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

It's still early days for search ads in AI Overviews. Ads are already being served in AI Overviews. At its Marketing Live event on May 21, 2024, Google announced that it will start testing search and shopping ads in AI Overviews when the ad is relevant to the query and the content in the Overview.

Google search revenues: $48.5 billion (13.8% YoY increase). YouTube ad revenues: $8.7 billion (13% YoY increase). Net income: $23.6 billion (28.3% YoY increase). Operating income: $27.4 billion (25.7% YoY increase). Diluted EPS: $1.89 (31.3% YoY increase). Why it matters: Google is No. 1 in its market, and it shows no signs of slowing down.

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.

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.

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.

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.

The experiment gauges users鈥� interest in seeing news content in search results and could push publishers to evaluate their reliance on traffic and ad revenue from Google Search

New search ads drive growth. Google鈥檚 growth is below average, but Apple and Amazon will grow quickly as they have an inside track for app and product search, respectively. Mobile games remain underutilized. Mobile game advertising will account for only 3.9% of mobile ad spending in 2024, far less than the 10.9% of mobile time spent on gaming.

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.

Look out for more coverage on generative AI鈥檚 threat to the search ad business in Q2 2023. Sign up for alerts here. What are generative AI鈥檚 most promising media and advertising use cases?

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.

The growth in retail media ad spending in these three countries will outpace all other formats for years to come. It鈥檚 thus gaining an important place at the ad budgeting table.

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.

Apple鈥檚 services include music-, game-, and video-streaming plans; search revenue from Google; and product warranties that together accounted for $24.21 billion in revenue in its fiscal Q3, a 14.1% increase YoY. Apple Intelligence will come standard on iPhone 16 models, but we expect wider subscription options as these features are refined over the next two years.

To avoid stepping on its own toes, Microsoft will have to tread lightly with AI search ads. Which businesses will AI search disrupt first? Outside of Big Tech, publishers and agencies working with smaller brands will notice the toll of AI first.

And that list doesn鈥檛 even extend to Google-branded products like Gmail, Chrome, Search, Ads, Google Play, and Maps. Google Search and Ad products are so intertwined that it would be next to impossible to separate the two. The DOJ is reportedly considering divestment of other Google products, like Android or Chrome.

The news: Google search ads are being displayed on a wide array of non-Google websites, including some hosting pornography and pirated material, research from industry activist Adalytics has uncovered. These sites include entities in countries under US sanctions, notably Iran and Russia.

A successful SearchGPT could cut into Google鈥檚 search advertising revenue and alter existing ad cost structures. Google might need to reconsider its relationships with publishers and content creators as AI alters web traffic patterns. Our take: Google Search owns 91% of the search market. It reported $175 billion in revenues from Search and attached ad sales in 2023.

Amazon will account for 21.6% of search revenues this year thanks to its dominant position in product search. But TikTok, Snapchat, and Meta all have chatbot-powered search features, and OpenAI continues to refine ChatGPT with new features. Fragmentation will lead to a wider search ad net. Fewer list-based answers will trigger new search formats.

Then if you're testing social search ads, again, please, you need to be flexible and set realistic expectations. Right now, the search ads on social platforms are pretty undeveloped. The measurement tools are pretty basic. There's really little to no ability to bid on keywords, which is kind of a basic function of search advertising.

Amazon accounts for about four times Microsoft鈥檚 US search ad revenue share, according to our forecast. We project Microsoft will lose share as Amazon gains, though it should be noted these numbers are from October 2022, before Microsoft announced its new AI-powered Bing.