Search Thriving: Least Likely To Be Cut From Ad Budgets

Search ad spending in the U.S. is estimated to reach nearly $112 billion by 2023 -- doubling what advertisers spent in 2019, according to data from Insider Intelligence.

The analyst firm, in the report released this week, called paid search the “bedrock” of media -- accounting for more than a quarter of total spend between general search and the ecommerce channel.

It will account for 28.6% of total media spending this year. By 2026, $3 of $10 of ad spending will go toward search.

Google still dominates search advertising, but its share of the market continues to slowly shrink, the data shows.

Advertisers are increasing spend on search formats on Amazon and other retailers’ websites and apps, and smaller general search engines are growing based on a privacy focus.

Meanwhile, Apple continues to grow its advertising business based on privacy initiatives. Apple Search Ads have attracted advertisers’ budgets, in part, from its AppTrackingTransparency (ATT) initiative, which has made targeting potential customers more challenging.



Insider Intelligence data estimates ad revenue for Apple -- which is almost entirely generated by search ads in its app store -- will come in at $4.14 billion this year.

With its current business model, Apple will experience double-digit increases in ad revenue during the next few years and, by 2024, will account for 5% of all search ad spending. The expectation is Apple also will expand its ad inventory across Maps, Books, and Podcasts.

While TikTok doesn’t offer search ads, it could be a matter of time. A TikTok spokesperson confirmed that the company launched a beta trial for search in March 2022.

In July, Google SVP Prabhakar Raghavan publicized internal data during a public discussion that estimates nearly 40% of 18-to-24-year-olds in the U.S. go to TikTok and Instagram, rather than Google, when looking for a place for lunch.

This trend may become more important as consumer behavior changes and younger generations mature.

As of March 2022, 61% of U.S. internet users ages 16 and older begin online product research with Google or YouTube, while just 6% start with Facebook, Instagram, or Pinterest, according to the study, citing Morgan Stanley data.

If advertising budgets tighten, Insider Intelligence believes search media will be the channel least likely to see cuts, while channels like connected TV (CTV), digital video and linear TV will be the most vulnerable, according to recent survey data from Advertiser Perceptions.

Data from Advertiser Perceptions suggests U.S. advertising professionals paused or pulled ad budgets due to supply chain disruptions. The data from April 2022 shows 47% pulled or paused CTV; 44%, digital video on desktop or mobile; 42%, linier TV on broadcast or cable; 37%, digital streaming audio; 36%, ecommerce; 35%, out of home; 33%, paid social; 31%, digital display; 26%, advanced TV; 26, AM/FM radio; 22%, print; and 21%, paid search.

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