TikTok and AI startups are putting an end to Google’s dominance in the search advertising market

Google’s grip on the nearly $300 billion search advertising market is eroding as competitors emerge with innovative offerings. TikTok has begun targeting ads based on user searches, and Perplexity plans to embed ads into its AI-generated responses.

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Google’s share of the U.S. search advertising market is expected to fall below 50% next year for the first time in more than a decade, according to The Wall Street Journal. While Amazon now holds 22.3% of the market with growth of 17.6%, Google holds 50.5% with growth of just 7.6%. “This space is long overdue for change,” said Brendan Alberts, head of search and commerce at advertising company Dentsu. Despite pressure from competitors, Google’s position has not changed. However, advertisers have expressed a desire to see more alternatives and it is clear that they are emerging.

TikTok recently launched a new advertising product that allows brands to target ads based on users’ search queries. The move represents nothing less than a direct challenge to Google’s core business. In its message to advertisers, TikTok highlighted the positive trend in search, saying its global daily volume on the platform exceeds three billion, with 23% of users searching within 30 seconds of opening the app.

Perplexity, the AI ​​search startup backed by Jeff Bezos, is set to introduce advertising later this month, integrating it into its AI-generated responses. Previously, the company only generated revenue primarily from a $20-per-month subscription that provides access to an advanced version of the AI.

In response to these “threats,” Google has begun placing ads in AI Overviews at the top of search results, but for now only for mobile searches in the United States. Brendon Kraham, Google’s vice president of search advertising business, expressed confidence in the new approach, saying: “We are confident in the new direction of monetization. We already had experience before we started making these changes.” Despite its best efforts, Google’s share of the U.S. search advertising market is expected to decline next year for the first time in years.

With increasing competition and legal pressure on Google, the situation is becoming tense for the company. Over the summer, Google lost an antitrust case in which the court found that the company acted illegally to maintain its monopoly in the search engine market. “Is this a vulnerable moment for Google? Absolutely,” concluded Jeremy Cornfeldt, President of Tinuiti.

Advertisers, tired of Google’s monopoly, are enthusiastic about the emergence of new players in the Internet advertising market. However, the transition to new platforms is still slow.