Artificial Intelligence (AI) has profoundly transformed how users consume content online.
NB: This is an article from mirai, one of our Expert Partners
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With its ability to interpret natural language and capture emotions, AI delivers more concise, empathetic, and personalized responses than traditional search engines. Features like the ability to refine searches seamlessly, coupled with voice recognition in multiple languages and generative AI capabilities, have expanded content formats beyond text to include images and videos, unlocking new and unprecedented possibilities.
A multi billion industry dominated by just a few giants
The travel and hospitality sector, a $5 trillion industry, allocates a significant portion of its revenue – about 7%- to digital marketing. The dominant players, Booking.com and Expedia, invest between 30% and 50% of their revenues in marketing, totaling a staggering $16 billion in 2024. In contrast, suppliers, such as hotels, invest a modest 2% to 5% in marketing efforts. We wrote a blog post related to this huge difference in investment between hotels and OTAs.
This enormous marketing expenditure flows primarily to a handful of platforms:
- Search Engines: an industry largely controlled by Google.
- Social and Video Platforms: led by Meta (Instagram and Facebook), TikTok, YouTube, and Pinterest.
- Metasearch Engines: Google Hotels dominates, followed by TripAdvisor and trivago.
- Marketing in OTAs: including Expedia Travel Ads, TripAdvisor Sponsored Placements, and similar offerings.
Newcomers aiming to disrupt the landscape
The emergence of AI platforms like ChatGPT, Perplexity, Llama (Meta), Claude, Microsoft’s Copilot, and countless others represents a potential shift in consumer behavior. While dethroning established giants like Google may seem daunting, history -with examples like Kodak, Nokia, and Blackberry- shows that consumer preferences can pivot swiftly when novel alternatives emerge.
ChatGPT, for instance, has already amassed nearly 200 million monthly users and over 100 million app downloads in just over a year. While these figures are still dwarfed by Google’s 80 billion monthly users, ChatGPT’s awareness -currently at 18% among U.S. adults- is expected to grow globally.
Despite the opportunities, the high cost of AI development presents significant barriers to entry. With estimated costs of $100 million to create a new AI model and AI specialists being among the highest-paid in the tech industry, only companies with deep pockets- like Apple, Amazon, and Microsoftare well-positioned to compete. However, smaller companies leveraging third-party AI models or niche applications may carve out valuable market space, though many are likely to fail in the process.
Rising costs and the need for revenue models
As AI costs escalate, finding sustainable revenue streams becomes critical. In 2024, OpenAI incurred losses of $5 billion, and Perplexity’s revenue barely reached $25 million. Meanwhile, Nvidia’s stock surge reflects the intense investment still pouring into AI.
To offset rising expenses, many AI companies, such as OpenAI (chatGPT) and Google (Gemini), have introduced subscription models, paid memberships, and APIs for enterprise use. While these strategies generate revenue, it remains unclear whether they can keep pace with the rapidly increasing costs of AI development and maintenance.
