Where Do Paid Ads Fit With ChatGPT & Why Is Google’s Bard Taking So Long To Come To The AI Party?

Where Do Paid Ads Fit With ChatGPT & Why Is Google’s Bard Taking So Long To Come To The AI Party?

In this guest post, Nunn Media’s head of digital Pete Wilson (pictured below) takes a look at the hottest topic in town – ChatGPT – and contemplates why Google has been so late to the AI ad party…

Maybe, just maybe, Google has been stalling on Bard because of the success of Google Ads.

Google’s ‘search and other’ revenue came to a whopping US$42.6 billion in Q4 2022. Whilst this represents a 1.6 per cent drop YOY on Q4 2021, it’s pretty clear that search revenue is still Google’s bread and butter (plus a couple of other fillings).

So what would happen if they introduced a better way to search, that gave you more succinct answers without having to potentially trawl through lots of pages of results, maybe clicking on several before you found what you wanted. A drop in revenue for starters. Echoes of Sony and Walkmans v MP3 players perhaps?

Well, with the arrival of ChatGPT, Google’s hand has been forced.

For years, Google has held around 90 per cent of search share in many markets. ChatGPT is a threat to this and of course the huge amounts of revenue generated as a result.

I haven’t had a play on Google Bard as of yet. A good job as I’ve been writing a research paper on telescopes (joking). However, I suspect paid ads won’t be there from the start, but Google felt it needed to move to ensure Microsoft does not steal the AI narrative – highly important in both in the investment, sales and marketing worlds.

We may see Google Bard take a different approach given Google makes its search revenue from directing people to websites. It has been a bad week for Google, but certainly not fatal given their long track record of significant investment in this area.

And let’s not forget there is currently no clear revenue model for ChatGPT, so there is still lots to play out. Facebook launched three years before its initial ads platform appeared in 2007. At the same time, we aren’t talking about social media, we are talking about search. Google has seen off a plethora of other search engines over the years, from Alta Vista and Ask Jeeves to Lycos, Infoseek and many more. So for a competitor to even give the perception it has one-upped Alphabet means we are in uncharted waters.

ChatGPT has had a great start, with the aid of a huge amount of global publicity, but they will need to focus and refine the product offering. It won’t take long for the novelty to wear off, with users wanting deeper and broader information. With the AI engine only drawing on information up to the end of 2021, there are obvious limitations to the ‘I’ in its AI.

Whilst monetisation of AI will come later, Google’s earnings may be impacted in the short to midterm. We have already seen the impact on its valuation. But I suspect they will catch up and quickly while retaining the ability to give senior Microsoft execs some sleepless nights.

From an advertiser perspective we have entered a really interesting phase. It is also a great opportunity for other publishers. We may see declining spends on search and thus more budget for other areas. And don’t get me started on attribution. How this all develops will be fascinating.

 

 

 




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