Google expands AI Search ads globally as core ad growth slows

Google is bringing advertisements directly into its AI-powered Search experiences across international markets, banking on generative AI to unlock fresh revenue streams as expansion within its foundational search advertising business begins to cool down.

The announcement was delivered Wednesday during Alphabet’s third-quarter earnings call, where the tech giant reported total revenues of $127.6 billion, marking a 25% increase compared to the same period last year. Despite the overall gain, Alphabet shares dipped 8% following the release due to decelerating growth in core advertising sectors.

Company figures showed that Google Search revenue rose 12% year-over-year during the third quarter, dropping down from a 17% growth rate in the second quarter and 19% in the first. This ongoing slowdown places heightened pressure on Google to successfully monetize its expanding portfolio of artificial intelligence features.

"We are now scaling high-quality ads within AI overviews in AI mode to more users and queries," Philipp Schindler, Google’s chief business officer, informed investors on the call. He added that the company is taking its monetization footprint global for the first time alongside introducing multi-turn ads in the United States.

Stock photo for illustration only, not from the actual event

"We are now scaling high-quality ads within AI overviews in AI mode to more users and queries, including taking our monetization footprint global for the first time."

Philipp Schindler, Chief Business Officer at Google

According to Google, initial metrics demonstrate that these experimental ad formats are effective. Click-through rates for sponsored product listings housed within AI Mode currently match the performance levels of organic results, while internal user research indicates consumers find the advertisements relevant.