Publishers and advertisers are becoming increasingly frustrated with tech giant Google (GOOGL). Indeed, according to The Information, many publishers say that Google search results now send less traffic to their sites. At the same time, advertisers complain that their search ads aren’t always showing up next to the terms they paid for. Nevertheless, companies are still spending more on Google ads because there aren’t many good alternatives. As a result, Google’s search ad business still grew 11.7% in the second quarter, slightly faster than in the first, even as ChatGPT and other AI tools draw some searches away.
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Interestingly, publishers say that the traffic drops may be linked to Google’s new AI Overviews feature or more people asking questions on ChatGPT. In fact, a Pew Research survey found that users clicked fewer links when Google used AI summaries, although Google disputes this claim. Still, many publishers admit that they are spending more on paid ads in order to make up for the drop in free search traffic. It also doesn’t help that ads are now appearing more often next to brand-specific searches rather than general ones, which makes campaigns less effective.
This is because more people are researching products on AI tools like ChatGPT, which means that by the time they turn to Google, they are searching for exact items rather than exploring options. This has pushed up the cost of brand-specific ads by 16% in the first half of the year, compared to a 3% rise for other search terms. However, marketers continue to invest in Google ads because they still perform better than other platforms, and new AI-powered features like AI Max are helping to boost returns.
Is Google Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on GOOGL stock based on 26 Buys and nine Holds assigned in the past three months. Furthermore, the average GOOGL price target of $216.48 per share implies 11% upside potential.
