📰 Key Takeaways

Google announced it is expanding ads in its AI search experiences to international markets, betting that generative AI can create new revenue sources while growth in core search ads slows. The news came on Alphabet’s Q3 earnings call, where quarterly revenue was $127.6 billion, up 25% year over year, but Alphabet’s stock dropped 8% after the report. Google Search revenue grew 12% year over year, down from 17% in Q2 and 19% in Q1. That steady slowdown makes it even more important for Google to turn its expanding AI features into real ad revenue.

Chief Business Officer Philipp Schindler said Google is bringing high-quality ads in AI Overviews and AI Mode to more users and more queries, and is monetizing globally for the first time. It’s also launching multi-turn conversational ads and AI Mode in the US. He noted that click-through rates for sponsored product listings in AI Mode are now on par with organic listings, and user research shows people find these ads relevant. This builds on the Gemini-powered ad formats Google announced in May, including conversational discovery ads that respond to user questions and sponsored recommendations embedded in AI-generated answers.

CEO Sundar Pichai said search query volume grew at its fastest year-over-year rate in five years, though he didn’t share exact numbers. He said AI Mode queries are on average three times longer than traditional searches, and globally one in five AI Mode searches involves voice, images, or documents. Visual search now exceeds 50 billion searches per month.

By segment, Google Services, which includes Search, brought in $96.3 billion in revenue, up 11% year over year, while Google Cloud revenue rose 103% year over year to $30.7 billion. This quarter Google also released Gemini 4 Argon, the Gemini app passed 1 billion monthly active users, and the Pixel 11 series launched.

💬 JudyAI Lab Take

Google is pushing AI search ads worldwide precisely because core search ad growth is slowing. Alphabet’s Q3 revenue was $127.6 billion, up 25% year over year, and search revenue grew 12%, below the previous two quarters’ 17% and 19%. The stock still fell 8% after the report.

This case points to a design mindset worth noting for AI builders: the path to monetizing a new feature should be designed right alongside the product itself. In AI Mode, click-through rates for sponsored product listings are already on par with organic listings, and user research says people find these ads relevant. That means the ads are placed inside the conversation and the AI-generated answer, not stuck on as a separate slot. Another signal comes from usage behavior: AI Mode queries are on average three times longer than traditional searches, one in five involves voice, images, or files, and visual search tops 50 billion per month. When users ask longer and more varied questions, both the interface and the monetization have to be redesigned to keep up. Meanwhile, Google Cloud’s 103% year-over-year growth shows that AI revenue doesn’t come only from consumer-facing products.

Action for readers: take another look at your own AI product and list which part needs adjusting first once your users start asking longer, more varied questions. And when you plan a feature, write down at the same time how it will charge or pay for itself.

📅 Original Article Info

🔗 Further Reading