Google is taking advertising inside its AI powered search experiences global for the first time. Chief Business Officer Philipp Schindler told investors on Alphabet’s third quarter earnings call on October 28 that the company is scaling high quality ads within AI Overviews and AI Mode to more users and queries, extending the monetisation footprint internationally alongside multi-turn ads and AI Mode in the United States.
The timing is driven by the core business. Google Search revenue grew 12 percent year on year in the third quarter, down from 17 percent in the second quarter and 19 percent in the first, TechCrunch reported from the call. Alphabet’s total revenue rose 25 percent to 127.6 billion dollars, with Google Services revenue of 96.3 billion dollars, up 11 percent, and Google Cloud revenue up 103 percent to 30.7 billion dollars, per the company’s filed results.
Schindler said click through rates for sponsored product listings in AI Mode are already comparable to those for organic listings, and that company research finds users judge the ads relevant. Chief Executive Sundar Pichai said Search queries grew at their fastest year on year rate in five years, that AI Mode queries run three times longer on average than traditional searches, and that one in five AI Mode searches involves voice, images or documents, with visual searches passing 50 billion a month.
The advertising push answers the question hanging over the quarter covered in yesterday’s edition: cloud growth is carrying Alphabet’s revenue while the cash cost of the AI buildout, 51.4 billion dollars of capital spending in the quarter and negative free cash flow, has to be funded from somewhere. Search advertising remains that somewhere, and AI Mode is now expected to contribute to it outside the United States as well.