The current internet infrastructure, driven largely by search ads and paid traffic, is not designed to understand user context or intent. Global digital ad spending is estimated at $455 billion in 2023, with 44% of this coming from search ads. However, traditional search engines still depend on indexing and ranking pages based on keywords, often leading to information overload.
GenAI has the potential to change this paradigm by:
- Understanding user intent more deeply.
- Generating precise, conversational answers.
- Creating more natural and personalized interactions.
Instead of relying solely on indexed web pages, GenAI-driven platforms analyze data from multiple touchpoints to predict user needs. For example, travel platforms like Kayak are already leveraging AI to offer personalized recommendations based on past searches, weather data, and travel reviews.
Innovations in GenAI Search and Discovery
- Curation as the New King:
- As content becomes increasingly commoditized, the value will shift towards curation. High-quality, human-led content and expert curation will become paramount. By 2025, 60% of internet traffic is expected to come from curated content rather than traditional search results.
- Companies like Pinterest and Spotify have built data flywheels, continuously enhancing their recommendation engines. Pinterest, with its 450 million monthly active users, uses AI to curate content, enhancing engagement and relevance.
- LLMs Are Not Enough:
- While large language models (LLMs) provide a foundation for generative AI, they alone don’t create a competitive moat. True differentiation will come from how user data, context, and interfaces are leveraged.
- Companies like Spotify and Shopify are perfecting this. Spotify uses AI to curate music playlists like Discover Weekly by analyzing listening habits, while Shopify optimizes product recommendations based on user behavior.
- Agentic AI:
- Agentic AI represents proactive AI agents that go beyond search to anticipate user needs. Platforms like Viv.ai are developing AI assistants that autonomously complete tasks, such as booking flights or making restaurant reservations.
Key Players and GenAI-Led Models in Search and Discovery
Horizontal vs. Vertical Search:
Horizontal players like Google, Microsoft, and Apple dominate generic search engines and content aggregation, but there’s immense potential for vertical-specific search and discovery platforms, focusing on industries like e-commerce, travel, and entertainment.
Key Players in GenAI-Led Search:
- Google DeepMind: Enhances traditional search with AI-powered algorithms, providing more accurate and contextually relevant results.
- OpenAI: Their models, such as GPT-4, are being used for complex text generation, question-answering, and personalized search applications.
- You.com: A customizable AI-powered search engine offering users the ability to tweak their search experience. Founded in 2021, they’ve raised $45 million from Salesforce Ventures.
Vertical-Specific Players:
- Hopper (Travel): A GenAI platform that helps users book flights and hotels based on predictive pricing models and personalized recommendations. Their AI-driven recommendation engine considers seasonality, pricing trends, and user preferences.
- Glean (Enterprise Search): Glean searches across all internal tools, like Slack or Google Drive, to give contextually rich results for employees. Founded in 2019, Glean raised $100 million and is valued at $1 billion.
- Kalendar AI: Specializes in B2B lead generation by using GenAI to mine massive data sets for high-intent leads.
Shifting Monetization Models in GenAI Search and Discovery
The rise of GenAI is likely to disrupt traditional monetization models, particularly as users visit fewer web pages and data is structured differently. Key shifts in revenue generation include:
- API Access:
- Platforms like Perplexity AI and You.com offer their AI search technology as an API for businesses that want to integrate GenAI-powered search capabilities.
- Revenue comes from API licenses and SaaS models, similar to how OpenAI monetizes GPT access.
- Subscription-Based Models:
- Platforms like Neeva and You.com have experimented with subscription models, offering ad-free, privacy-focused search experiences.
- This model is gaining traction in niche verticals where privacy or data ownership is critical.
- Native Advertising:
- As GenAI becomes the default search tool, we’ll see a rise in native, contextual advertising seamlessly integrated into search results. Ads will appear more like recommendations, enhancing click-through rates and user satisfaction.
GenAI Search and Discovery Startups: Case Studies
Here are a few startup examples disrupting search and discovery with GenAI:
- Perplexity AI (Search): Founded in 2022, it raised $26 million and offers multi-modal search via text, voice, and images. It’s notable for providing conversational answers rather than directing users to links. Their platform is designed to be context-aware.
- Andi (Search for Gen Z): Focused on creating an AI-powered search experience specifically for mobile-first, younger users. Their visually appealing interface combines chatbot answers and traditional web links.
- Glean (Enterprise): Their AI-powered platform focuses on contextually rich enterprise search across internal tools. Raised $100 million, offering targeted solutions to large organizations.
- Neeva (Privacy-Centric Search): Raised $77 million before being acquired by Snowflake. Neeva aimed to create a subscription-based, privacy-first search engine but found it difficult to scale beyond its niche.
Future Trends and Predictions
- Multi-Modal AI:
- Expect multi-modal search engines that integrate text, voice, and visual inputs to become mainstream. Imagine searching not just by typing but by uploading a picture or using voice commands.
- Agentic AI:
- AI assistants that autonomously complete tasks—like planning trips, managing schedules, or even completing purchases—are becoming more prevalent. Platforms like Viv.ai are early movers in this space.
- Personalized Interfaces:
- Interfaces will become hyper-personalized, tailoring search results, recommendations, and even the interface itself based on user habits and preferences. For example, Spotify’s Discover Weekly playlist curates music tailored to a user’s listening patterns, and Kayak’s AI helps curate travel recommendations.
Conclusion
Generative AI is not just transforming how we search for information; it’s fundamentally reshaping how we interact with digital content. With multi-modal search capabilities, proactive AI agents, and context-aware algorithms, the future of search will be highly personalized, conversational, and integrated into everyday life. For founders and investors, the challenge lies in identifying niche verticals, building robust data flywheels, and leveraging contextual user data to stand out in a crowded market.
If you’re building in this space or exploring investment opportunities, I’d love to connect—reach out to me at natasha@kae-capital.com. Stay tuned for the next blog in this series as we continue to explore the cutting-edge developments in AI and their impact on the future of technology.