The Wall Street Journal
Google’s Grip on Search Slips as TikTok and AI Startup Mount ChallengeA flurry of new offerings for advertisers is hitting the market
Emil Lendof/WSJ
By Suzanne Vranica
and Miles Kruppa
Oct. 5, 2024 9:00 pm ET
Google’s grip on the nearly $300 billion search advertising business is loosening.
For years, the tech giant has seemed invincible in this corner of the ad market, which is the foundation of its business. Now, rivals are beginning to eat into its lead, and new offerings—fueled by the rise of artificial intelligence and social video—threaten to reshape the landscape.
TikTok, the wildly popular short-form video platform, has recently started allowing brands to target ads based on users’ search queries—a direct challenge to Google’s core business.
Perplexity, an AI search startup backed by Jeff Bezos, plans to introduce ads later this month under its AI-generated answers. Until now, it has made revenue mostly from a $20-a-month subscription offering that grants access to more-powerful AI technology.
The new initiatives add to the pressure on Google from the rise of Amazon.com, which has taken a chunk of search ad spending. Many consumers begin product searches on the e-commerce platform.
Google’s share of the U.S. search ad market is expected to drop below 50% next year for the first time in over a decade, according to the research firm eMarketer.
Amazon is expected to have 22.3% of the market this year, with 17.6% growth, compared with Google’s 50.5% share and its 7.6% growth.
“This space has been ripe for a shake-up for a long period of time,” said Brendan Alberts, head of search and commerce at the ad-buying firm Dentsu.
Google remains in an enviable position: far ahead of the pack in the search market, with plenty of resources to counter moves by its rivals. Still, advertisers are eager for more competition.
“For the first time in probably 15 years, we will have viable alternatives to Google,” said Nii Ahene, a veteran digital-advertising executive.
Answers and ads
The generative-AI boom is transforming search products, which will increasingly serve up fully formed answers to user queries or summaries of the results. Google this past week rolled out ads in the AI-generated summaries it has begun placing at the top of search results. The ads will only show up on mobile searches in the U.S. at first, Google said.
In one example of how the new search ads might appear, Google showed a listing for a Tide pen that is available on the Albertsons website in an AI overview responding to the query, “How do I get a grass stain out of jeans?”
“We’re confident in this approach to monetizing our AI-powered experiences,” said Brendon Kraham, a Google vice president overseeing the search ads business. “We’ve been here before navigating these kinds of changes.”
Perplexity is angling for a piece of the same market. Dmitry Shevelenko, the company’s chief business officer, said a handful of “household, top-tier names” are its first advertisers. The startup will allow brands to sponsor follow-up questions that trigger a back-and-forth with the user.
In a presentation to advertisers, Perplexity said answers to the sponsored questions will be “approved ahead of time, and can be locked, giving you comfort in how your brand will be portrayed in an answer,” according to a copy viewed by The Wall Street Journal.
“What we’re opening up is the ability for a brand to spark or inspire somebody to ask a question about them,” Shevelenko said.
Some 46% of Perplexity queries in the U.S. lead to follow-up questions, according to the presentation. The company said it processed 340 million queries in September. By comparison, Google has said that it handles some two trillion searches a year. Shevelenko said Perplexity won’t ever change the search engine’s nonsponsored answers based on demands from advertisers.
Other search engines have experimented with inserting ads in AI-generated answers. Microsoft has introduced sponsored links and comparison-shopping ads in a chatbot attached to its Bing search engine.
Almost 60% of U.S. consumers used a chatbot to help research or decide on a purchase in the past 30 days, according to a survey by New Street Research. Some analysts have questioned whether ads in chatbots will be as valuable as traditional search ads, because people might be less likely to click on them.
TikTok keywords
Targeting search budgets is a logical step for TikTok. Up to now, the company has offered brands the option of displaying ads near search results, but advertisers couldn’t target their ads based on the keywords in user searches.
Advertisers remain drawn to TikTok because of the platform’s strong appeal to younger adults—interest that hasn’t diminished despite the U.S. government’s efforts to force the app to sever ties with its Chinese owner or face a potential ban. While TikTok’s U.S. ad revenue is expected to jump 38.1% this year, it only has a 3.4% share of the U.S. digital ad market, according to eMarketer.
In a pitch to advertisers viewed by the Journal, TikTok said “search behaviors have evolved” and added that the platform had global daily search volume of over three billion, with 23% of users searching for something within 30 seconds of opening the app.
Many advertisers tested TikTok’s new ad product earlier this year. Some brands were required to commit a minimum of $10,000 a month and participate for at least two months, according to ad buyers.
The digital ad firm Tinuiti said almost two dozen of its clients in such categories as consumer electronics, apparel and beauty are currently buying the new TikTok ads, and the majority are seeing positive results.
“We are seeing performance on return on ad spending that sometimes rivals what we are seeing on Google,” said Tinuiti President Jeremy Cornfeldt. The real test is what happens when more advertisers compete for keywords and ad prices go up, he said.
Some advertisers are hesitant to shift ad dollars from Google to TikTok, said Sara Young, a group account director of social activation at the digital agency Dept, partly because search volume on TikTok is still low.
The increased competition, coupled with legal pressures on Google, makes it a particularly tense time for the Alphabet -owned ad giant. This past summer, Google lost an antitrust case over its dominance in the U.S. search-engine marketplace after a federal judge said it acted illegally to maintain a monopoly in the sector. Google plans to appeal the ruling.
“Is it a vulnerable moment for Google? Absolutely,” Cornfeldt said.
Write to Suzanne Vranica at Suzanne.Vranica@wsj.com and Miles Kruppa at miles.kruppa@wsj.com
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sam Davis
3 minutes ago
I find perplexity much more convenient, efficient and helpful than google
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Ernie Zelinski
1 hour ago
I know way more than Google.
Seriously, Google knows nothing — and I know 10 times as much!
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Jack Remington
1 hour ago
Probably because Google search has been garbage for years now. Intentionally so. The good, efficient search engine from 2013 or so didn’t make them as much money as the trash one, in the short term anyway. The first page of most searches is dominated by sponsored results that usually aren’t relevant.
I still get scam calls every open enrollment period because Google listed a fake Covered California page above actual Covered California and I had started filling in my information before I noticed it wasn’t the real site.
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Steven Nelson
2 hours ago
It’s still odd that Google isn’t considered a monopoly.
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Kristian Pettie
2 hours ago
Google is not going bankrupt over the loss in dominance of "Search". Google will take a hit and they will eventually figure out how to mitigate the loss in revenue. Plus Google is in the lead (with IBM) in quantum computing. Quantum may seem like the ultimate vaporware but genuine progress is being made. I would not count out Google for the long run.
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Kurt Smith
2 hours ago
I've been moving away from Google and using duckduckgo. This was mostly because Google suppressed information during covid, and I don't want to support a company that doesn't respect the 1st amendmant.
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John Landers
1 hour ago
Same, Kurt.
I'll be first to admit that DuckDuckGo does not have the polish or all the capabilities that Google has. Yet.
It's hardly a bad search engine, though. It's very functional, and you know your privacy isn't beingn completely violated with each search as the build a profile of you with your logged-in Google account.
The biggest improvement with DDG, to me, is what you said: it's not politically skewed. If you put in a conservative persons name, for example, it returns their Wiki page and biographical information about them, along with their own website/show and things they're saying/tweeting and what not.
Google returns 7-10 hit pieces on said conservative, most calling whoever it is a "white supremacist" and "literally a Nazi" without any supporting claims (Guardian, HuffPo, Daily Beast, usual suspects). That's actually what Google returns. If it's a leftist politician, they return endless praise. It's unacceptable.
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John Smithson
2 hours ago
Good. I hate Google.
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Doctor Nancy Sculerati
3 hours ago
Duck it ! Try DUCKDUCKGO and relax
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Chris K
3 hours ago
Google’s revenue higher than ever.
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John Landers
1 hour ago
Revenue and profit are two very different things, Chris.
Google becomes a more bloated and unmanageable mess each passing year.
Doesn't mean they don't still have strong products and services, but they're going down the wrong path.
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Chris K
3 hours ago
“Almost 60% of U.S. consumers used a chatbot to help research or decide on a purchase in the past 30 days,”
Seems bogus. Or misleading.
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John Landers
1 hour ago
Lol yeah. I sure know a lot of people in that 40% who didn't, I guess. And we don't exactly live in the sticks.
I actually don't know anybody who's done that recently. We talk about AI quite a bit.
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Jane Genova
1 hour ago
I didn't.
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Ted G
3 hours ago
Google is losing her monopoly. Monopolies are usually helpless in the face of change — look at Kodak or Xerox.
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Call Given
3 hours ago
Friendly reminder that google isn’t a monopoly.
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Tom Able
4 hours ago
Using Google for a search request takes you to 5-10 web pages you need to read through to find your answer. Using an A.I. search engine gives you the answer immediately. Who's got time to scroll through 5 to 10 web pages to find an answer?
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John Landers
1 hour ago
I have noticed how much more effective those AI search engines have become in just the past 6-12 months.
I still primarily use search engines, mostly to understand the source of the info I'm reading, but I get what you're saying.
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jared stevenson
4 hours ago
Competition is better for the consumer. I for one am tired of all the shady data harvesting google conducts on its end users.
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Maria Lopez
4 hours ago
Break the habit of running to Google and other search engines when you need information. Use your brain and your memory. It's not too late, unless you're a digital native, in which case you wouldn't understand there was a time when you didn't have to be so utterly dependent on a company that does all your thinking for you.
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Robbie G
4 hours ago
Perplexity has replaced all search for me. For more important questions I will asks ChatGPT. Search is a ridiculous waste of time.
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D Black
4 hours ago
Google, Inc., isn't just the world's biggest purveyor of information; it is also the world's biggest censor.
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Kris Tara
4 hours ago
People are turned off by Google and its search results are biased. Unfortunately, it appears that executives are running around at every level who think it’s their job to impose their own opinion on social injustices or socio economic problems like racial and gender equality issues by manipulating the algorithm . They haven’t learned anything from Disney and Bud Light blunder.
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Ellen S
5 hours ago
Google was at first a wonder; then it began manipulating results and I found it difficult to use and trust as friends putting in the exact same search term got different results. Finally, it began hiding info I needed way, way back, sometimes 20 pages back. Good riddance.
(Edited)
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Betty Smith
2 hours ago
Try duck duck go
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Phil P
5 hours ago
What's stopping the US government to BAN TikTok??
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Ellen S
5 hours ago
Ideological agreement.
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Reddy D
5 hours ago
AI overview by Google is now the best search experience, to it's an already gold standard search box.
Paid article by amzn, wishful thinking.
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Dan M
5 hours ago
The quality and quantity of information returned by Google search has decreased steadily over the last 10 years. First came ads and now some biased untraceable info labelled as AI. I am glad I sold GOOG years ago.
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Gautam Dey
5 hours ago
You nailed it - bias.
No one trusts Google now.
But chatGPT also is very biased for the Democrats.
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John Landers
7 minutes ago
Have you ever asked chatGPT to say positive things about Harris, then to say positive things about Trump?
You'd think it would just go through the motions, say some nice things about both, maybe give Harris a little more praise since it's leftist AI.
It won't do it. It refuses to state anything positive about Trump. It makes Harris sound like Churchill (but blacker and womaner) and Trump sound like, well, you already guessed, Hitler. It doesn't even pretend to have an objective stance.
Really trashy way to design something that is supposed to be objective intelligence.
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Ellen S
5 hours ago
Did you know you can argue with Chat?
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Gautam Dey
4 hours ago
Yes. It then clarifies a little.
When I asked how many jobs Biden created in total?
It said 15 million.
Then I argued a lot of it could be recovery from covid?
Then it admitted that 9.5 million jobs were covid recovery.
So, unless you argue, the result favors Democrats.
Why not? Obama personally in constant touch with Altman.
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Mel A
5 hours ago
Google may have diversified its offerings with hardware, YouTube, Gmail, etc., but as an individual user, I no longer use its flagship product—there are better products out there such as Perplexity.
Also, as a company that purports to be a pioneer AI, its Gemini search is one of the most horrendous. I guess this is the problem with a publicly traded company that has to comply with how it has to present search results to please the advertiser base.
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John Landers
52 seconds ago
Gemini really is terrible.
It makes you wonder how Google, pioneers of modern tech with endless billions of dollars to spend, could fall so far behind in the AI race.
Did they not realize AI was a thing til last year? Did they just throw a few developers on it as a side project, planning to ramp up on down the road then forget to reengage?
It's hard to believe, and doesn't portend well for their near-term success in the field.
I think what you said about having to return results in a certain manner has a lot to do with the search engine worsening over the last decade..
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RJ LEGASPI
5 hours ago
I stopped using Google because it tracks your activity (privacy concerns) and also it provides biased search results.
Tiktok is worse because it's a Chinese spy operation.
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Betty Smith
2 hours ago
Try DuckDuckGo
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Bob Beyrouty
5 hours ago
A year after I spent a ton on Google's home security system they sunsetted it and attempted to get all the users to go to ADT. The equipment just stopped working. And I was just one of many thousand dissatisfied customers forced to find another system. Worse thaneven that, they were still selling equipment after they announced the date that it would all be useless. So whatever bad happens to Google, I am a fan of it.
(Edited)
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Dan M
5 hours ago
Wow how disrespectful from Google
(Edited)
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Bob Beyrouty
4 hours ago
However much I was disrespectful to Google, it isn't enough. And I know I am not alone.
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Maria Lopez
4 hours ago
With all due respect, I think you should tell Google to go to hect.
(Edited)
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Dan M
4 hours ago
Your criticism of Google was right and respectful. They have been disrespectful to you
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Judy Neuwirth
4 hours ago
I think he meant Google was disrespectful of its customers.
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Richard Yu
5 hours ago
Thinking about my own behavior for the past 3 months, only time I've used google is to find a phone # or address on maps. When i need to do some research or ask a question, I go to ChatGPT 4o or o1. and it's great cuz i dont see any ads.
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WS
William Stephens
5 hours ago
Reminds me of the AT&T situation in 1984 when they (the government) broke up "Ma Bell". At the time of the breakup, the lion's share of long distance was held by AT&T. The perception of AT&T was that they would be able to retain the leadership of long distance.
I would imagine that these statistics have become meaningless; I am not sure but to me and my mobile phone, a call is a call. Could be wrong!
Most likely it is more about international calls and then other calls.
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ML
Maria Lopez
4 hours ago
You couldn't even own a phone back then. You had to lease it.
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Rene P
5 hours ago
AI is a major paradigm shift and a category killer for Google if they don’t get AI right. They could easily become the Kodak or Polaroid of search. Monopolies don’t always last forever. Especially not in high tech.
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Gautam Dey
5 hours ago
Non-technical Pichai has to go.
Yes, he polished Google mail - but that’s nothing compared to what Brin/Page did.
Pursuing ultra liberal strategy has made Google distracted, IMO.
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Ellen S
5 hours ago
It has made it dangerous for our Democracy.
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Timothy Foley
6 hours ago
I'm long Google - rut roh.
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Judy Neuwirth
6 hours ago
DuckDuckGo. Fewer privacy concerns, less-biased results, far fewer ads. Use it.
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Phil P
5 hours ago
It's a search engine for leftists
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Judy Neuwirth
4 hours ago
No, that would be Google, as shown by its slanted search results.
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Ellen S
5 hours ago
Google certainly is a search engine that divides the country; it orders results according to what it "thinks" you want to hear. Result? Each side is not introduced to info the other receives. Divison.
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William Stephens
5 hours ago
Search engine of my choice. Go for it.
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MICHAEL DONNELLY
6 hours ago
While the Harris- Biden administration continue to let TikTok infiltrate our country. This is beyond brain dead. This is treasonous.
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Benjamin Ellett
4 hours ago
The US is a free country. People choose to use TikTok and TikTok should be free show whatever content it wants. Banning TikTok is mostly about helping Facebook kill one of its biggest competitors and/or allowing Americans to steal a Chinese business. Banning TikTok is immoral and bad for the United States.
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Ted G
3 hours ago
Agreed. Should ban Fox and MSNBC first.
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MICHAEL DONNELLY
4 hours ago
This is post is clearly Chinese intervention. WSJ, please start paying attention!
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Ellen S
5 hours ago
Of course.But so is removal of the interactive feature on the Dept. of Education's reporting site on foreign donations to our universities.
(Edited)
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MICHAEL DONNELLY
4 hours ago
Agree
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Wyatt E
6 hours ago
So you think Google is doing nothing about it? You do realize they are also an AI platform. Gmail and YouTube are not sitting idle either.
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