AI search ad spend set to hit $26B by 2029 as brands rethink search strategies

A dramatic shift is underway in the US search advertising market as advertisers pour billions into AI-powered search ads, challenging traditional keyword-based search strategies and reshaping how brands reach consumers.

According to fresh forecasts from eMarketer, AI-driven search ad spending in the US will skyrocket from just over $1 billion this year to nearly $26 billion by 2029, capturing 13.6% of total search ad budgets — a massive leap from its current share of under 1%.

This explosive growth comes as more consumers embrace AI search tools for faster, more conversational answers — bypassing the need to scroll through pages of traditional search results. Recent YouGov data shows that 38% of US adults already rely on AI-generated summaries for half or more of their searches.

Major search players like Google and Microsoft’s Bing have raced to embed AI capabilities into their platforms to compete with popular chatbots like OpenAI’s ChatGPT and Perplexity AI, which deliver direct answers without extra clicks. Google, for example, recently boosted its AI-powered shopping features to extend these capabilities to the consumer packaged goods sector.

Even Apple is exploring adding AI-driven search to its Safari browser — a move that could signal a long-anticipated shift away from its lucrative search partnership with Google.

The surge in AI search ad budgets could squeeze revenue for companies still clinging to traditional keyword-based ads. AI-enhanced search formats promise better targeting, more relevant results, and more engaged consumers — but they also threaten publishers and websites that rely on clicks from classic search listings.

“Publishers and other sites are feeling the pain from AI search,” said Emarketer analyst Minda Smiley. “As they lose out on traffic, we’re seeing them pivot toward subscription models and paid AI licensing deals to stay afloat.”

Key industries fueling this surge include financial services, technology, telecom, and healthcare, all of which are using AI to sharpen their ad targeting and capture more high-intent consumers. However, the retail sector — which still leans heavily on paid search and email — has been slower to adopt AI-driven search.

Meanwhile, AI-generated traffic continues to climb rapidly: Adobe recently reported a staggering 1,300% year-over-year increase in Generative AI traffic to US retail sites during the 2024 holiday season — with strong momentum into 2025.