Google expands AI Search ads globally as core ad growth slows

Google is bringing ads in its AI-powered Search experiences 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 came Wednesday during Alphabet’s third-quarter earnings call ,as the company reported $127.6 billion in revenue, up 25% year over year. But Search advertising growth continued to decelerate, and Alphabet shares fell 8% following the results.

Google Search revenue grew 12% year over year in the third quarter, down from 17% growth in the second quarter and 19% in the first quarter. The slowdown puts added pressure on Google to turn its expanding AI features into a meaningful source of advertising revenue.

“We are now scaling high-quality ads within AI overviews in AI mode to more users and queries,” Philipp Schindler, Google’s chief business officer, said during the call with investors. “This includes taking our monetization footprint global for the first time. Today, we’re announcing the expansion of ads in AI mode into international markets alongside multi-turn ads and AI mode in the U.S.”

Google says early results suggest the formats are working. Click-through rates for sponsored product listings in AI Mode are already comparable to those for organic listings, according to Schindler. The company’s user research also indicates that people find the ads relevant.