Editorial
The Gist
- Prepare for change. The decline of traditional search engine volume due to AI and chatbots necessitates innovation in advertising strategies.
- Adaptable strategies. Marketers must diversify their advertising efforts, focusing on the upper funnel to adapt to new AI-driven environments.
- Investment shift. Allocating budget to higher-reach channels and investing in media mix modeling can enhance overall marketing effectiveness.
Gartner's recent report has the marketing world buzzing. The report is predicting a 25% loss of search engine volume to AI, chatbots and other virtual agents by 2026. If these predictions come to pass, what comes next for advertisers? Should you panic about AI in marketing? No, but you should start innovating ASAP.
AI in Marketing: Inevitable Monetization
As it stands, many people are already used to AI as a household experience. Alexa answers their questions. However, it’s important to note that most of the time, a chatbot like Alexa doesn't use a large language model. Instead, it heads to the web to gather its data and reports its answers from what’s collected there. There is much room for improvement.
But just because this is how something is done today doesn’t mean it’ll be this way forever, nor can it be if search-based companies want to stay relevant — especially in light of Gartner’s report. In fact, even before the report dropped, you could say that Alexa’s been going through a personal transformation.
Also, recall that not long ago, Alexa was considered a groundbreaking new product. Like all new technology, it was created to fill a specific need and continually improve.
With AI, the purveyors of search engines find themselves in a new “innovator’s dilemma,” as Clayton Christensen first described in 1997: Even though big innovators are motivated to pioneer new technologies and products, what if their new creations render their old ones obsolete? Should that stop them from innovating? The short answer: of course not.
It becomes a numbers game of time, cost and projected revenue. If they play their numbers right, the Big Five can not only stay in the game but win big.
In other words, they’ll inevitably find a way to shift, grow and monetize their latest technologies. That said, there are really only two viable business models for digital services: pay-to-play or ad-supported. Since people won’t pay enough to offset the profit that ads can drive, marketers should expect that advertising will be their monetization engine.
Related Article: Google, Generative Search and the Web's Uncertain Future
A Potential Lag Effect: User Adoption vs. Ad Inventory
In the case of search engine marketing (SEM) and Gartner’s report, AI in marketing means fewer search ads in the short term. What about the longer term? Ads will eventually catch up.
Once disruption happens, advertiser search volume might drop because people are now using something different from search mainstays like Google or Bing. This would be a worst-case scenario.
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The best-case scenario? Google and Bing ride out their innovator’s dilemma, pivot, and figure out how to implement AI into their search engines to replace their old technology. This would avoid revenue loss while changing their placements to support AI — technology that isn’t going away any time soon (or ever).
Just how successful they are could be a matter of taking note of the lag effect between user adoption of AI in marketing and the advertising inventory that’s available to engage those users.
Related Article: The Unforeseen Consequences of Relying on AI in Marketing Strategies
What Can Marketers Do?
In the face of this lag effect, marketers can hedge their bets and invest in what’s likely to work in the long run. Invest in the upper funnel. Push the user experience. Make the lemonade.
Instead of resisting what will soon become “the new normal,” the first step is diversifying your reliance on search engine marketing. This is a win-win situation — SEM has become incredibly expensive. So, anything you can do to lower costs in this arena is a win.
Further, the move away from traditional search engine marketing should encourage you to target potential new customers earlier in the funnel, before people start searching. This will have an overall positive impact on brand positioning, something you should be regularly assessing, anyway.
In other words, there’s no need to freak out about Gartner’s report. Once search volume drops, the cost will go up even more. Think of your product. Is it great for building your brand? What can you do to improve it? How can you provide a better customer experience than your competitors? Or are you basing your advertising programs purely on intent? As these technologies disrupt business as usual, we have to disrupt our thinking as usual.
Related Article: AI in Marketing: 10 Crucial Skills for Success
Bottom Line on AI in Marketing: Move With the Times
What we see with a lot of our advertisers who are big on direct response is that when they move up the funnel and start pushing brand metrics, there’s a lift in all conversions.
Allocate around 20% of your budget into higher-reach channels where you believe you’re reaching your target audience. Hit them with more impactful creative that drives home your brand value propositions. You should see an overall lift. At that point, double down until you see points of diminishing returns. You’ll be in a great place.
A bonus tip: Invest in media mix modeling. This will let you understand how your upper-funnel campaigns drive lower-funnel ones.
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