Google Takes AI Search Ads Worldwide as Its Core Search Business Cools

Google is taking ads inside its AI-generated search results global, a move announced Wednesday on Alphabet's third-quarter earnings call that doubles as an admission: the company's traditional search ad machine is losing steam, and AI features need to start paying their way.

The numbers tell the story. Alphabet posted $127.6 billion in revenue for the quarter, up 25% year over year, a figure that would normally read as a blowout. But Google Search advertising, the company's financial backbone, grew just 12% year over year, down from 17% in the second quarter and 19% in the first. That's three consecutive quarters of deceleration. Investors noticed: Alphabet shares fell 8% after the results came out.

Against that backdrop, Philipp Schindler, Google's chief business officer, laid out the company's answer. "We are now scaling high-quality ads within AI overviews in AI mode to more users and queries," he told investors, adding that the expansion includes "taking our monetization footprint global for the first time." Alongside the international rollout, Google is also introducing multi-turn ads in AI mode in the U.S., a format built for the back-and-forth, conversational style of AI search sessions rather than a single query and a list of links.

Early signs the format works

Schindler offered some evidence that the bet is paying off, at least so far. Click-through rates for sponsored product listings inside AI Mode are already comparable to those for organic listings, he said, and Google's internal user research suggests people find the ads relevant rather than intrusive. That matters because the core risk of putting ads inside AI-generated answers is that it disrupts the conversational, assistant-like feel that's supposed to be the whole selling point of AI search.

The international expansion builds on groundwork Google laid in May, when it introduced Gemini-powered ad formats including conversational discovery ads, which respond directly to a user's question, and sponsored recommendations woven into AI-generated answers. Taking that infrastructure worldwide signals Google believes the format is mature enough to scale beyond its home market, and that it needs the revenue diversification sooner rather than later given the pressure on core Search growth.

Search usage is changing, even if ad growth is slowing

Separately from the monetization news, CEO Sundar Pichai used the earnings call to argue that AI is fundamentally changing how people search, even if he didn't share hard growth figures. He said Search queries grew at their fastest year-over-year rate in five years, and credited AI features for encouraging longer, more complex queries.

The specifics he offered were notable. Queries in AI Mode run three times longer on average than traditional searches, according to Pichai, and one in five AI Mode searches globally now involves voice, images, or documents rather than typed text. Google has also crossed 50 billion visual searches per month. "[Search] is bringing the benefits of AI to more people than any other product in the world," Pichai told investors, describing queries that are "longer, personalized, and multimodal."

That framing is important context for the ad expansion: if people are searching differently, in ways that don't map neatly onto the traditional ten-blue-links format, Google needs ad products that fit the new behavior rather than just porting over old ones.

The bigger financial picture

Google Services, the Alphabet division that houses Search, brought in $96.3 billion in revenue for the quarter, up 11% year over year. That's a respectable number in isolation, but it reflects the same deceleration showing up in the Search-specific figures. The brighter spot in Alphabet's results was Google Cloud, where revenue surged 103% to $30.7 billion, underscoring how much of the company's growth story has shifted toward infrastructure and enterprise AI services rather than advertising.

The quarter was also a busy one on the product side. Google released Gemini 4 Argon, grew the Gemini app to one billion monthly users, and launched its Pixel 11 phone lineup. Taken together with the AI Mode ad expansion, the picture is of a company racing to build out AI products broadly while trying to figure out, in real time, how to turn AI-driven engagement into AI-driven revenue before its legacy ad business cools further.

Whether that bet pays off will show up in future earnings calls, specifically in whether AI Mode ad revenue can grow fast enough to offset the ongoing slowdown in traditional Search advertising. For now, Google has made its intentions clear: AI search isn't just a user experience upgrade, it's the next ad business it's counting on.