Key points
- Alphabet's Q3 Search and other revenue rose 12% to $63.35 billion, after 19% growth in Q1 and 17% in Q2.
- Chief Business Officer Philipp Schindler tied part of the slowdown to AI Mode queries earning less per query, but gave no comparison or size.
- Ads in AI Mode reached 10 additional countries on the day of the call, and multiturn ads are coming to the U.S.
- Currency was Schindler's top-ranked cause of the slower growth since Q2, followed by retail and media trends.
Why it matters for marketers: AI Mode is now a named drag on Google's ad growth while ad formats there expand, so paid search budgets and traffic forecasts should be reviewed with that tension in mind.
Alphabet reported that Google Search and other revenue grew 12% year over year in the third quarter, reaching $63.35 billion. That compares with 19% growth in the first quarter and 17% in the second.
On the earnings call, an analyst asked whether fewer ads in AI Overviews and AI Mode explained the slower pace. Philipp Schindler, Google's chief business officer, put currency first, then retail and media. He also said rising AI Mode usage mattered because of "lower monetization we were seeing in AI Mode." He added that Google feels good about its trajectory.
Schindler did not specify what AI Mode was earning less than, or the size of the gap. Google's published Q3 remarks and the call also left out an update on clicks sent to websites, a number it shared a quarter earlier. So the quarter offers more on revenue and nothing new on publisher traffic, according to Search Engine Journal. Latent Space noted that Google does not break out AI Mode in enough detail for rigorous analysis, and that the comments landed during a broad tech selloff.
For marketers, the point is that Google is openly acknowledging a tradeoff between AI-driven search and ad income, while rolling out more ad formats inside AI Mode. That same day, the company extended those ads to 10 more countries and announced multiturn ads for the U.S. Advertisers should expect more inventory to test there, and content teams should expect the traffic picture to stay murky.
Next, watch whether Google starts reporting AI Mode figures or restores its click disclosures. Meanwhile, check your own analytics for referral changes from AI surfaces, since Google's numbers will not answer that for you.
Sources
This brief is our own summary. Read the full reporting at the source.
