AI Search Advertising Poised to Hit $25 Billion by 2029

EMARKETER forecasts that U.S. advertisers will spend over $25 billion—roughly 14% of all search budgets—on AI-powered search ads by 2029. This marks a dramatic leap from just $1.04 billion in 2025, fueled by advancements in real-time product data integration and conversational commerce.

Infrastructure Enabling the Boom

Key to this growth is the emergence of structured product feeds that connect directly with large-language-model (LLM) interfaces. For example, Shopify’s Catalog API, launched in May 2025, allows AI agents like Perplexity to access real-time product data—titles, prices, and inventory—without scraping. This development transforms conversational AI responses into shoppable ad inventory.

• Gavin McKew, Director at Shero Commerce, notes: "Discovery apps like ChatGPT, Perplexity, or Copilot can pull enriched product data in real time. No scraping, no lag."
• Scot Wingo, a retail marketplaces expert, emphasizes: "A credible agentic-commerce flow must let customers see a product and buy it inside the chat."

The Retail Media Parallel

The projected growth trajectory mirrors retail media’s rapid adoption, which surged from $1 billion to $30 billion in five years. AI search advertising is expected to follow a similar hockey-stick curve, with spending jumping from $4.77 billion in 2027 to $12.65 billion in 2028.

Adobe’s survey of 5,000 U.S. consumers reveals:

• 39% have used generative AI for shopping.
• 53% plan to use it this year.
• Top use cases include product research (55%), recommendations (47%), and deal hunting (43%).

Retailers’ Diverging Strategies

Retailers are adopting different approaches to AI shopping:

1. Walmart: Betting on open AI agents, allowing shoppers to use preferred personal assistants.
2. Amazon: Building proprietary tools (e.g., Rufus, Alexa+, "Buy for Me") while blocking external agents.
3. Shopify: Partnering with Perplexity for cross-retailer shopping via AI search and Shop Pay.

Attribution Challenges