What's Happening?
The rise of AI tools like ChatGPT and Google's AI Overviews is affecting the open-web ad inventory that demand-side platforms (DSPs) such as The Trade Desk and Viant depend on. This shift is causing a significant reduction in website traffic for major publishers, with CNN experiencing a 30% drop and Business Insider and HuffPost seeing declines of around 40%. AI Overviews are appearing in 18% of Google searches, leading to fewer clicks on publisher links. This change is impacting the programmatic platforms that drive the digital ad economy, as traditional DSPs relying on display and online video ad units are particularly vulnerable. The Trade Desk's shares fell nearly 40% due to slowing growth and AI-driven changes in web traffic.
AD
Why It's Important?
The impact of AI search tools on web traffic and ad inventory is reshaping the digital advertising landscape. As AI tools keep users on their platforms, publishers and DSPs face reduced ad opportunities, affecting their revenue streams. This shift forces marketers to recalibrate strategies that rely on traditional search data for audience targeting. The reduction in premium supply could lead to increased competition and higher costs for advertisers. DSPs are adapting by focusing on channels less dependent on open-web traffic, such as connected TV, which is seeing significant growth. The industry must assess whether the open web can sustain itself against the dominance of AI-driven platforms.
What's Next?
DSPs are shifting towards channels like connected TV, audio, and digital out-of-home to secure premium inventory. Viant is increasing its focus on CTV, with 45% of its ad spend in this area. The Trade Desk is also reporting higher use of CTV. As the digital ad ecosystem evolves, DSPs must adjust to the changing landscape and explore new strategies to maintain resilience. The industry will continue to monitor the balance between open web and walled gardens, assessing the long-term viability of traditional ad models.
