Cookie Loss Didn’t Kill the Web, But AI Overviews Might

The digital advertising industry spent years preparing for the demise of third-party cookies—an event that never fully materialized. But while we were focused on cookies, a much bigger transformation was quietly unfolding: the fundamental shift in how people interact with search engines. AI Overviews.

Google’s AI Overviews and AI-driven chatbots are reshaping search behavior in ways that will have profound consequences for advertisers, publishers, and the open web. This shift and its repercussions are already unfolding—but advertisers and publishers are standing flat-footed. That needs to change.

The Far-Reaching Implications of Search’s Upheaval

For years, search has followed a predictable model: Users type in a query, click on an organic result or ad, and visit a webpage—often an ad-supported one. This process generates countless bid requests, fueling the programmatic advertising ecosystem.

Now, AI Overviews are changing the game. Instead of clicking through to a page, users increasingly get their answers directly in the search results, eliminating the need to visit ad-supported sites. This shift has weighty implications for the ad-supported internet:

• Bid requests will decline: As fewer users click through to webpages, the number of programmatic ad impressions will naturally drop.
• Conversational advertising will take center stage: Search budgets will likely shift toward AI Overview product promotions and other sponsored options embedded within chatbot environments.
• MFA and search arbitrage sites will lose viability: Many ad-supported sites rely on search-driven traffic. If users don’t click through, these sites will struggle to sustain themselves. Long-tail cheap-reach sites (g., recipe sites, parenting blogs) will feel the pinch from a natural drop in search traffic most acutely.

Let’s put this in a real-world context: Imagine you’re planning a dinner party. In the past, you’d search for recipes, decoration ideas, and cocktail pairings—clicking through to multiple ad-supported sites in the process. Each click would generate programmatic display inventory, sustaining ad-supported sites.

Now, with AI Overviews, you simply tell a chatbot about the party you’re planning, and it gives you everything you need in one view—without ever clicking through to a webpage, triggering a bid request, or seeing an ad. This shift alters the digital advertising economy in a fundamental way.

The Data Tells the Tale

Industry data indicates that the consequences of changing search behaviors are already unfolding before our very eyes. Consider this: Gartner predicted a 25 percent drop in Google searches by 2026 due to AI. However, more recent data indicates that search queries have actually increased over 20 percent since ChatGPT’s launch in late 2022. However, despite this increase, referral traffic from search engines is already starting to decline.

In other words, while search queries are up, they do not appear to be resulting in more clicks. Instead, users are likely refining their AI Overview results, reducing the need to visit external sites. As referral traffic declines despite growing search volume, we’re witnessing an inflection point within the digital advertising ecosystem.

Where Could $14B+ in Ad Spend Go?

As users increasingly stay within AI-generated search results, let’s conservatively assume we might see a 5 percent annual decline in open-web traffic to browser-based sites. Over five years, this traffic decline translates to up to $14 billion in long-tail display ad inventory simply vanishing.

This shift will have profound consequences for the digital ecosystem. Small publishers that rely heavily on search-driven traffic may struggle to sustain their business models as fewer users click through to their sites. At the same time, more premium publishers, such as The New York Times and The Wall Street Journal, will be less directly affected as they are less reliant on search for their traffic.

The result is a shrinking pool of lower-CPM web inventory, intensifying competition for premium inventory and pushing some budget into other channels.

Where Do Advertisers Go from Here?

It’s not all bad news. While supply constraints in premium web inventory might push up prices, this also creates opportunities for alternative advertising channels. Here are the leading candidates for capturing shifting budgets:

• CTV advertising: With its premium, immersive format, CTV is a natural beneficiary. However, it faces supply constraints similar to the premium web.
• In-app mobile advertising: Full-screen, highly viewable, and offering 100 percent share of voice in certain formats, mobile in-app advertising is poised to capture more dollars. This will include ID-less mobile inventory capable of delivering efficient results based on contextual cues.
• Digital out-of-home (DOOH): As brands seek scale, DOOH presents an alternative (and increasingly targetable and measurable) way to reach mass audiences.
• Audio advertising: Podcasts and other streaming audio provide another avenue for advertisers looking for coveted audiences and targetable ad opportunities beyond traditional web placements.

AI isn’t just reshaping search—it’s reshaping the entire digital advertising landscape. The traditional search-and-click model is eroding, forcing advertisers and publishers to adapt or risk being left behind. While third-party cookies’ demise might not have spelled the end for the web, AI-driven search is poised to truly disrupt the digital ecosystem.

Advertisers must start experimenting with alternative channels, and publishers must reinvent their content strategies to maintain engagement and monetization. The brands that acknowledge this shift early and pivot will be best positioned in the new era of digital advertising. Those who wait? They could soon find themselves searching for relevance in a landscape that no longer has room for them.