Google's dominance in the advertising market is waning thanks to AI and TikTok

A forecast by market researchers at eMarketer is causing discussion in the advertising industry. According to the forecast, Google's market power in online advertising could fall below 50 percent next year after a long period of dominance. This is still a big lead over the number two, Amazon, which is expected to account for around 22% of advertising revenue in 2024, but it is still a major upheaval. Google's share has been falling for years.

The Wall Street Journal has spoken to a number of analysts and companies who agree that artificial intelligence and advertising directly on online platforms will bring about major changes. The growth of Amazon, for example, which has been steadily taking market share from Google since 2020, is mainly due to ads on Amazon itself. According to the journal, consumers are increasingly searching for products on Amazon first, not using a search engine.

TikTok with customized advertising

The platforms are increasingly tailoring advertising to the user's profile, as Google has always done. According to the report, TikTok has recently started offering its major advertising customers the option of displaying ads based on a user's previous search queries. As with TikTok's suggestions for new videos, which offer more and more of a person's favorite content, artificial intelligence is used here. TikTok's algorithms and models are said to promote addictive behavior, which the EU Commission recently began investigating.

Google itself is of course already working with machine learning. Some users are now shown summaries of texts from the search results directly in response to a search query. The search giant is still relaxed: Brendon Kraham, Google's head of ads in search queries, told the WSJ: "We've been at a point before where we've had to deal with changes like this."

Perplexity as a potential threat to Google

However, Google is not only facing competition from established platforms such as Amazon and TikTok in the market for online search ads, which is estimated at USD 300 billion. Perplexity AI, an AI start-up financed by Jeff Bezos and others, will soon also be displaying advertisements. So far, the service has only been based on a subscription model. Advertisers will also be able to determine exactly how their brand is displayed in the search engine's responses. As our tests show, Perplexity differs from conventional search engines primarily in that it provides text summaries with images and diagrams, even for complex search queries.

All these efforts to confront users with advertising that is increasingly tailored to them have not gone unnoticed by regulators. Just this week, the European Court of Justice ruled that Meta may only use a user's data for advertising purposes for its Facebook service to a limited extent.

(nie)