AI tools and enhancements to maintain its competitive edge. Google is also leveraging AI to improve ad presentation, demonstrating examples like Tide product advertisements appearing below searches for stain removal tips.
Brendon Kraham, Google’s vice president overseeing search ads, expressed confidence in the company’s monetization strategy, telling The Wall Street Journal: “We’ve been here before navigating these kinds of changes.”
Meanwhile, competitors are gaining ground. Perplexity AI processed 340 million queries in September and is attracting interest from major advertisers, according to chief business officer Dmitry Shevelenko. The company, valued at over $1 billion with backing from Jeff Bezos and Nvidia, plans to allow sponsors to advertise on follow-up questions in conversational searches. However, Perplexity has faced controversy over copyright issues, with Forbes accusing the platform of using content without proper attribution.
The battle for search advertising supremacy is intensifying as AI fundamentally transforms how users discover information and how companies reach potential customers.
Key Quotes
Young internet users are now ‘searching’ instead of ‘Googling’
Mark Shmulik, an analyst at Bernstein Research, highlighted this linguistic shift in a note to investors last month, illustrating how younger generations are moving away from Google’s brand dominance and adopting more generic terminology for online searches.
We’re confident in this approach to monetizing our AI-powered experiences. We’ve been here before navigating these kinds of changes.
Brendon Kraham, Google’s vice president overseeing the search ads business, expressed confidence to The Wall Street Journal about the company’s ability to adapt to AI-driven changes in the search market, drawing on Google’s history of navigating technological shifts.
What we’re opening up is the ability for a brand to spark or inspire somebody to ask a question about them
Dmitry Shevelenko, Perplexity AI’s chief business officer, explained the company’s innovative advertising approach that allows brands to sponsor follow-up questions in conversational searches, representing a new paradigm for digital advertising beyond traditional search ads.
Our Take
This story represents a watershed moment for both AI and digital advertising. Google’s vulnerability isn’t just about technology—it’s about user behavior fundamentally changing. The company that defined internet search for a generation now faces competitors that offer something genuinely different: conversational AI that feels more intuitive and efficient.
What’s particularly striking is the speed of this disruption. ChatGPT launched less than two years ago, yet it’s already forcing a company as dominant as Google to scramble. This acceleration suggests we’re entering a period of rapid transformation in how information is accessed and monetized online.
The copyright controversies surrounding Perplexity also foreshadow larger battles ahead. As AI companies build businesses on content created by others, the tension between innovation and intellectual property rights will only intensify. The outcome of these conflicts will shape the future of both AI development and content creation.
Why This Matters
This development marks a pivotal moment in the evolution of digital advertising and AI technology. Google’s potential drop below 50% market share represents more than just a statistical milestone—it signals a fundamental disruption of a business model that has dominated the internet for over two decades.
The rise of AI-powered search tools like ChatGPT and Perplexity demonstrates how large language models are reshaping user expectations for information retrieval. Instead of clicking through multiple links, users increasingly prefer conversational AI that provides direct, synthesized answers. This shift has profound implications for businesses that have built their digital marketing strategies around traditional search engine optimization.
For the broader AI industry, this competition validates the commercial viability of generative AI applications beyond novelty use cases. It’s driving massive investment in AI infrastructure and accelerating innovation in natural language processing. However, it also raises critical questions about content attribution, copyright protection, and the sustainability of the content ecosystem that AI models depend upon. As advertising dollars follow user attention to AI platforms, the entire digital economy must adapt to this new paradigm.
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Source: https://www.businessinsider.com/google-search-ad-market-share-perplexity-ai-openai-chatgpt-2024-10