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Last May, Google released its search generative experience (SGE). As expected, this AI tool stands to cost publishers a substantial amount of money in ad revenue. According to a study conducted by Raptive, it appears that Google SGE could cost publishers up to $2 billion in ad revenue.
If you don’t know what Google SGE is, it is the AI tool that will artificially generate text-based responses to your Google searches. So, when you do a Google search, rather than having relevant websites at the top, Google will generate a text-based response to your search, and that would be the first thing you see.
The issue with Google SGE is the fact that it allows people to forgo navigating to websites to get answers. So, rather than going to these sites and generating ad revenue for them, people can simply skip that step and get their information.
Google SGE could cost publishers billions of dollars
Raptive, the company handling ad sales for companies such as Mac Rumors, Stereogum, and Half Baked Harvest, conducted two separate studies, one back in September and one this February. According to its study, Google SGE could potentially cause a decline in search traffic for most publication sites between 20% and 60%. A drop that massive could significantly affect the ad revenue that these companies can get. Such a sharp decline in ad revenue will cause companies to have to make significant changes to their business structures.
Right now, even though it’s been out for more than half a year, SGE is still in beta. This means that its reach is still rather limited. However, in a statement to add week, Raptive’s Executive Vice President of Innovation, MCollum said “When fully rolled out, SGE could result in a 25% decline in search traffic across its 5,000-publisher network.”
That’s a scary thought, as Google is the largest search engine in the world. This means that SGE will be available across much of the world when it fully rolls out. So, publishers stand to lose a significant amount of money. When that happens, it’s obvious that many of them will have to either restructure, lay off employees, or shut down.
Google claims that it surfaces relevant links to publications in the SGE results, but that’s not enough. Obviously, if the beta version of its AI tool is already causing a drop in ad revenue for publishers, then there is something wrong with Google’s strategy. However, Google is going to do what it wants to do, and we’re all just along for the ride.
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