AI's impact on search, advertising, and the future of transactional queries

Executive overview

AI chat interfaces are shifting how users discover and buy things online, but the transition from keyword auctions to transaction-based monetisation is more evolutionary than catastrophic. Search ad revenue is concentrated in transactional queries — and users making purchase decisions still want choice, not a single AI-curated answer.

Google and Microsoft will adapt their monetisation models. The real disruption is to middleware aggregators like Expedia and Kayak, which AI can replace entirely.

The businesses that win are those closest to the end user's economics — best price, best convenience, strongest brand.

AI's threat to search advertising

• Transactional keywords drive the vast majority of ad spend — these are least likely to be disrupted short-term.
• Informational queries are more vulnerable: users prefer a concise AI answer over trawling blue links.
• Knowledge Graph didn't kill Google's traffic; each improvement drove more usage overall.
• AI chat increases total search-like activity, so aggregate volume may rise even if per-query ad clicks fall.
• Misinformation baked into training data limits AI answer reliability, especially for nuanced queries.

How the ad auction model shifts

• Today: advertisers bid on keywords, back-calculate to cost-per-acquisition.
• With AI agents booking on your behalf: advertisers bid on willingness to sell at a price, not on a click.
• Airlines or hotels only pay when a customer with matching criteria appears — far fewer wasted clicks.
• The "auction" becomes dynamic pricing in the background; the user never sees it.
• Businesses must get much closer to unit economics; performance marketers who aren't will struggle.

Aggregators get disintermediated

• Expedia and Kayak exist to re-aggregate Google — a task AI handles natively.
• The ChatGPT plugin store turns every app into a background service; users stop visiting product frontends.
• OpenAI (effectively Microsoft/Bing) becomes the aggregator of aggregators, commoditising app UIs.
• Airlines, hotels, and retailers can transact directly through the AI layer, cutting out middleware margin.
• Google and Apple Pay integrations mean the transaction completes inside the AI interface entirely.

What wins long-term: brand, convenience, price

• Strong brands survive commoditisation — Nike, Zapier, HubSpot retain users despite cheaper alternatives.
• Bundling and convenience beat feature count: users choose the integrated solution that "just works."
• Younger consumers already apply this logic (Amazon for toilet paper vs. a grocery store).
• Companies that obsess over the end-user experience will be chosen by AI agents over those that don't.
• Unit economics mastery becomes the core marketing competency as click-based metrics fade.