AI is changing online ads, and brands have a new fight on their hands: Report

Brands have spent years competing to appear at the top of search results and social media feeds. Now, as consumers turn to AI to discover products and compare options, the next fight is over getting AI to recommend what they sell.

In Southeast Asia, 50% of consumers use AI to discover products and 69% use it to compare them, according to the e-Conomy SEA 2026 report by Google, Temasek and Bain & Company, released on October 21. The report also found that 19% of consumers start their shopping journeys directly on standalone AI apps.

This could change how brands approach advertising. As consumers use AI assistants to shortlist products, compare prices and weigh their options, brands may have to look beyond search rankings and social media feeds to figure out how to get their products noticed in AI-generated recommendations.


But AI is not replacing existing discovery channels just yet. More than 90% of users who receive an AI recommendation conduct further research or consult reviews, according to the e-Conomy SEA report. Of these users, 55% turn to online search platforms, 54% consult customer reviews and 44% use social media content. AI is becoming another step in the shopping journey, rather than replacing the channels consumers already use.

Advertising platforms are also experimenting with new formats. In India, Google introduced Business Agent for Leads in beta in July 2026, bringing a Gemini-powered brand agent directly into Search ads. According to the company, the tool lets consumers ask questions and receive answers based on an advertiser's website. Education platform upGrad has started testing it to answer prospective students' questions and qualify leads before they reach its sales team, Google said.

AI is also changing how existing advertising businesses operate. Online media revenue in Southeast Asia is expected to reach $44 billion in 2026, up 22% year-on-year, with online advertising remaining its biggest contributor, according to the e-Conomy SEA report. AI-powered advertising tools are delivering a 10-20% uplift in engagement quality, the report said. Meanwhile, video advertising is expanding beyond brand campaigns into clickable and shoppable formats designed to drive consumer action.

According to the report, e-commerce platforms, travel companies and superapps are also building advertising businesses around their existing user bases. These platforms can offer brands access to consumers who are already browsing products, planning trips or using their services, creating another source of revenue beyond their core businesses.

The e-Conomy SEA report also estimates that commerce media has become a $4 billion advertising market in Southeast Asia over five years. There is still room for growth, with advertising accounting for only 1-3% of gross merchandise value on these platforms, compared with 9-10% for Amazon in the US, the report said.

AI-first consumer apps are another potential source of advertising inventory. In its August 2026 report, Advertising Unlocks Scale for the Next Generation of Consumer Platforms, Redseer Strategy Consultants said advertising could help AI apps monetise a wider user base instead of relying only on subscriptions. The report estimates that global advertising spending has grown around 1.4 times as fast as advertiser revenue since generative AI began scaling in 2022.

However, advertising on standalone AI platforms remains at an early stage. The e-Conomy SEA report expects it to develop gradually over the next two to three years, citing limited ad inventory, uncertainty around ad effectiveness and differences in platform strategies.