AI-Powered Search Advertising Could Reach $25 Billion by 2029, Says Industry Report

Artificial intelligence is rapidly reshaping the landscape of digital advertising—and industry experts predict that AI-powered search advertising could soar to $25 billion in global ad spend by 2029, according to a recent Forbes report by Kiri Masters.

A New Advertising Frontier

The growth is being fueled by the emergence of AI-first search engines such as Perplexity.ai, You.com, and Arc Search, which combine large language models with web search to provide users with conversational, contextual answers. These platforms are challenging traditional search paradigms and opening new doors for advertisers.

Why $25 Billion?

The $25 billion estimate is based on how quickly AI search platforms are scaling and the projected share of the search ad market they could capture by 2029. For comparison, Google earned more than $160 billion in search ad revenue in 2023 alone.

• Faster user adoption of AI search tools in mobile and desktop environments
• Integration of AI chat features directly into web browsers and smart assistants
• Growing investor interest in AI-first search companies
• Advertiser demand for more personalized and conversational ad placements

Brands Already Experimenting

Some early adopters are already experimenting with AI-native advertising. For instance, major retailers are testing ad placements in Perplexity.ai’s conversational answers, targeting users based on product-related queries like “best running shoes for flat feet” or “budget travel backpacks.”

Challenges Ahead

• Lack of established ad networks: Unlike Google Ads, these AI platforms are still building their monetization models.
• Transparency concerns: Users may find it harder to distinguish between organic and paid content in conversational responses.
• Privacy and ethical issues: AI-generated answers require large-scale data aggregation, which can raise compliance and trust questions.

Google and Microsoft Respond

With the rise of AI-native search, tech giants aren’t standing still. Google’s Search Generative Experience (SGE) and Microsoft’s Copilot-enhanced Bing both reflect efforts to blend AI and traditional search. However, it remains unclear how much advertising real estate these hybrid experiences will preserve—and how effective ad performance will be within them.

What This Means for Marketers

For digital marketers, this emerging space signals an urgent need to rethink SEO and PPC strategies. Traditional keyword bidding may become less effective, replaced by intent-based, AI-integrated campaigns.

• Explore new AI search platforms early to gain first-mover advantage
• Create AI-friendly content optimized for summarization and inclusion in responses
• Prepare to work with AI-native ad networks and tools still in development

The Bottom Line

With AI continuing to evolve rapidly, search is no longer just about links and rankings—it’s becoming a conversational experience. And as that experience becomes monetizable, the opportunity for advertisers is massive.

If projections hold true, AI search ads could become one of the fastest-growing segments in digital marketing, with a multi-billion-dollar future unfolding by the end of the decade.