Search Advertising being challanged

The search advertising market is now set up for disruption.

Search Advertising at $256.5bn is the largest media channel globally, with a market share of 28.3% of all ad advertising investments worldwide. The trends for the medium look bright with 56% of the advertisers planning to increase spend on this medium, as per a recent WARC survey. A recent GroupM report projects a 40% surge in search spending reaching $350bn in 2023.

The search advertising market which has been dominated by Google, has for the first time some serious challenges to deal with.

The challengers

1. Retail Media Networks

2. Social Discovery

3. Generative AI

Retail Media

Given the global economic environment, all businesses are focused towards getting more from their investments and hence media ROI has become an important discussion. Retail media is search-focused media based on product searches on retail platforms such as Amazon, Walmart etc. In most cases, the consumers are at the lower end of the purchase funnel with high intent. As per E-consultancy on Amazon marketers are seeing an ROI of up to 54% as against an average of 22% on paid search

Consumers are also building a habit to start their purchase journey on the retail media through a product search as against a search engine. Thereby enables brands to precisely target intent through search media. Google’s internal studies have indicated that close to 55% of product searches now begin on Amazon.

Retail media networks are also holding consumer purchase and indent data, which coupled with the data-driven targeting and personalisation capabilities of digital advertising (retail DSPs) are allowing the networks to expand and to focus on the upper and mid-funnel consumer in the purchase journey.

All these are adding to retail media resulting in a 10.1% growth to reach $122bn globally as per a recent GroupM forecast.

Social Discovery:

“In our studies, something like almost 40% of young people, when they’re looking for a place for lunch, they don’t go to Google Maps or Search,” continues. “They go to TikTok or Instagram.” Prabhakar Raghavan - Senior Vice President, Google’s Knowledge & Information. Raghavan at an industry conference in July 2022.

Raghavan in the same conference attributed this to how younger people were generally interested in more “visually rich forms” of search and discovery

Recognising these market trends, Google has worked on enhancing its visual search, which allows one to combine images and text and start searching based on what your eye sees.

Not wanting to miss out on this pie, Instagram unveiled sponsored content alongside organic posts against product searches. TikTok’s search offering is under work and will be unfolded soon.

Similar trends are also noticed in China, with Douyin & Zhihu giving Baidu a run for its money.

Generative AI :

With the quick adoption of ChatGPT in 2022, everyone has stood up and looked for and is looking for effective ways of using this technology.

Within search, it has a conversation manner in which ChatGPT gives back the responses that are many times more consumer friendly as against the list of links that a search engine responds with. Besides the delivery, ChatGPT needs a lot more work on the accuracy and recency of its results. While it is early days, it has promise.

Microsoft is integrating ChatGPT into its search engine “Bing” which has had Google worried. Google is working on integrating its AI engine BARD into the search, with a promise of fresh high-quality responses.

We will need to keep a watch out for how this impacts the search engine and its users.