The advent of artificial intelligence tools like Google Gemini is revolutionizing search engines and redefining the rules of the game in digital marketing. This transformation is leading to a dramatic increase in cost per lead (CPL) on Google, sometimes reaching +100%, according to experts. This evolution poses new challenges for advertisers, particularly in sensitive sectors like education. Faced with this pressure, brands are diversifying their efforts towards social media, search engine optimization (SEO), and programmatic advertising. But how, precisely, is AI impacting the cost of Google ads?
The Mechanisms of AI’s Influence
Google Gemini (formerly Bard) uses AI to improve ad targeting and offer even more relevant content to users. However, this increased precision diminishes the visibility of traditional advertisements and increases competition among advertisers, causing advertising costs to explode. According to an analysis by Exchange4media, conducted by Tasmayee Laha Roy and Jarriti Verma, this trend directly impacts the return on investment (ROI) of digital campaigns.
This dynamic is only expected to intensify in the coming years: forecasts from the American management consulting firm Gartner, specializing in technology, anticipate a 25% drop in search volume via traditional search engines by 2026, in favor of AI chatbots and virtual assistants. This shift calls into question the effectiveness of current advertisements and forces advertisers to rethink their strategies to adapt to this new ecosystem.
The Economic and Sectoral Impact
In India, the consequences are evident. The average cost per click (CPC) for Display ads is around 5 rupees (approximately €0.06), while the cost per thousand impressions (CPM) reaches 50 rupees (approximately €0.59). Digital marketing spending has jumped to 31,500 crore rupees for the 2023-24 fiscal year (one crore is equivalent to ten million Indian rupees), with an annual growth of 30%, according to IPSOS.
The education and travel sectors are among the most affected. Ambika Sharma, founder of Pulp Strategy, notes a 40% increase in CPL in e-commerce and 35 to 50% in SaaS services. These increases are pushing companies to rethink their keywords and explore new advertising channels.
Adaptive Strategies for Advertisers
These ongoing changes are pushing brands to rethink their methods. Exchange4media illustrates this transformation by sharing testimonials from leaders of Indian companies.
Integrated Strategies
Kirtan Mankad, CEO of Blackcoffee.media, advocates for a combination of SEO, tailored content, and interactive advertising formats. He emphasizes the importance of leveraging data to optimize campaigns.
Platform Diversification
Tejas Maha, media manager at White Rivers Media, recommends investing in alternative platforms like Microsoft Advertising, Amazon, and Quora.
Quality and Innovation
Prady, CEO of NP Digital India, insists on the importance of creating content compatible with AI algorithms. A fluid and engaging user experience is essential to reduce acquisition costs.
Solid Foundations
Amit Verma, founder of Digitup, reminds us that companies must first consolidate their websites, customer segmentation, and branding before investing heavily in advertising.
A Transformation Fraught with Challenges
While AI is revolutionizing digital marketing by offering unprecedented targeting possibilities, it also poses new competitive challenges. The ultra-precise targeting offered by AI increases advertisers’ dependence on digital giants, thus strengthening their hold on the advertising market. This concentration could hinder innovation and marginalize SMEs.
The development of artificial intelligence in digital marketing is emerging as a double-edged sword: it offers immense opportunities while posing significant economic and strategic challenges. To take advantage of this evolution, advertisers must equip themselves with adaptive strategies, invest in quality content, and diversify their channels. The future belongs to those who know how to innovate while maintaining a balanced approach between technology and creativity.
- The rise of AI in search engines, particularly Google Gemini, is dramatically increasing cost per lead (CPL) for advertisers, sometimes by over 100%.
- This increase is due to AI’s improved ad targeting, which reduces visibility for traditional ads and intensifies competition.
- In response, brands are diversifying their strategies, focusing on social media, SEO, and alternative platforms like Microsoft Advertising to mitigate rising Google ad costs and adapt to the changing digital landscape.
This article originally appeared on FashionUnited.FR, translated and edited to English.
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