Ad money shifts to platforms, retail media and AI: Is the open web losing ground?

Despite commanding nearly half of global digital attention, the open web is drawing just about 5 percent of digital ad spends as marketers prioritise performance, commerce-led media and AI-driven discovery.

The open web, say industry experts, is steadily losing its place in the digital advertising economy, not because audiences have disappeared, but because advertising priorities have fundamentally shifted. Even as it continues to account for nearly half of global digital eyeballs, including a significant share of Gen Z consumption, the open web today commands only around 5 percent of global digital advertising expenditure, according to industry estimates. The widening gap between attention and investment has become one of the clearest signals of how digital media planning is being structurally rewritten.

What was once the primary discovery layer for brands is now being squeezed from multiple sides. On one end are walled gardens that control data, measurement, distribution and monetisation at scale. On the other is the rapid rise of retail media, where search intent has moved decisively closer to transaction. Layered onto this is the emergence of AI-led answers, which increasingly resolve user queries without directing traffic back to publisher environments.

“The way media money moves today has very little to do with where content is consumed and everything to do with where outcomes are delivered,” said a senior advertising leader who spoke to e4m on condition of anonymity. “You have to look at who is actually making money, who is enabling others to make money, and who controls the pipes. Big platforms sit across all three.”

For advertisers, the shift has been driven by a relentless push for measurable outcomes. Performance-led models, sharper attribution and sales-linked KPIs are now dictating where budgets flow. In that environment, the open web, long associated with awareness and consideration, is struggling to defend its value proposition, even as it remains central to information discovery and trust.

The result is a growing structural imbalance. Publishers are facing falling traffic, discounted inventory and intensifying competition from cheaper audience supply across platforms, while advertising money continues to consolidate within closed ecosystems and commerce-led media. As AI-powered discovery further shortens user journeys, the industry is increasingly confronting a more uncomfortable question. Whether the digital advertising ecosystem can remain healthy if the open web continues to be systematically underfunded.

Traffic Declines, Mobile Behaviour and Margin Pressure

The erosion of open web economics is closely tied to how consumption has shifted from desktop-led browsing to mobile-first behaviour. Industry experts point out that while open web consumption still exists, it is now overwhelmingly mobile-driven, with limited depth and reduced monetisation potential.

“There is a massive difference between desktop open web and mobile open web,” said a marketing leader with over two decades of experience, on the condition of

anonymity. “Today, everything is mobile-first. Brands are asking whether they can really reach a defined tier one or tier two audience meaningfully on mobile open web. In most cases, the answer is not very clear.”

AI-driven search and answer engines have compounded the pressure. Industry voices indicate that AI summaries and overviews are already diverting users away from publisher websites, contributing to a 4 to 5 percent incremental drop in publisher revenues. More significantly, traffic-led monetisation has declined by 25 to 35 percent as users stop clicking through multiple links and consume information directly within AI interfaces.

Publishers are also grappling with quarter-on-quarter monetisation declines ranging between 18 and 35 percent. These declines are being exacerbated by periodic search algorithm updates, reduced discoverability for premium publishers and intensifying competition from lower-cost inventory available across retail media, gaming apps and influencer platforms.

Margin pressure has become acute. “Publishers were already very tight on margins,” said one of the industry experts. “Even if some technology costs reduce because of AI, revenue loss from traffic far outweighs that benefit. That is why you are seeing more bundle deals and aggressive pricing.”

CPMs that once launched at Rs 30 to Rs 40 have, in some cases, moved to Rs 80 to Rs 100 over the past two years, yet remain significantly lower than what large platforms command. Despite this, advertisers continue to view open web inventory as a lower priority.

“As a brand, when I am choosing where to put my next 5 or 10 percent of budget, open web is competing with platforms that already deliver proven revenue,” said the marketer. “That is a very hard battle.”

Overall, open web advertising spends are estimated to be down between 20 and 35 percent, driven by falling traffic, surplus inventory elsewhere and sustained budget migration towards platforms offering sharper targeting and clearer attribution.

Walled Gardens Strengthen Their Structural Advantage

While the open web struggles to defend relevance, walled gardens continue to strengthen their grip across the digital value chain. Platforms such as Google operate simultaneously as publishers, search engines, video platforms, ad tech providers and supply-side enablers, allowing them to monetise media consumption at multiple touchpoints.

“Google participates across every layer of the ecosystem,” said a senior advertising leader who shared views exclusively with e4m requesting anonymity. “Publisher, search, video, demand-side platform, supply-side platform. That structural advantage is exactly why there are so many antitrust cases globally.”

In India, advertising budgets are being distributed across OTT platforms, display, news media, video platforms and social networks. However, the bulk of high-intent and performance-led spending continues to remain concentrated within controlled ecosystems where data, scale and measurement are tightly integrated.

Another expert noted that even when platforms act as tech enablers, the money flow is tightly controlled. “The money may not technically sit with the platform, but when the pipes are owned by one player, influence is inevitable,” the expert said.

Retail Media Becomes the Default Search Layer

Retail media has emerged as the second major force reshaping digital advertising allocations. Consumer search behaviour has moved decisively away from traditional web search towards commerce and utility applications.

“If you want to buy a product today, you do not search on Google,” said one senior advertising expert. “You search on Amazon, Zepto, Myntra or a category-specific app. The default search engine is now an application.”

This behavioural shift is being accelerated by India’s mobile-first reality. With widespread smartphone penetration, low data costs and app-centric consumption habits, desktop-based web discovery is steadily declining. Even mobile web traffic is under pressure as consumers increasingly operate within closed app ecosystems.

“People are not searching anymore, they are consuming,” said the expert. “You open an app, you get what you want, and the journey ends there.”

AI Answers Change Discovery, Budgets Move Cautiously

AI-led discovery is now emerging as the third structural disruptor. Industry inputs suggest that approximately 21 percent of ad spends are already shifting towards AI-driven search and answer environments. While these platforms rely heavily on publisher content as source material, they compress user journeys and reduce direct engagement with original sources.

From a monetisation standpoint, marketers remain cautious. “AI search will monetise, but the ad inventory will be very small,” said a senior marketer with over two decades of experience. “It will not make a meaningful dent in overall advertising budgets. Walled gardens will remain dominant.”

Another industry leader described AI platforms as potential future walled gardens but warned against expecting rapid shifts. “As a brand, I might allocate 10 percent of my budget to test AI-led environments,” the expert said. “But I will not change my strategy overnight. These decisions play out over six to eight quarters.”

A Structural Shift, Not a Passing Phase

Global advertising is still expected to grow between 15 and 20 percent annually, with potential upside of 25 to 30 percent if consumption accelerates and new launches pick up. However, geopolitical uncertainty, trade pressures and cautious marketer sentiment are influencing near-term spending decisions.

Industry leaders stress that the challenges facing the open web are structural rather than cyclical. The shift towards performance, commerce and closed ecosystems reflects a fundamental change in how advertising value is defined.

“The open web plays a critical role in credible information and consumer trust,” said Pankaj Sharma, CEO and Director of MGID India. “A balanced marketing mix is essential. Performance cannot come at the cost of long-term brand building and ecosystem health.”

As advertisers continue to chase immediacy and efficiency, the marginalisation of the open web raises a larger industry question. Whether the digital advertising economy can continue to scale without adequately funding the layer that feeds discovery, information and informed consumer choice.