In the U.S., the company is introducing multi-turn advertising, allowing sponsored content to appear as users continue conversations with AI Mode. Advertisements will carry a "Sponsored" label, and Google says it will continue experimenting with how commercial results appear alongside AI-generated information.
The announcement coincided with Alphabet's third-quarter earnings, which showed continued revenue growth but a slowdown in the company's core Search advertising business.
Alphabet reported quarterly revenue of $127.6 billion, a 25% increase from the previous year. Google Search and other revenue reached $63.35 billion, up 12% year over year, compared with growth of 17% in the second quarter and 19% in the first.
The declining growth rate places greater attention on Google's efforts to generate advertising revenue from its AI search products. Alphabet shares fell following the earnings announcement, with reports indicating a decline of approximately 8% after the results and roughly 10% in Thursday's premarket trading.
Google Chief Business Officer Philipp Schindler told investors that the company is increasing the availability of advertisements across its AI search features, including AI Overviews and AI Mode.
“We are now scaling high-quality ads within AI overviews in AI mode to more users and queries,” Schindler said. “This includes taking our monetization footprint global for the first time.”
Google says its initial advertising experiments have produced encouraging results. According to Schindler, sponsored product listings in AI Mode are receiving click-through rates comparable to unpaid product listings. The company's research also suggests users consider the advertisements relevant to their searches.
Those findings are based on Google's own measurements, and the company has not disclosed detailed performance figures or revenue generated specifically by AI Mode advertising.
The expansion builds on advertising formats Google introduced in May, including Gemini-powered recommendations that can respond to conversational searches and incorporate sponsored products into AI-generated answers.
Unlike conventional Search, where users typically enter shorter queries and browse a list of results, AI Mode supports longer interactions involving multiple questions. That creates opportunities for Google to display advertisements as users refine their requests or explore related products and services.
Google CEO Sundar Pichai said the company's AI features are contributing to increased Search activity. During the earnings call, he reported that Search queries experienced their strongest year-over-year growth rate in five years, although Google did not provide an exact percentage.
AI Mode queries are approximately three times longer than traditional searches, according to Pichai. About 20% of AI Mode searches worldwide also involve inputs beyond text, including voice, images and documents.
Google additionally reported that monthly visual searches have exceeded 50 billion, reflecting growing use of image-based search capabilities.
“People are using our AI features more, searching in entirely new ways. Their queries are longer, personalized, and multimodal,” Pichai told investors.
The company sees this changing search behavior as an opportunity to introduce advertising into more stages of a user's interaction, rather than relying exclusively on conventional search-result placements.
Pichai also linked the company's investment in artificial intelligence to growth in commercially relevant searches.
“Our AI investments are driving overall Search query growth, including commercial queries,” he said.
Beyond Search, Alphabet reported $96.3 billion in revenue from Google Services, an 11% annual increase. Google Cloud revenue rose 103% to $30.7 billion.
The quarter also included several major product developments, including the introduction of Gemini 4 Argon, the Gemini app reaching one billion monthly users and the release of Google's Pixel 11 smartphone lineup.
The broader expansion of AI advertising comes as Google works to translate increased engagement with its AI products into revenue. Although the company reports that users are conducting more complex searches and interacting with sponsored recommendations, it has not yet provided a separate financial breakdown showing how much AI Mode contributes to advertising sales.
For advertisers, the immediate change is access to additional international markets and the ability to reach U.S. users during ongoing AI Mode conversations.
For Google, the rollout provides another way to commercialize its AI-powered Search features at a time when traditional Search revenue growth is moderating. The early engagement figures suggest sponsored results can attract user interest, but the longer-term financial contribution of these formats remains unquantified in the company's disclosures.
This analysis is based on reporting from TechCrunch.
Image courtesy of Business Insider.
This article was generated with AI assistance and reviewed for accuracy and quality.
