• Google faces new competition in the advertising market as AI transforms the industry.

• Google’s search ad market share in the United States could fall below 50% for the first time in a decade.

• Perplexity AI, for its part, claims to attract “high-profile” advertisers.

Google faces a challenge from its decades-long dominance of the Internet advertising market, as AI, the new kid on the block, changes everything.

Projections from eMarketer – a digital marketing research firm owned by Business Insider parent company Axel Springer – indicate that Google’s share of the US search advertising market could fall below 50%. next year for the first time in over a decade.

Long dominant, Google also began to decline in other important areas. A recent study found that younger generations, like Generation Z and Generation Alpha, no longer use the word “Google” as a verb. Young Internet users now “search” instead of “Google it,” Mark Shmulik, an analyst at Bernstein Research, said in a note to investors last month.

This shift is driven in part by the rise of AI tools like ChatGPT and OpenAI’s Perplexity AI, which use large language models trained on huge amounts of data to answer user questions in language natural. ChatGPT set the record for the fastest-growing user base for a consumer app shortly after its late 2022 launch.

Never to be outdone, Google hastened to catch up. In March 2023, it launched Gemini, its own large language model that now presents Google search results in natural language at the top of the page. Google has since rolled out a series of other generative AI tools and improved its search engine.

Google is also leveraging AI to better present ads in its search results. He presented an example earlier this month, showing how Tide products are now advertised under a search query “how do I remove grass stains from jeans?” »

“We’re confident in this approach to monetizing our AI-driven experiences,” Brendon Kraham, Google’s vice president overseeing the search ads business, told the Wall Street Journal. “We were here before we went through these kinds of changes.”

While Google remains by far the most used search engine, its competitors are hot on its heels. Search engine Perplexity AI says it processed 340 million queries in September and has several “family-owned and high-profile” companies looking to advertise on the platform, chief commercial officer Dmitry Shevelenko said, according to the Journal.

Perplexity is valued at over $1 billion and has received funding from Jeff Bezos and Nvidia. However, he also faced backlash for not sourcing the copyrighted material used in his results. Forbes accused the company in June of pirating its content without attribution after the platform shared details of an investigative article about its new “Perplexity Pages” feature.

On Perplexity, search queries are followed by questions that engage the user in conversation. Perplexity says this will allow sponsors to advertise on these follow-up questions in the future.

In a presentation to advertisers, Perplexity said responses to sponsored questions would be approved in advance by advertisers “and may be locked, giving you peace of mind about how your brand will be represented in an answer,” the Newspaper.

“What we’re opening up is the ability for a brand to prompt or inspire someone to ask a question about them,” Shevelenko said.

Google and Perplexity AI did not immediately respond to requests for comment for this story.

Read the original article on Business Insider