The tech giant is betting on AI search ads as its Q3 earnings show search advertising growth in decline.
Google is expanding ads in AI search globally as part of its strategy to counter the decline in growth of search advertising revenue.
Ads in AI Mode will now be available in Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines, Singapore as well as the US, where it was originally launched.
The tech giant is also planning to roll out ads in Brazil, Mexico and the UK in Q4 2026.
In the US, it is also launching multi-turn ads, which will enable ads to appear in follow-up queries within AI Mode.
Google confirmed all ads will be labelled as ‘sponsored’ and will continue to test new formats to ensure they remain relevant.
Shashi Thakur, vice president and general manager, Google search ads and ads on Google experiences, said: “As AI transforms how people search, queries are becoming increasingly conversational. In AI Mode, queries are, on average, three times longer than traditional searches.
“[…] Our research shows that people are comfortable with ads in AI Mode and find them highly relevant. In fact, click-through rates are already similar between sponsored and organic product list items within AI Mode.”
Search ad revenue growth in decline
The announcement of the AI search ads expansion came during Alphabet’s Q3 earnings call last night (Wednesday).
Overall revenue for the big tech firm increased by 25% year-on-year to $127.6bn – that’s the thirteenth consecutive quarter of double-digit growth.
However, Google search advertising revenue growth was just 12% YoY in Q3 to $63bn – down from 17% growth in Q2 and 19% in Q1.
This negative growth trend suggests Google is betting on its expanded AI features as new advertising revenue opportunities.
Google and Alphabet chief executive, Sundar Pichai, said: “Search has strong momentum. Our AI investments are driving increased usage and overall query growth, including commercial queries. In fact, our year-over-year query growth rate is the highest it’s been in the last five years.”
“[…] We are building one seamless experience across AI Overviews, AI Mode, and traditional Search. And people are using our AI features more, searching in entirely new ways. Their queries are longer, personalised, and multimodal,” he went on to add.
“Queries in AI Mode are on average three times longer than traditional searches, and one in five AI Mode searches globally use voice, images, or documents. We’ve now crossed over 50 billion visual searches per month.”
Early results suggest the ad formats are working with click-through rates for sponsored products in AI Mode already comparable to organic listings, said Philipp Schindler, chief business officer at Google, on the investors call.
“To be clear, we feel very good about our trajectory here,” added Schindler.
Google Cloud growth doubles
Overall, Google’s search division saw revenue grow by 10.63% YoY to $96.3bn in Q3. This is a significantly lower growth rate than the previous quarter which saw revenue up by almost a quarter (24.23%) to reach $119.8bn. Google attributed the spike in Q2 to the FIFA World Cup.
YouTube ads revenue for Q3 grew by 9.22% YoY to $11.2bn – down from 12.85% and $11bn in Q2.
The streaming platform has approximately 150 million subscribers.
Google Cloud saw its Q3 revenue more than double by 103% to $30.7bn, which was driven by strong growth in Google Cloud Platform across enterprise AI infrastructure and AI solutions.
Pichai added: “Our AI infrastructure and solutions are the major drivers for Cloud growth and our customers see us as the leading provider here, so there’s huge demand. We are working hard to bring more capacity online to meet this long-term demand.”
