U.S. Digital Advertising Pressured by AI Disruption, Web Traffic Decline
Digital publishers and advertising intermediaries face increasing disruption from advanced AI and large language models that are changing online users’ behaviors, says Fitch Ratings.
Sustained traffic declines reduce advertising monetization opportunities and could pressure the ratings of these companies if they are unable to adapt to the rapidly changing market.
Companies who successfully pivot to AI-enabled solutions, outcome-based pricing models, and diversified revenue streams will maintain stronger credit profiles as digital consumption patterns continue to evolve.
Recent industry reports highlight a notable shift in user behavior toward AI-powered chatbots for information retrieval. Unlike traditional search engines that direct users to publisher websites, these chatbots deliver concise responses that eliminate the need for further clicks.
AI contributed to an estimated 15% decline in global search traffic year to date as of June 2025, according to Similarweb data. eMarketer reported that Google AI overviews led to as much as 52% decrease in referral traffic in a single month and are reducing users click-through behavior.
The impact of AI on different types of web traffic will vary by traffic source, content type, and user intent. Content platforms, which rely on search traffic to drive advertising revenues, could be particularly affected by AI chatbots and summaries.
IAC Inc., a media company, reported during its June 2025 earnings call that Google Search traffic to its sites has dropped from 52% to 28% of sessions over recent years. The company attributed this to AI and other changes made by Google to the search page.
This trend could exacerbate existing operating pressures faced by AP Core Holdings (Yahoo, B-/Stable) whose EBITDA has been pressured due to high traffic acquisition costs.
Fitch expects Yahoo’s FCF to be negative in 2025 and 2026, and higher-than-anticipated negative FCF generation may heighten Yahoo’s refinancing risk as it faces term loan maturities in September 2027.
Advertising intermediaries that rely on user engagement metrics face similar long-term pressure. Companies like Teads Holdings Co. (BB-/Stable) and RedVentures Holdco (B+/Stable) both depend on user clicks and return on ad spend to drive revenue and would be sensitive to changes in web traffic.
Red Ventures generates revenues via affiliate commission from its specialized referral sites like Bankrate and The Points Guy. High-intent searches, where the user signals a purchase intent rather than just seeking out information, may be less affected by AI summaries for now.
However, revenues are still directly correlated to traffic, and these companies will need to continue evolving as AI capabilities improve.
Teads, a digital advertising platform, acknowledged modest traffic declines to premium publishers from AI summaries in its June 2025 earnings call. If this trend continues, lower click-through rates and revenues may challenge Fitch’s modest fiscal 2025 growth expectations and deleveraging trajectory following the Teads Outbrain merger.
Fitch estimates EBITDA leverage in the mid-3x range following the transaction and expects Fitch-calculated leverage to fall below 3x by FY26, driven by significant incremental EBITDA from Teads and organic growth from Outbrain. The company is accelerating investment in its next-generation advertising platform with Agentic AI modules for launch in 1H26.
AppLovin Corporation (BBB-/Stable) is better positioned to weather these shifts as it derives most revenue from mobile gaming ads with little exposure to web traffic from browsers.
Even as the company expands into e-commerce advertising, its significant scale and advanced AI/ML recommendation engines effectively mitigate potential disruption risks.
The rating is supported by the company’s leading market position and strong financial metrics but constrained by limited competitive advantage and concentrated end markets around mobile gaming.
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