Google is pushing ads into its AI-powered search experience to international markets, betting that generative AI can open up new revenue opportunities even as growth in its core search advertising business slows.
The announcement was made Wednesday during Alphabet’s third-quarter earnings call, where the company reported revenue of $127.6 billion, up 25% year over year. But search advertising growth continued to slow, and Alphabet shares fell 8% following the results.
Google Search revenue increased 12% year-over-year in the third quarter, but was down from 17% growth in the second quarter and 19% growth in the first quarter. This slowdown will put additional pressure on Google to turn its expanding AI capabilities into a meaningful source of advertising revenue.
“We’re now extending high-quality advertising within AI Mode’s AI Overview to more users and queries,” Google Chief Business Officer Philipp Schindler said on a conference call with investors. “This includes expanding our monetization footprint globally for the first time. Today, in addition to multi-turn advertising and AI mode in the U.S., we are announcing the expansion of AI mode advertising to international markets.”
Google says early results suggest the format is working. According to Schindler, click-through rates for sponsored product listings in AI mode are already on par with click-through rates for organic listings. The company’s user research also shows that people find ads relevant.
The move builds on new Gemini-powered ad formats Google announced in May, including conversational discovery ads that respond to user questions and sponsored recommendations integrated with AI-generated answers.
Google CEO Sundar Pichai also said that the year-over-year growth rate of search queries is the fastest in the past five years, although he did not reveal the exact growth rate. He credited AI features with changing the way people use search, including requiring longer and more complex queries.
According to Pichai, AI mode queries are on average three times longer than traditional searches, and globally, one in five AI mode searches include audio, images, or documents. Google also generates over 50 billion visual searches per month.
“(Search) is bringing the benefits of AI to more people than any other product in the world,” Pichai told investors. “People are leveraging our AI capabilities even more to search in entirely new ways. Their queries are longer, more personalized, and more multimodal.”
Alphabet’s Google Services division, which includes search, generated $96.3 billion in revenue, an 11% increase from the same period last year. Google Cloud’s revenue increased 103% to $30.7 billion.
The results come after a busy quarter for Google, which included the release of Gemini 4 Argon, the growth of the Gemini app to 1 billion monthly users, and the launch of the Pixel 11 lineup.
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