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Google expands AI Mode ads to international markets as Search growth slows

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Google is bringing ads in its AI-powered Search experiences to international markets. The company is betting that generative AI can open new revenue even as growth in its core search advertising business slows. The announcement came Wednesday on Alphabet's third-quarter earnings call.

Philipp Schindler, Google's chief business officer, put it this way: "We are now scaling high-quality ads within AI overviews in AI mode to more users and queries. This includes taking our monetization footprint global for the first time." He said Google was announcing the expansion of ads in AI Mode into international markets, alongside multi-turn ads and AI Mode in the US.

The numbers around the announcement were mixed. Alphabet reported $127.6 billion in revenue, up 25% year over year. Google Search revenue grew 12% year over year, down from 17% in the second quarter and 19% in the first. Alphabet shares fell 8% following the results. Google Services, the division that includes Search, brought in $96.3 billion, up 11%. Google Cloud revenue rose 103% to $30.7 billion.

Google says early results suggest the new ad formats are working. According to Schindler, click-through rates for sponsored product listings in AI Mode are already comparable to those for organic listings. Google's user research also indicates that people find the ads relevant. The move builds on Google's May announcement of Gemini-powered ad formats, including conversational discovery ads that respond to users' questions and sponsored recommendations built into AI-generated answers.

CEO Sundar Pichai said Search queries grew at their fastest year-over-year rate in five years, though he did not disclose the exact rate. He credited AI features with changing how people use Search, including prompting longer and more complex queries. Queries in AI Mode are three times longer on average than traditional searches, he said, and one in five AI Mode searches globally involves voice, images, or documents. Google has also passed 50 billion visual searches per month. Pichai told investors that Search "is bringing the benefits of AI to more people than any other product in the world", and that people's queries are "longer, personalized, and multimodal."

The quarter also included the release of Gemini 4 Argon, growth of the Gemini app to 1 billion monthly users, and the launch of the Pixel 11 lineup.

Key facts

  • Google said on Alphabet's Q3 call that ads in AI Mode are going into international markets, alongside multi-turn ads and AI Mode in the US.
  • Google Search revenue grew 12% year over year in Q3, down from 17% in Q2 and 19% in Q1; Alphabet shares fell 8% after the results.
  • Alphabet revenue was $127.6 billion, up 25%; Google Services made $96.3 billion, up 11%; Google Cloud reached $30.7 billion, up 103%.
  • Per Schindler, click-through rates for sponsored product listings in AI Mode are already comparable to those for organic listings.
  • Pichai said AI Mode queries are three times longer on average than traditional searches, and one in five AI Mode searches globally involves voice, images, or documents.

Why it matters

Search advertising is Google's core business, and its growth has slowed from 19% to 17% to 12% over three quarters. Taking ads in AI Mode global for the first time is Google's answer to the question of whether AI answers can earn as much as the link-based results they are changing. The announcement builds on the Gemini-powered ad formats Google unveiled in May.

Who it affects

Advertisers who buy Search ads, particularly those selling products, since the early click-through data Schindler cited concerns sponsored product listings. It also touches users of AI Mode outside the US, who are the people the international expansion is aimed at. Investors reacted sharply: Alphabet shares fell 8% after the results.

How to use it

The source gives no hands-on instructions. No countries or markets are named for the international expansion, and no rollout timescale or start date is given. Advertisers should watch for Google's follow-up details on availability. The formats named are conversational discovery ads and sponsored recommendations inside AI-generated answers, plus multi-turn ads in the US.

How solid is it

The ad expansion is Google's own announcement, made by its chief business officer on an earnings call, and the revenue figures come from the same report. The performance claims are Google's: the click-through comparison comes from Schindler, and the relevance finding comes from the company's own user research. No absolute click-through figures are given. Pichai did not disclose the exact rate of query growth.

Risks and caveats

No dollar amount is given for Search advertising revenue or for AI Mode ad revenue, so the size of the new income is unknown. The source does not say over what period the 8% share fall occurred, and does not state that the Search slowdown caused it. The user-research finding that people find the ads relevant is Google's own and is not backed by published detail.

“We are now scaling high-quality ads within AI overviews in AI mode to more users and queries. This includes taking our monetization footprint global for the first time.”

— Philipp Schindler, Google's chief business officer, on Alphabet's Q3 earnings call