Google says ads in AI Mode earn less than traditional search ads
Google's senior vice president and chief business officer, Philipp Schindler, told analysts on the company's earnings call that advertising in AI Mode monetises worse than advertising in traditional search. He said the strong growth in AI Mode queries weighed on results because of that lower monetisation.
Schindler said Google is scaling ads in both AI Overviews and AI Mode to more users and more queries, including multi-turn ads in the US and expansion into international markets. He described many AI Mode queries as upper funnel, meaning early research before a purchase decision, and said monetisation should improve over time.
The admission sits awkwardly beside Google's earlier position that ads on AI Overviews earn the same as they do without them. That claim covered AI Overviews only, not AI Mode.
For brands, the economics point in a familiar direction: AI Mode surfaces are being pushed to more users while earning less per query, so the value of being cited in an answer is not yet matched by what advertisers pay to appear there. Google also said AI Mode encourages more searches per user, which is where the multi-turn ad slots come in.
Reported by Search Engine Roundtable ↗
Topics: AI Mode, AI Overviews, AI advertising