蘑菇AV

Case in point: Google鈥檚 1.87% search revenues bump was dramatically lower than its 24.28% growth a year earlier and the 30.11% jump in Q1 2021.

Advertising revenues took a hit across the board; YouTube ad revenues were $7.96 billion versus an expected $8.25 billion, Google Search revenues fell by nearly $700 million YoY, and Google Network revenues fell more than $800 million YoY. Google Cloud revenues jumped 32%, accounting for most of Google鈥檚 gains in the quarter.

A return to profitability in the travel sector has allowed airlines, hotels, cruise lines, etc., to reinvest in advertising and brand messaging around promotions, loyalty programs, and lower-funnel targeted keyword search ads. Travel stands out from other industries in its sustained spending growth.

Search ads will pace that growth. In 2023, advertisers will spend almost $30 billion on retail media search ads. By 2027, that figure will be more than double, rising to $63.20 billion. But major display growth is also in the foreseeable future.

Looking ahead: We predict Google will claim 53.9% of US search ad revenues in 2023. That鈥檚 down from 2021鈥檚 peak at 57.2%. Conversely, we predict Microsoft will pull in 5.2% of US search ad revenues this year. While Microsoft has a long way to go to close that gap, positive early reports from its AI-powered Bing launch could leave Google searching for new options to stop its search ad drop.

Search advertising is the best example, and will account for 28.6% of total ad revenues in 2022: Advertisers shifted more of their budgets toward search, an essential if unsexy way to ensure that limited budgets have the greatest impact. The stalwart effectiveness of search marketing kicked off a race in Big Tech to capitalize on search revenues.

Search ads will pace that growth. In 2023, advertisers will spend almost $30 billion on retail media search ads. By 2027, that figure will be more than double, rising to $63.20 billion. But major display growth is also in the foreseeable future.

Microsoft will grow its US search ad revenues 9.0% this year鈥攎ore than three times as fast as Google. In 2024 and 2025, its search ad revenue growth will rival that of Amazon. Apple鈥檚 App Store ads are an immense success. Apple鈥檚 ad revenues will top $5 billion in 2023, having nearly quadrupled over the last five years.

Google鈥檚 tough year of regulation gets tougher: The EU is reportedly planning to penalize Alphabet for Google鈥檚 favoritism in search results.

The competition: Google is still the undisputed king of search advertising, with a projected $57.49 billion in US search ad revenues this year, per our forecast. Despite being an early mover in generative AI search, Microsoft is well behind Google, with a forecast $5.84 billion in US search ad revenues this year. 鈥淚 think Bing Chat is the best AI product that鈥檚 out there right now,鈥� said Ray.

Search, social, and customer ratings and reviews are the most influential channels for driving foot traffic and sales, according to SOCi鈥檚 Local Visibility Index 2024.

Search, ads, and services are getting supercharged. This has wider implications since Google is using its dominance in Search to integrate generative AI results. Search results will generate an AI-powered snapshot of key information to consider, with links to dig deeper.

But given Google's reliance on search revenues, it can't afford to not get this right.

US retail media search ad revenues will grow at a rate nearly four times faster than the rest of search advertising this year, according to our forecast. Amazon will account for nearly all of the $29.69 billion US retail media search ad spend this year, though Walmart and Instacart are also contributing to retail media鈥檚 share of search ad spend, per our forecast. 3.

Focusing primarily on search revenue deals, the DOJ鈥檚 suit deals with a different aspect of Google鈥檚 business than the class-action complaint, which will break open another front on which Google must defend itself.

Meta and TikTok will venture into search advertising. As Facebook and Instagram look for new ways to kick-start their ad businesses after a difficult 2022, search ads would allow them to take advantage of existing shopping behaviors. And there鈥檚 precedent: Facebook experimented with search ads in 2012 and 2018.

Meta鈥檚 powerhouse ad platform also gives it a leg up in monetization as genAI search advertising gains steam. Meta is a staple in most marketers鈥� ad strategies and will account for 22.8% of worldwide digital ad spending in 2024, per our forecast. Both Facebook and Instagram already offer some search ad placements, while WhatsApp monetizes via business messaging tools.

However, Lipsman warned that, despite D2C dollars shifting to Google, it may not be able to keep its grip on search advertising for long. Google鈥檚 share of US search advertising is down five points over the past three years to 56.1%, while Amazon has increased its share by nearly 10 points to 22.6%.

鈥淚n 2022, retail media hit the first of many milestones when it became the fastest US ad channel to eclipse $30 billion in spending鈥攏early twice as quickly as it took social media,鈥� our analyst Max Willens said on a recent Meet the Analyst webinar. 鈥淭hat was just the start.鈥�

As 2023 comes to an end, this is the data you need to kick-start 2024.

That鈥檚 not to say that this should replace search advertising, though. For search ads to be effective, you need a catalyst鈥攁 broken-down car, a mole-infested lawn, or a clogged drain. Your brand can be more proactive than that. How does it work? Retail media sites can segment their audiences by using dozens of first-party data traits such as habits, behaviors, basket size, and geography.

Nearly 80% of advertisers are using at least one AI-powered search ad product. AI tools such as Dreamscreen and YouTube Create are revolutionizing content creation, Alphabet chief Sundar Pichai said. The company also called out Spotlight Moments, launched last week, which uses AI to identify trending content for brand sponsorship.

Our take: Our forecast predicts 7.2% growth in Google search ad revenues this year and 9.8% in 2024. But if Bing captures even a small portion of Google's searches, it will affect Google's ability to serve enough ad impressions to meet its revenue targets.

Beyond the chart: Google will account for a hefty 53.9% of US search ad revenues in 2023, though the company鈥檚 share has been shrinking each year since hitting 57.2% in 2021, according to our forecast. Microsoft is far behind, capturing 5.2% of US search ad spending this year, a share that is also decreasing, per our estimates.