Why AI Chatbots Are the New Search Bar
The way consumers find and purchase products is fundamentally changing. Instead of navigating directly to a retailer's website, many are increasingly turning to AI chatbots for product research and even direct purchasing. This behavior shift has profound implications for the retail media landscape, where search ads account for about 60% of total retail media spend.This trend is not speculative; traditional search engine volume is projected to decline significantly. "It’s a threat to how retail media networks operate as they are. They’re going to have to evolve,” Rita Steinberg, VP of Media at FUSE Create, told Digiday. The core issue: if shoppers spend less time on retailer sites, RMNs lose their primary mechanism for monetizing traffic.
This evolving dynamic is forcing a re-evaluation of strategies. For instance, The Trade Desk is actively testing how advertisers can build campaigns using generative AI on its platform, with CEO Jeff Green hinting at an "agentic AI framework" for partners in 2026, according to Adweek. Agentic AI, which can autonomously execute tasks like pricing and bidding without constant human oversight, presents a new layer of disruption, creating "uncatchable dealer advantages" for early adopters, as reported by Automotive News.
The Complex Battle for Ad Dollars and Data
While the threat is clear, advertisers aren't abandoning retail media just yet. Ross Walker, Director of Retail Media at Acadia, noted that "no one is taking money away from retail media to put into AI ads." Questions around high costs, brand safety, and limited data transparency with AI chatbot ads persist. Unlike RMNs, LLMs often lack the crucial final point of sale, measurement tools, and transactional data—assets largely controlled by retailers themselves. This explains why some companies like Williams-Sonoma and The Knot are testing ads in ChatGPT, but broader adoption hinges on proving effectiveness.Retailers are responding strategically. Walmart has partnered with Google Gemini and OpenAI’s ChatGPT for AI-powered shopping experiences, and Target is collaborating with OpenAI for a specialized in-app experience. These partnerships acknowledge the AI shift while allowing retailers to maintain control over their valuable data ecosystems. Amazon has even secured a court order blocking Perplexity AI’s shopping bots from making purchases on its marketplace, underscoring the fierce competition for control over AI-driven commerce, as The Business of Fashion reports.
As retailers expand their ecosystems—even launching their own generative AI chatbots like Amazon's Rufus or Walmart's Sparky—their closed-loop attribution and end-to-end measurement capabilities give them significant leverage. This means the path to truly competing with RMNs will require LLMs to build out robust APIs, integrate seamlessly with transactional data, and offer comparable measurement insights. The ongoing consolidation within the retail media industry, with mergers and acquisitions aimed at streamlining tech stacks, further indicates a market adapting to these demands.
