By Kimeko McCoy • October 16, 2024 •
Ivy Liu
The conversation around search advertising has reached a new fever pitch thanks to recently launched AI-powered tools like Perplexity and Google’s AI Overviews. Despite the buzz, some marketers and advertisers remain uncertain about AI tools in search, citing too many unknowns. That said, some are unwilling to be first movers until these tools are proven effective in terms of reach and return on ad spend.
Search has seen recent, renewed interest with new entrants like TikTok’s and (maybe) Reddit shaping up in the shadow of Google’s dominance. A federal judge ruled in August that the tech behemoth monopolized the search advertising marketplace. More recently, the DOJ is in the midst of another trial against Google’s ad tech. While the ad tech antitrust case is underway, competitors have released new ad tools (some of which incorporate AI), but ad dollars have yet to start flowing.
All said, the DOJ isn’t the only one challenging Google’s dominance. There are more competitors, including TikTok’s new search offering, Perplexity AI search engine and Microsoft’s latest ad tools for Copilot, Bing and Edge. Still, it’s to be determined if any of these will successfully put a dent in Google’s search dominance, even with the temptation of AI-powered search.
“What we’re seeing from partners is some early data… around the success that they’re seeing with certain types of campaigns,” said Dan Toplitt, svp, head of search and digital experience at Kinesso performance marketing agency. Toplitt did not offer specific partners, saying that Kinesso is “partner agnostic.” He added, “It’s still early days in terms of measurement for us ad advertisers to isolate some of those new ad units versus more traditional ad units,” referring to Google’s challengers.
The infusion of artificial intelligence surged interest around search ads for marketers as they look to AI to more efficiently target online shoppers. But, adds Toplitt, marketers need additional measurement to be confident enough to carve out additional budgets. There are even new KPIs to consider. For example, Perplexity is said to be charging based on CPMs (which are said to run north of $50, according to Digiday’s recent reporting) rather than CPCs, which is the usual approach to paid search, per execs. It seems to indicate that Perplexity’s measurement may be based more on brand reach and exposure rather than clicks or impressions.
“That’s just philosophically a really interesting thing to shape out because that has the potential to impact how we use search within the broader media mix, how to buy search versus other channels,” Toplitt said.
There are also concerns about brand safety and consumer backlash, according to Brandy Alexander-Wimberly, director of client innovation TandemTide digital agency. The AI hype cycle has given way to questions about accuracy, hallucination and data privacy. If the lines between AI-generated ads or sponsored posts and genuine content sources blur, there’s a chance for blowback which could impact ad performance, she added.
In terms of budget, Alexander-Wimbley said TandemTide is using AI-powered tools baked within major platforms, like Google, and allocating anywhere from 25 to 50% of said budgets, depending on the client’s goals, to test and learn, though she did not give exact figures.
For now, advertisers are organically testing and learning with AI in search — or using already existing search budgets. The AI tools on the market aren’t enticing enough to move ad dollars, according to industry experts. Notably, budget constraints continue looming over the industry in which marketers are continually asked to do more with less in light of economic headwinds.
“It would be definitely interesting to test, but as far as immediate plans of where we’re putting dollars in the most effective spots, it’s been left off for Q4 from, from our POV,” said Brandon Biancalani, head of paid media at Modifly, a performance media and creative agency.
Pin it on pricing and performance, the execs say. Competitors like TikTok may be gaining ground when it comes to search, but Google is still the dominant search engine, at least for now. According to Statista, Google accounted for 80% of the market share in comparison to Bing, Yahoo, DuckDuckGo and others. And where eyeballs go, advertisers follow. Plus, the launch of Google’s AI overviews back in May makes it a one-stop shop for advertisers.
Industry execs say they’re hesitant to invest in these tools until more users adopt the technology and companies like Perplexity or TikTok can spell out what success metrics look like to determine return on ad spend.
But agencies should be flexible enough to pivot and set up dedicated spend or pull from experimental budgets, if a use-case were to present itself, said Phil Lewicki, associate media director at Dagger marketing agency said. “[We’re] still monitoring the market to see what happens, not wanting to be that first group to jump in and see results due to the cost and some of the unknowns.”
https://digiday.com/?p=558147
