Key points
- Alphabet's Q3 Search & other revenue rose 12% to $63.35 billion, slower than the roughly 17% growth in Q2, per The Verge and Search Engine Journal.
- Chief Business Officer Philipp Schindler tied part of the slowdown to AI Mode queries earning less per query than traditional searches, after currency effects.
- Google is widening AI Mode ads to 10 more countries and launching multiturn ads in the U.S., per Search Engine Journal.
- Alphabet shares fell about 12.6% on Oct. 29, wiping out close to $500 billion in market value, according to Digiday.
Why it matters for marketers: Google's AI search is growing usage faster than ad revenue, and advertisers cannot see AI ad results separately, so budget decisions rest on blended numbers.
Alphabet reported that search queries grew at their fastest pace in five years in the third quarter, but Search revenue did not keep up. Search & other revenue rose 12% year over year to $63.35 billion, down from about 17% in the second quarter. Paid click growth also cooled, from 13% to 8%, according to The Verge.
On the earnings call, Schindler said currency was the largest factor in the slowdown, followed by developments in retail and media. He also said strong growth in AI Mode queries weighed on results because those queries monetize less. Search Engine Journal notes he did not give a comparison point or a size for the gap. Google also said it feels good about its trajectory.
For marketers, the practical issue is visibility. Tinuiti's Andy Taylor told The Verge that its advertisers raised Google paid search spend 14% in Q3 while holding return targets, but Google does not let them target or report on AI ad inventory separately. Steady returns may simply mean AI placements are still too small to move the totals.
Google is pushing ahead anyway. It is extending ads in AI Mode to 10 more countries and rolling out multiturn ads in the U.S., where ads can appear across a longer conversation. It has also floated ads in the Gemini app but has not given a date.
Watch for any reporting that isolates AI Mode performance, and for whether Google again discloses clicks sent to websites, a figure it gave last quarter but not this one. Until then, track your own paid search results by query type and keep expectations for AI placements modest.
Sources
This brief is our own summary. Read the full reporting at the source.
- The Verge: Google hasn’t figured out how to make AI pay like its search engine
- Latent Space: [AINews] Google admits AI Mode hurts Search revenue; -15% $500B drop worst since 2004 IPO. AI Bear Market coming?
- Search Engine Journal: Spam Guide Update, Restaurant Controls & AI Mode Revenue – SEO Pulse via @sejournal, @MattGSouthern
- Digiday: Ad Tech Briefing: Google’s AI-reckoning
- Social Media Today: Google says AI chatbots are hurting its bottom line
