Google, in panic mode according to the New York Times, is working on upgrading its existing search engine with AI features, trying to head off the threat from Bing. The company is also working on a new AI-powered search engine, code-named Project Magi. That new engine will supposedly provide a more personalized user experience, trying to anticipate users’ needs.
As Microsoft is bringing the search experience to a new level by adding a GPT-based chatbot, Google Search is finally facing some real competition, forcing Google to improve its search product. And that will not only benefit users, it’s also going to improve search advertising for marketers.
Most importantly, you can expect more innovation: As Bing picks up traffic and ad business from Google, competition between the search engines will intensify. This will drive innovation and lead to the development of better tools and features for advertisers, resulting in more effective and targeted ad campaigns. That’s good – as it stands today, advertising on Google Search is hardly an experience that delights buyers.
What this will do to search ad prices is less clear. CPC rates might actually increase (assuming that search engine companies will stick with the CPC pricing model). That’s because better search results mean there will be fewer queries (supply declines). By the same token, chatbot query results will provide better, more trustworthy results, making it more likely that users will click on an ad (advertisers’ demand increases). But then, because click-through traffic will be higher quality, ROAS should also be better. So all should be good in performance land.
Will Google’s efforts pay off? My crystal ball says: If Magi will just be a better search engine but will not be a step-change in terms of its results – as are Bing and ChatGPT – Bing will continue to eat into Google’s business.
This comes as Samsung is reportedly considering replacing Google with Bing as the default search engine on its devices, putting $2 billion in annual revenue from that distribution deal at stake. Also at risk: $20 billion from a similar distribution deal with Apple, which – so far – makes Google the default search engine on iOS devices.
Google’s future will depend on its ability to cannibalize its own business, even if that should mean it would continue in a somewhat reduced form.
But what is Google’s headache is advertisers’ delight – more competition, better advertiser-facing products.
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