Artificial intelligence is reshaping the U.S. search advertising landscape, with spending on AI-powered search ads expected to skyrocket from over $1 billion in 2024 to nearly $26 billion by 2029, according to data from Emarketer.
The exponential growth reflects a major shift in how businesses engage with consumers online, moving from traditional keyword-based strategies to more intelligent, personalized, and conversational ad delivery.
This AI-driven transformation is being accelerated by the adoption of advanced user targeting capabilities and seamless integration of AI into search platforms. As a result, advertisers can now serve more relevant and timely content, leading to higher engagement rates and improved return on investment.
The shift is already disrupting established players. Companies relying on conventional search ad models are seeing revenue pressures as AI-enhanced search engines such as Google and Bing increasingly provide direct answers, reducing the need for users to click through multiple search results. OpenAI’s ChatGPT and Perplexity AI are also drawing users away from traditional search platforms by offering conversational and context-aware responses, Reuters news report said.
Tech giants are taking notice. Google is expanding its AI-powered search capabilities into sectors like consumer packaged goods via Google Shopping, while Microsoft has bolstered Bing with generative AI tools. Apple is reportedly exploring AI-driven search functionality for its Safari browser, signaling a potential departure from its long-standing partnership with Google.
The impact of this shift extends beyond advertisers. Publishers and content providers are facing declining traffic as users bypass their websites in favor of AI-generated summaries. “Publishers and other sites are feeling the pain from 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.
Education platforms are also affected. Chegg announced in May it would lay off 248 employees, citing a drop in user engagement as students increasingly turn to tools like ChatGPT over traditional edtech offerings.
Emarketer estimates that AI-powered search ads will make up nearly 1 percent of total U.S. search ad spending this year, surging to 13.6 percent by 2029. Sectors such as financial services, technology, telecom, and healthcare are leading the adoption curve, leveraging AI to refine their advertising strategies. In contrast, retail remains slow to embrace the technology, potentially missing out on early-mover advantages.
InfotechLead.com News Desk
