How artificial intelligence can change the advertising market

Increasingly, chatbots are becoming competitors to search engines, from which users look for answers to a variety of questions. In such circumstances, traditional search engines are adding search functions using artificial intelligence (AI). According to experts, this could radically change the digital advertising market, so its representatives are already actively studying what will change under the new search conditions.

Search as text

In 2023, Google introduced a version of the search engine using generative artificial intelligence – Search Generative Experience (SGE). For now, the tool is working in test mode, but the current version shows how seriously search can change in the future. Moreover, as experts note, both from the point of view of users and from the point of view of companies for which Google is one of the important means of advertising.

Google has been experimenting in one way or another with the use of AI in its search engine for a long time. However, SGE involves more significant changes.

For the user, they consist in the fact that when searching, he will first be given an AI-generated answer to his request, and only then – the standard search engine links to the topic.

AI in such cases generates a small coherent text on demand using information from different sites that will be considered authoritative and trustworthy.

Yandex, the only Russian search engine with its own engine, is also developing its own neural network products (Mail.ru and Rambler use Yandex search technologies). The company presented its generative neural network YandexGPT in May 2023. Now in Yandex search results being tested inclusion of digests generated by the neural network in the “quick replies” block. At the same time, the answer includes a link to the source that formed the basis of the digest, and in February 2023, site owners had the opportunity to prohibit Yandex from using their content to create such answers.

For Google and other search engines, the release of AI tools of this kind to the market is all the more relevant since users already often use chatbots with generative AI to find answers to their questions. In February, Gartner published studywhich claims that due to the rise of chatbots and other similar tools, search volumes via traditional search engines will drop by 25% by 2026.

At the same time, search engines themselves have great advantages in this regard – after all, they are already a familiar tool for all users. According to Bernstein Internet analyst Mark Shmulik, Google is in a position of strength by entering the search market using AI. “Google’s entry into this market will probably be the easiest. They already have billions of people using Chrome and the Google search engine,” he noted.

Advertising get ready

Until now, for about 20 years, with all the innovations, the general principle of Google’s operation has remained unchanged, and advertisers around the world have been guided by this. Many experts recognize that the new format of search results – AI-generated text first, and only then links – will greatly change the digital advertising market.

As a specialized publication writes: Adweekthis can reduce organic traffic from search engines by 20-60%.

According to Mark McCollum, vice president of innovation at advertising tools developer Raptive, players in this market could lose up to $2 billion annually due to SGE.

“Organic search results and paid search traffic are important channels for digital marketers looking to achieve brand awareness goals— “Kommersant”) and stimulating demand. Generative AI solutions are becoming an alternative to traditional search engines… This will force companies to rethink their marketing channel strategy as generative AI is increasingly used in various aspects of the company,” said Alan Antin, vice president of analytics at Gartner.

Many experts have already tested the new search format. SGE does not generate answers to all questions. Thus, a study by SE Rankings shows that AI-generated answers are less likely to be returned when searching for more controversial and sensitive topics, such as politics and news. Also, some researchers noted that the generated response is not provided for many queries about diseases, for example about the flu or COVID. Google stated that generated responses are not provided in cases where there is not enough reliable information or the request concerns potentially dangerous topics.

Links First

In this environment, companies involved in digital advertising and, in particular, search engine optimization (SEO), are closely monitoring the development of SGE. The most important question in this regard is how much SGE will encourage users to click on links rather than just read AI-generated text and view AI-curated images. This is what advertising metrics will depend on in the future.

Edition Business Insider looked at how SGE works now and concluded that in many cases such answers do not contain links to the original materials at all, and in some cases there are fewer links than before, you need to scroll down to them, etc. The exception was mainly advertising content directly paid for by companies. However, many researchers note that as the new search option improves, answers increasingly include links.

In January, SEO platform SE Rankings analyzed search for 100 thousand keywords from 20 popular topics, including travel, education, politics, cars, etc. In 64% of cases, results were received specifically from SGE or a proposal to generate an answer using AI. 86% of AI-generated answers contained links to one or more sources from the top 10 links that are returned in a regular search.

“Many website owners are terrified,” notes Lily Ray, an SEO strategist at the American marketing company Amsive. “If you are now demonstrating (to clients— “Kommersant”) your SEO (SEO strategy.— “Kommersant”), your SEO agency will benefit if they have the best answer to the SGE optimization question.” According to her, the search engine in SGE is constantly changing, and this also needs to be monitored by digital advertising specialists, for example, recently more links have begun to appear in such search results than before.

According to Mark Mahaney, an analyst at the consulting company ISI Evercore, regardless of what changes Google makes in the near future, the presence of links is the key goal of the search engine, they are important from the point of view of its own business model. “Most people want to search for something like ‘where to ski near me’ and get a selection of answers. This is where serious commercial intentions come in, and it’s hard to imagine anything that can replace Google in this kind of business,” says Mr. Mahaney.

Yana Rozhdestvenskaya, Yuri Litvinenko