The digital ad industry could be on the cusp of a major transition with the decline of traditional search advertising, trapped in the headwinds of a significant increase in retail search, according to data.

The behavior of searching for a product or service is strong, but the location of where consumers conduct the search continues to change, according to Rick Bruner, head of insight and analytics at Standard Media Index (SMI), which aggregates media billing records from the 11 biggest ad-agency holding groups worldwide.  

Bruner pointed to SMI’s September data, with the October data being released mid-month. “We saw the decline for digital media non-search as well as search,” he said. “It went negative for search in July.”

In July 2022, traditional search fell 3% among the 11 biggest ad agencies. In August it fell 6%, and in September, it fell 12%.

One thing to note, he said, is that spending in 2021 was “abnormally high,” referring to the entire ad market as “overheated.” In November, December, January, and February media buys were up about 20% year-over-year, but that was against the pandemic year, 2020.

Advertisers through agencies are investing money in retail media, rather than traditional search, he said.

In the report, retail media is characterized as “point-of-sale aligned,” meaning that advertisers selling product through retailers such as grocers and consumer product goods (CPG). This includes companies like Albertsons, Amazon, Walmart, and Target, as well as Home Depot, Lowes, and Instacart.

Financial Services, Travel and similar are considered a non-POS aligned, because the sale is made direct.