Published June 25
The advertising infrastructure for AI giants like OpenAI is less than a year old. Still, the expectations are sky-high.
AI search is primed to become the fastest-growing marketing channel, with figures passing $100 billion, according to EMarketer.
As the CEO of EMarketer, Matthias Braun runs one of the most influential research businesses tracking all these developments. He has a front-row view to where budgets are actually moving versus what marketers say they care about.
Braun spoke with Lee Singletary at the Cannes Lions International Festival of Creativity about all of this and more.
This interview has been lightly edited for clarity.
Everyone is talking about AI search right now. Is consumer behavior actually changing in a meaningful way? Or are we still relatively early to the hype?
Yes and no. Typical researcher answer.
Yes, it absolutely is changing. We’re seeing half the adult population in the U.S. using LLMs on a regular basis. We’re seeing that for the first time since the pandemic, the time spent with media is increasing again, due to people spending on average 16 minutes a day with LLMs and AI. That is a huge shift in how consumers are behaving.
However, there’s also a lot of things that aren’t changing. We’re still seeing people searching in the traditional way a lot as well.
The Trade Desk Intelligence published research that indicated 95% of consumers still search the open web even after they’ve made an LLM search. Do you think that could show a trust problem?
There’s a couple of really interesting data points we looked at. The first is that when you talk to people or ask people who use AI regularly, 2 out of 3 will say they prefer the LLM answers for detailed questions seeking information. But only 1 out of 3 will say they trust the answers more than traditional search. So there’s definitely this disparity.
What predictions are you seeing on ad spend in AI search?
Our EMarketer forecast for U.S. AI ad search spending is $68 billion by 2030. We’re including a very broad definition of that, that includes ads that appear next to AI search results, not just within a prompt result itself. But we’re certainly seeing that as a huge growth area for that space.
How does AI search reshape traditional marketing and the funnel?
People keep talking about the shortening of the funnel and LLMs making everything irrelevant. I think I’d be very careful about that. There are some trends that have been ongoing for a long time.
The most prominent I’d like to highlight would be the creator economy and social. I think that’s not going anywhere. That will be impacted by AI in a very different way.
On social, for example, the number of campaigns and the number of creative units that people are using for a particular campaign is multiplying by 10x. That is an impact of AI, but it’s not necessarily the shortening of the funnel we’re necessarily talking about. There are, of course, areas where I could see that happening and where it will, over time, have a big impact.
As of now, we’re not seeing a lot of shopping behavior on LLMs. If anything, the AI users we asked in a representative survey said they actually prefer shopping on the traditional search experience or an app.
According to EMarketer, consumers are becoming more price-sensitive, focusing on value and, in some cases, even reducing how often they shop. At the same time, digital ad spending is increasing. How do we remedy that balance, and what’s your advice to marketers?
There are three things to look at. The first is that consumer confidence overall is the lowest it’s ever been since we started measuring it.
That’s super scary, and I think plays into your question. We’re also seeing a U.S. digital ad market that’s growing at 13% to 14% this year, so really big growth.
However, we’re also seeing that consumer spending is actually still increasing, which is, of course, also a reflection of the inflation we’re seeing. So there’s this big divide between consumer confidence and what consumers are really doing on the spending side, and marketers should continue to lean into that.
There are certainly categories where brands are seeing that in some product areas it makes sense to focus on a trading-down play, whereas in others people are still splurging and want to have the kind of experience they may have had in the past.
The Current is owned and operated by The Trade Desk Inc.