Google’s dominance in search advertising is coming under pressure, as fresh competition emerges from AI startups and social platforms like TikTok. While the tech giant has maintained a solid hold on the $300 billion search ad sector for years, rivals are now introducing new ad products that threaten its supremacy.
Among the most prominent challengers is TikTok, which recently launched a feature allowing brands to place ads linked to specific search queries—a direct shot at one of Google’s primary revenue streams. This comes as the social media platform also challenges Google News ad revenue by changing how people consume information.
At the same time, Perplexity, an AI-powered search engine backed by Jeff Bezos, is preparing to integrate ads within its AI-generated responses, creating a new monetization model that could further draw ad dollars away from Google.
TikTok’s Growing Presence in Search Ads
TikTok’s recent move to let advertisers target users based on the terms they search is attracting attention. The platform’s popularity, particularly among younger audiences, makes it an appealing option for brands, especially in categories like fashion, beauty, and consumer electronics.
With a reported daily search volume exceeding 3 billion, TikTok is becoming a serious player in the search advertising space, even as its user base primarily engages with short-form video content. Advertisers are increasingly drawn to TikTok because of its rapid growth.
In fact, eMarketer forecasts a revenue increase of 38.1% for TikTok this year, despite the political headwinds the company faces in the U.S., where calls for a ban persist. Nevertheless, some advertisers remain hesitant to fully shift their spending away from Google, given TikTok’s comparatively smaller search volume.
AI Search Platforms Enter the Fray
Artificial intelligence is transforming the search experience, with a shift from traditional search result pages toward AI-generated summaries and direct answers. Google is already leaning into this trend by testing ads within AI-powered summaries on mobile searches in the U.S., aiming to maintain its advertising revenue while embracing new technologies.
But Google isn’t the only company exploring this path. Perplexity, a startup that uses AI to generate search results, is also getting ready to launch ads within its answers, as it scales beyond its current subscription model. The AI platform, which has processed over 340 million search queries in September 2024 alone, offers an alternative search experience, especially appealing to users looking for more detailed responses and follow-up answers.
The company has noted that nearly half of its users in the U.S. tend to ask follow-up questions—a behavior it plans to capitalize on by enabling brands to sponsor these questions. With such data-driven insights, Perplexity is positioning itself as a formidable competitor in the AI search space.
It is worth noting that Perplexity is not without its issues. Major media outlets such as Forbes and Wired have accused the company of replicating their articles. There have also been accusations of broader plagiarism by various outlets. Forbes spotted a duplicated piece from its website on Perplexity, identified only by a small “F” icon.
Wired reported that an IP address, suspected to be associated with Perplexity, accessed its company’s sites more than 800 times over three months. In response, the company has updated its Pages feature to improve source citations and properly attribute original authors.
In an effort to alleviate these issues and benefit content creators, Perplexity AI has introduced a revenue-sharing program. The initiative allows publishers to earn from citations in Perplexity’s search outputs.
Amazon and Microsoft Join the Push
While Google’s search ad market share is still sizable, it is shrinking. Research from eMarketer predicts that Google’s U.S. share will fall below 50% for the first time in over a decade by next year, largely due to Amazon’s rise. With 22.3% of the market in 2023 and a growth rate of 17.6%, Amazon is becoming an increasingly powerful force, as many consumers now begin product searches directly on its platform rather than using traditional search engines.
Microsoft, too, is stepping into the AI search ad space, testing ways to incorporate ads into AI-generated results. The company’s integration of AI technology into its Bing search engine marks another effort to challenge Google’s reign, particularly as more users turn to AI-driven platforms for information.
Last Updated on November 7, 2024 2:38 pm CET
