Google Says AI Mode Holds Back Search Ad Business Growth

Google has reported that the rapid growth of its AI Mode has contributed to slower revenue growth in its search business, according to Search Engine Watch. This is due to the conversational search service having lower monetization, as stated by chief business officer Philipp Schindler. Search revenue still rose, with Google's Search and other business bringing in $63.35 billion in the third quarter, up 12% from a year earlier.

Schindler explained that currency movements were the biggest reason for the slowdown in growth from the previous quarter, but also pointed to changes in retail, media, and entertainment advertising. AI Mode was one factor in this wider picture, although Schindler did not provide a specific dollar figure for its effect. The company is still working to understand how to sell ads against AI Mode searches.

People are asking Google more questions, with CEO Sundar Pichai stating that the year-over-year search query growth rate reached its highest level in five years. This growth is attributed to AI investments, which have increased usage, including searches with commercial intent. AI Mode questions tend to be longer, averaging three times the length of traditional searches, and often use voice, images, or documents to explain what the user needs.

Google is still working out how to sell ads against these searches, with Schindler stating that most AI Mode queries are additional searches from people exploring their options. The company sees this as an opportunity to reach potential customers earlier and is expanding ads across AI Mode and AI Overviews. Promising ad experiments have been reported, although no separate revenue total for AI Mode was given.

The company's focus is on getting the user experience right before concentrating on monetization, according to Pichai. This means that advertisers will need to watch two separate things: how many people use AI Mode and how successfully Google turns those searches into ad opportunities. As Google continues to work on expanding ads across AI Mode, it will be important to monitor the progress and impact on revenue growth.

Search Engine Watch reported that Google's efforts to expand ads across AI Mode are ongoing, with the company aiming to turn the increased search activity into revenue. The success of these efforts will be crucial in determining the future growth of Google's search business. With AI Mode continuing to grow in popularity, it will be important for Google to find ways to effectively monetize these searches and turn them into revenue opportunities.

Overall, Google's AI Mode is presenting both opportunities and challenges for the company's search business. While the increased search query growth is a positive sign, the lower monetization of AI Mode searches is a concern that needs to be addressed. As Google continues to work on expanding ads across AI Mode, it will be important to monitor the progress and impact on revenue growth.