AI: Online Advertising to be accelerated by AI. RTZ #844
The Bigger Picture, Sunday, September 14, 2025
One of the biggest question for over a 1000 days now since OpenAI’s ‘ChatGPT moment’ in November 30, 2022, has been how AI would impact and presumably diminish the global multi-hundred billion online advertising. business. Thus impacting the largest player Google in that arena, and denting regular Search in this AI Tech Wave. And of course ‘breaking the internet’ as we know it today.
Now it seems that AI may actually accelerate much of online advertising, benefiting Google and Meta in particular, along with most of the ‘AI Native’ companies like OpenAI and others. That is the Bigger Picture I’d like to unpack today.
Axios lays out this turn of events in “AI set to upend search advertising model”:
“The $350 billion global search advertising industry will grow even faster during the AI era, thanks to new capabilities to make search queries more dimensional and multimodal.”
“Why it matters: The search ad business model of targeting based on keywords and evaluating success based on last-click attribution has barely evolved over the past three decades. It isn’t going away, but it’s about to get a whole lot more sophisticated.”
Companies like Meta are already racing ahead to adapt the best AI talent, and leverage their user base of 3.5 billion across their core properties. They already raced of TikTok owned by Bytedance last year, reaching a $10 billion+ annual monetization ramp for its short-video Reels platform before Tiktok.
That trend seems to be playing out for the industry in AI driven ads as well:
“By the numbers: In the U.S., $25.9 billion is expected to be spent on AI search ads in 2029, per eMarketer, up from just $1 billion this year.”
“By 2029, AI search ad spending will make up 13.6% of all search ad spending, up from just 0.7% this year.”
Google CEO Sundar Pichai indicated several weeks ago that their Ai driven advertising efforts were building matching and ramping up from their Search based advertising already in the early days of Gemini ‘AI Overviews’ atop Google Search.
That trend is what allows Google to build a new AI driven layer atop traditional Search Engine Optimized (SEO) revenues. This transitions to Generative Engine Optimization (GEO), which is a topic I discussed in this recent post.
This transition may take some time, but it’s begun in this AI Tech Wave”
“How it works: Traditional keyword search targeting put a lot of pressure on advertisers to constantly test and optimize their ad campaigns based on a set of keywords they preselected.”
“In the AI era, there are far more opportunities for advertisers to get in front of new users, including ones they may not have thought to target with a set of predetermined keywords.”
As I said in this ‘AI breaking internet’ piece a few months ago, Google especially is leading the charge from ‘Search’ to ‘Answers’, with greater economics for all.
And that is going to benefit all the new players as well, from OpenAI to Perplexity along with a range of other incumbents as well as startups. Next starting with Agent driven ‘AI Browsing’ in earnest.
And that is a Bigger Picture to keep in mind whenever concerns of internet advertising come up in AI conversations. Stay tuned.
(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)
