Artificial Intelligence (AI) Search Advertising Set to Soar, Potentially Achieving a $25 Billion Market Value by 2029

Artificial Intelligence (AI) Search Advertising Set to Soar, Potentially Achieving a $25 Billion Market Value by 2029

AI-Powered Search Ads Set to Dominate U.S. Market by 2029

Fancy yourself chatting with a Pal, asking for a new pair of sneakers, and just like that - bam! - you've got them ordered without even lifting a finger. Sounds like science fiction, right? not anymore!

According to the experts at eMarketer, the future of digital advertising is here, and it's all about AI. By 2029, U.S. advertisers will reportedly funnel over $25 billion into AI-enhanced search results. That's an astounding 14% of their entire search budget!

The secret? Platforms are connecting live, organized product feeds to powerful AI interfaces. Last week, Shopify rolled out their Catalog API, allowing agents like Perplexity to access real-time details on every product minutiae, without a single scrape required. It's a game-changer in the world of conversational shopping, with platforms like ChatGPT and Amazon's "Buy for Me" leading the charge.

But what exactly does this mean for us consumers? It means a shopping experience that's smoother, more personalized, and incredibly convenient. Say goodbye to endless browser tabs and hello to seamless, AI-guided shopping!

A New Era for Shopping - From Insight to Checkout

The days of generic search results are numbered. In the near future, AI-powered search ads will be woven directly into conversational answers. This shift calls for enriched product titles, detailed attributes, and real-time inventory status for AI agents to effectively rank or surface sponsored suggestions.

Shopify's Catalog API, introduced during their Summer '25 Edition on May 21st, is the infrastructure for this change. It provides a single, machine-readable feed of every product published on Shopify, making life easier for apps like ChatGPT and Perplexity to pull titles, prices, stock levels, and more, without delay.

In a world where speed and convenience matter, AI shopping is about to dominate the digital landscape. It's all about turning insight into instant action - and these innovations are unlocking possibilities that eMarketer's forecasting team couldn't ignore!

Challenges for Brands

But this new era of conversational commerce also presents significant challenges for brands. Clean, real-time product data feeds are vital, as are connections to swift checkout capabilities, be it through integrated payment systems or smooth retailer integrations.

Scot Wingo, a retail marketplaces expert, emphasizes the need for a seamless experience, stating that customers must be able to see a product in the chat and complete their purchase instantly. No more shuffling tabs or juggling windows - it's all about intuitive streamlining.

The Rise of the AI-Powered Shopping Experience

eMarketer's trajectory projection - from $1 billion in 2022 to $25 billion in 2029 - follows a pattern identical to that of digital advertising's past. Retail media took approximately five years to reach similar scale, and AI search is already on track to match retail media's rapid adoption curve.

An Adobe survey of American consumers reveals that 39% have already used AI for shopping, with 53% planning to do so this year. Consumers utilize these AI agents for research, recommendations, deals, and more - and with the convenience on offer, it's no wonder!

In the not-so-distant future, AI shoppers will be commonplace. Shoppers will turn to AI to research products, receive recommendations, and discover deals, just like they do now with human assistants. But with AI, the entire process will be faster, more convenient, and infinitely more intelligent.

Brands Must Adapt - Now!

Brands that neglect the optimization of their product data and media strategies risk being left behind. The time to experiment with AI-powered search advertising is now. Establish relationships with emerging platforms, optimize product data, and stay agile in a rapidly evolving digital landscape.

The inflection point between 2027 and 2028, when eMarketer projects spending to explode, will likely coincide with platforms rolling out premium placement layers on top of their free catalog feeds[3]. Until then, moderate investments will help brands ride the wave of AI search advertising as it crests.

The Future of Retailers: Smart Strategies and AI Allies

The emergence of AI shopping agents forces retailers to reconsider their strategies for conversational commerce. Walmart is blazing a trail, developing their own shopping agents while also enabling customers to use their preferred AI shopping assistants across multiple platforms[2]. Meanwhile, Amazon continues to focus on their proprietary AI tools, keeping external agents at bay.

Multi-merchant platforms like Shopify partnering with AI agents present a third option. These platforms provide seamless, cross-retailer shopping experiences, allowing users to discover products, compare options, and complete transactions - all within a single conversational interface.

For brands, these diverging retailer strategies create complex decisions about platform prioritization and budget allocation across different AI shopping environments.

Measuring the Unmeasurable: New Attribution Challenges

As conversational shopping experiences take off, measurement becomes a complex issue. With transactions beginning in conversation and completing through various checkout systems, traditional budget categorization breaks down.

Marketing teams will need new frameworks to track and optimize spending across conversational interfaces, especially as these platforms develop their own advertising inventory. Collaborating with IT, marketing, and advertising teams will be more important than ever before, as brands navigate the blurry lines of search, retail media, and affiliate budgets.

Even at its projected $25 billion scale, AI search advertising will remain smaller than retail media in absolute terms. But the incremental advertising growth between 2027 and 2029 will increasingly tilt toward AI-powered search as conversational interfaces become primary discovery channels.

Ready for the Future of AI Search Advertising?

Brands that treat product data and media strategy as an integrated challenge will thrive in the new AI landscape. As AI search advertising scales, those who neglect alignment between traditionally siloed teams may find themselves struggling to keep up with the competition.

The foundations for the explosive growth eMarketer predicts are already in place, with product feeds that once powered comparison shopping engines and retailer websites now powering conversational AI. Combined with growing consumer adoption and the maturing infrastructure, the AI revolution is set to redefine the future of search advertising.

It's time for brands to adapt and evolve - or get left behind! Embrace the future, experiment with AI, and watch your business soar to new heights!

1. As investing in AI-powered search ads is set to surge, reaching $25 billion by 2029, finance leaders must understand the technology's impact on artificial-intelligence shopping and retail media, particularly in search advertising.
2. In the era of AI shopping, brands require not only clean, real-time product data feeds but also swift checkout capabilities, as emphasized by retail marketplaces expert Scot Wingo. To create a seamless experience, these elements must be integrated, following the trend of intuitive streamlining in technology-driven consumer interactions.

Read also: