The essential
- Prepare for change. The decline in volume of traditional search engines due to AI and chatbots requires innovation in advertising strategies.
- Adaptable strategies. Marketers need to diversify their advertising efforts, focusing on the upper funnel to adapt to new AI-driven environments.
- Change of investment. Allocating budget to higher-reach channels and investing in media mix modeling can improve overall marketing effectiveness.
The recent Gartner report rocks the world of marketing. The report predicts a 25% loss of search engine volume to AI, chatbots and other virtual agents by 2026. If these predictions come true, what’s next for advertisers? Should we panic about AI in marketing? No, but you should start innovating as soon as possible.
AI in marketing: inevitable monetization
As it stands, many people are already accustomed to AI as a home experience. Alexa answers their questions. However, it is important to note that most of the time, a chatbot like Alexa does not use a large language model. Instead, it heads to the web to gather its data and reports its answers from what is collected there. There is a lot of room for improvement.
But just because things are done this way today doesn’t mean they will be this way forever, nor can that be the case if research-based businesses want to stay relevant – especially at the light of the Gartner report. In fact, even before the report was released, Alexa could be said to be going through a personal transformation.
Let’s also remember that not so long ago Alexa was considered a revolutionary new product. Like any new technology, it was created to meet a specific need and continually improve.
With AI, search engine providers face a new “innovator’s dilemma,” like the first Clayton Christensen described in 1997: Even if great innovators are motivated to pioneer new technologies and products, what happens if their new creations make old ones obsolete? Should this stop them from innovating? The short answer: of course not.
It becomes a game of numbers, time, costs 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 will inevitably find a way to scale, develop and monetize their latest technologies. That said, there are really only two viable business models for digital services: pay-to-play or ad-funded. Since people won’t pay enough to offset the profits ads can generate, marketers should expect advertising to be their monetization driver.
Related article: Google, generative search and the uncertain future of the Web
A potential lag effect: user adoption versus ad inventory
In the case of search engine marketing (SEM) and the Gartner report, AI in marketing means fewer search ads in the short term. What about in the longer term? Advertisements will eventually catch up.
If disrupted, advertisers’ search volume could plummet because people are now using something different from search mainstays like Google or Bing. That would be the worst case scenario.
Best case scenario? Google and Bing overcome the innovator’s dilemma, pivot and figure out how to implement AI into their search engines to replace their old technology. This would prevent a loss of revenue while changing their locations to support AI – a technology that isn’t going away anytime soon (or ever).
Their success may depend on addressing the disconnect between user adoption of AI in marketing and the ad inventory available to engage those users.
Related article: The unintended consequences of using AI in marketing strategies
What can marketers do?
Faced with this lag effect, marketers can hedge their bets and invest in what is likely to work in the long term. Invest in the upper funnel. Push the user experience. Prepare the lemonade.
Instead of resisting what will soon become “the new normal,” the first step is to diversify your reliance on search engine marketing. It’s a win-win situation: SEM has become incredibly expensive. So anything you can do to reduce costs in this area is a win.
Additionally, moving away from traditional search engine marketing should encourage you to target new potential customers earlier in the funnel, before people start searching. This will have an overall positive impact on brand positioning, something you should evaluate regularly anyway.
In other words, there is no need to worry about Gartner’s report. Once the search volume decreases, the cost will increase even more. Think about your product. Is this ideal for growing 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 solely on intent? As these technologies disrupt the status quo, we must disrupt our way of thinking as usual.
Related article: AI in Marketing: 10 Crucial Skills for Success
Conclusion on AI in Marketing: Moving with the Times
What we see with a lot of our advertisers who prioritize direct response is that when they move up the funnel and start pushing brand metrics, there is an increase in all conversions.
Allocate around 20% of your budget to the highest reach channels where you think you will reach your target audience. Hit them with more impactful creative that brings out your brand’s value propositions. You should see an overall improvement. At this point, double down until you see points of diminishing returns. You will be in a great place.
A bonus tip: Invest in media mix modeling. This will allow you to understand how your top-of-funnel campaigns generate those at the bottom of the funnel.
Learn how you can join our community of contributors.
