Spending on AI-powered search advertising in the United States is projected to grow dramatically from just over $1 billion in 2024 to nearly $26 billion by 2029, according to new data from research firm Emarketer. The forecast highlights a rapid shift in how advertisers are allocating budgets, with AI-driven ads offering more advanced targeting and engagement than traditional keyword-based models.
The report suggests that companies slow to adopt AI-enhanced ad formats may face revenue pressure, as user preferences evolve toward more intuitive and efficient search experiences.
Big tech leads the transition
Major platforms including Google and Microsoft have already begun integrating AI into their search ecosystems. Alphabet-owned Google and Microsoft’s Bing now incorporate generative AI to deliver direct, conversational responses—similar to those offered by ChatGPT and Perplexity AI—reducing the need for users to click through multiple links.
Apple is also exploring AI-powered search enhancements for its Safari browser, a move that may signal a broader shift away from longstanding reliance on Google search integration.
Also read: TV Ad Volumes Drop 4% in 2024
Impact extends across industries
The transition to AI-driven search is having ripple effects beyond advertising. Online education platform Chegg recently announced layoffs affecting about 248 employees, citing declining demand for its services as students increasingly turn to AI tools such as ChatGPT.
Emarketer forecasts that AI-powered search ads will account for 1% of total U.S. search ad spending in 2024, rising to 13.6% by 2029. Adoption is currently strongest in sectors like financial services, technology, telecommunications, and healthcare. The retail industry, by contrast, has been slower to shift toward AI-enhanced strategies.
Google’s recent expansion of AI tools into Google Shopping also points to increased use of AI in the consumer packaged goods space, further accelerating the trend.
