Google takes AI Mode ads global as search growth slows

Google is putting ads in AI Mode outside the U.S. for the first time. The company is betting that its conversational search tool can make up for slowing growth in its main search advertising business. Chief business officer Philipp Schindler announced the move on Alphabet's third-quarter earnings call on Wednesday, October 28. He said Google is "taking our monetization footprint global for the first time" and is also launching multi-turn ads in AI Mode in the U.S..techcrunch.com

The timing matters. Search revenue grew more slowly again this quarter, and Google is under pressure to show that its AI features can earn as much as traditional search results do.

Where the ads are going

Google said ads in AI Mode are now rolling out in Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines and Singapore. Brazil, Mexico and the United Kingdom are planned for the fourth quarter. Multi-turn ads can appear in follow-up questions, and all ads will be labeled "Sponsored".blog.google

Schindler said click-through rates "are already similar between sponsored and organic product list items within AI Mode." He also said Google's user research shows people are comfortable with the ads and find them relevant. The expansion builds on Gemini-powered ad formats Google announced in May, including conversational discovery ads.singjupost.com+1

Search growth slows

Alphabet reported revenue of $127.6 billion, up 25% from a year earlier. Search and other revenue rose 12% to $63.35 billion, short of a $64.96 billion estimate. Search growth was 17% in the second quarter and 19% in the first. Shares fell sharply in after-hours trading.businessinsider.com+3

Schindler blamed currency headwinds and said "the strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode". CEO Sundar Pichai said search query growth was the fastest in five years. He added that AI Mode queries are on average three times longer than traditional searches.techcrunch.com+1

Investors want proof

Pichai compared the moment to Google's move to mobile a decade ago. "We are focused on building the best Search user experience, followed by monetization," he said. Google did not give separate revenue figures for AI Mode or AI Overviews, so it's hard to tell how much the new formats are contributing.fourweekmba.com+1

Analysts are now asking whether the shift is hurting Google's core business. Bernstein's Mark Shmulik put it this way in a note to clients: "Are more monetizable search queries being affected by AI surfaces and agents?".businessinsider.com