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

AI-powered shopping complicates media attribution:

• Transactions starting in chat interfaces and completing via merchant checkouts blur traditional budget categories (search, retail media, affiliate).
• New frameworks are needed to track spending across conversational commerce.

Preparing for the Shift

Brands must align product data, media strategy, and tech infrastructure to capitalize on AI search advertising. Jason Goldberg, Chief Commerce Strategy Officer at Publicis Commerce, advises:

"The companies that thrive in the new AI search landscape will not be the loudest—they'll be the most adaptable."

Key Takeaways

• Real-time product feeds are critical for AI search ads.
• Early experimentation with modest budgets is recommended.
• Retailers’ AI strategies will influence brand advertising decisions.

For more details, see EMARKETER’s forecast and Shopify’s Catalog API announcement.