AI-this and AI-that has pushed to the forefront, becoming part of our everyday conversations. Talk to anybody and you’ll get an earful of the pros and cons, and often, they’re directly related to a specific topic or industry.
What’s Going On:
AI is affecting consumer behavior – something the advertising industry needs to rapidly address. Recently, the rapid growth of AI-generated summaries in search results is changing consumer behavior quickly.
Problem We’re Seeing:
For advertisers and publishers, it is expected to lower CPMs (cost per thousand impressions) especially on websites like news publishers that are already experiencing significant drops in traffic.
As is true in many industries, costs (CPMs) are fundamentally influenced by supply and demand. When web traffic to publishers’ sites decline, so does the volume of ad impressions available for sale, making the sites less appealing to advertisers. Data from a recent Pew Research Center report suggests that some publishers are seeing a sharp decline in clickthrough rates from Google search results, dropping from 15% to just 1%, as these AI summaries are providing consumers with enough information to satisfy their current ask.
Beyond traffic volume, user engagement is also a critical factor in advertising value. If AI summaries provide enough information to answer user search queries, many users may not visit the original content at all, leading to reduced on-site engagement. This may further reduce the value of each impression and push CPMs even lower.
Combating Change:
To combat these declines, some publishers may implement defensive paywalls to increase the value of their content and target more valuable users. While this might raise CPMs slightly for their limited inventory, it also reduces reach and overall site traffic, limiting long-term revenue potential. There’s talk too about emerging licensing models, where publishers charge AI companies for content access in order to create new revenue streams for publishers outside of advertising dollars.
Overall, the shift toward AI-driven content delivery is likely to have a negative impact on ad-supported publishers. While top-tier sites may be able to adapt with subscriptions or licensing deals, many mid- and lower-tier publishers will see both CPMs and total ad revenue decline as AI summaries continue to capture user attention and reduce site visits.
What It Means For Brands:
All brands, including news publishers, need to include more authentic, high-quality, structured content on their website and across their social channels. With 15% of AI Summaries containing links from just three platforms (Reddit, YouTube and Wikipedia), brands should also be engaged and visible across these avenues. Refreshing content frequently will increase the chances that brands’ authentic content is included in summaries.
Alongside the site traffic and pricing changes, AI-generated summaries are also changing consumer’s path and journey through the funnel. Based on consumers’ experiences with and adoption of AI Summary results, their path to awareness, discovery and purchase/decision is no longer linear and direct. Last click attribution becomes less reliable for brands, replaced by multi-touch and/or AI-driven attribution.
What We Do For Brands:
At True Media, we are actively analyzing the effects AI is having on the landscape and highlighting the value we bring to our clients.
We’re doing this through lower CPMs, better targeting and/or identifying high-value content across the web. Working towards balancing lower costs with quality placements on trusted, engaging sites can help provide both value and performance in the everchanging environment of digital media.
