Google expands AI Search ads globally as core ad growth slows to 12%
Alphabet said ads in AI Mode are going international for the first time, with multi-turn ads in the U.S., as Search ad growth slowed and shares fell 8%.
The story in focus
Google announced during Alphabet's third-quarter earnings call that it is expanding ads in its AI Mode Search experience into international markets for the first time, alongside multi-turn ads in the U.S. Alphabet revenue rose 25% to $127.6 billion, but Search ad growth slowed to 12%.
- AI Mode ads are going global for the first time; multi-turn ads remain in the U.S.
- Alphabet revenue was $127.6 billion, up 25% year over year
- Search advertising grew 12%, down from 17% in the second quarter and 19% in the first
- Alphabet shares fell 8% after the results
- Sponsored product listings in AI Mode show click-through rates comparable to organic listings, per chief business officer Philipp Schindler
Global expansion of AI Mode ads
Google said it is scaling ads inside AI Overviews and AI Mode to more users and queries, and is taking that monetization outside the U.S. for the first time. Chief business officer Philipp Schindler told investors the company is announcing expansion of AI Mode ads into international markets, alongside multi-turn ads and AI Mode in the U.S.
The formats build on Gemini-powered ad products Google announced in May, including conversational discovery ads and sponsored recommendations inside AI-generated answers. Google cites early results: Schindler said click-through rates for sponsored product listings in AI Mode are comparable to organic listings, and user research indicates people find the ads relevant.
Slowing ad growth pressures AI monetization
Alphabet reported $127.6 billion in quarterly revenue, up 25% year over year. But Search advertising growth decelerated to 12%, from 17% in the second quarter and 19% in the first. Shares fell 8% after the results.
CEO Sundar Pichai said Search queries grew at their fastest year-over-year rate in five years, without disclosing the figure. He said AI Mode queries are three times longer on average than traditional searches, one in five AI Mode searches involves voice, images or documents, and Google handles more than 50 billion visual searches a month.
Segment results
Google Services, which includes Search, generated $96.3 billion in revenue, up 11% year over year. Google Cloud revenue rose 103% to $30.7 billion. The quarter also included the release of Gemini 4 Argon, the Gemini app reaching 1 billion monthly users, and the Pixel 11 launch.
Did Google say how fast Search queries grew year over year?
Pichai said Search queries grew at their fastest year-over-year rate in five years but did not disclose the exact growth rate, according to TechCrunch.
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