Overview
Small and medium-sized businesses (SMBs) are increasingly gravitating to advertising solutions that incorporate generative artificial intelligence, according to a new survey conducted by Morgan Stanley & Co. LLC. The research highlights elevated adoption and future intent for Alphabet Inc.'s Search and AI Overviews features, which respondents rated higher than comparable offerings from rival platforms on measures of usefulness and growth momentum.
Platform performance and advertiser intent
The report indicates that Google’s AI-driven search capabilities have gained traction among SMB advertisers, who cite improvements in lead quality and relevance. These AI Overviews have been singled out for delivering higher-intent results that more directly support conversion compared with traditional social feed placements.
While Meta Platforms continues to occupy a major role in the digital advertising ecosystem, the survey recorded a modest year-over-year softening in usage among smaller advertisers. That decline suggests some reallocation of ad spend toward platforms offering AI-enabled discovery and search experiences.
Generative AI and ChatGPT experimentation
Another prominent finding is the widespread inclination among SMBs to experiment with OpenAI’s ChatGPT ad products. The appetite for generative text and video creation tools is growing, and the survey frames that interest as a factor altering the competitive balance for legacy social media companies. Businesses are increasingly attracted to the high intent associated with AI-driven search outputs, while also adopting AI-backed creative tools to lower barriers to producing higher-quality ad content.
Market implications and timeline
Survey participants expect demand for platforms that tightly integrate generative capabilities to expand. Morgan Stanley’s data suggests that these shifts in advertiser preference could redistribute market share among the major technology advertisers through the remainder of 2026. The report underscores that early movers integrating effective AI features are seeing measurable gains in advertiser loyalty.
Longer-term considerations
As AI tools evolve, the ability of a platform to sustain practical utility for smaller advertisers will be a key determinant of its revenue resilience in an increasingly automated advertising environment. The survey implies that functional performance from AI-enhanced search is beginning to matter more to SMBs than the broad reach provided by older social media models.
Key takeaways
- Alphabet's Search and AI Overviews lead SMB adoption and forward intent due to perceived improvements in lead quality and conversion pathways.
- Meta remains a core channel for local advertising, but shows modest year-over-year softness in usage among SMBs, indicating some budget reallocation to AI-led platforms.
- SMBs express strong interest in testing ChatGPT ad products and other generative AI creative tools, signaling experimentation across the digital ad sector.
Risks and uncertainties
- Modest year-over-year softness in Meta usage may reflect shifting advertiser priorities, creating uncertainty for social-focused ad revenue - impacting the digital advertising sector.
- The pace at which platforms can maintain and improve AI utility for SMBs will influence long-term revenue resilience; platform execution risk affects major technology advertisers and SMB marketing effectiveness.
- Redistribution of market share among incumbent ad platforms through 2026 is presented as a potential outcome, but it remains contingent on continued adoption of integrated generative capabilities - posing strategic risk for incumbent platforms.