Google Expands AI-Powered Search Ad Units Globally, Betting On Generative AI For New Revenue Growth

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Context: Core Search Ad Growth Continues To Decelerate

The announcement of the global rollout landed on Alphabet’s third-quarter earnings call, where the parent company reported total quarterly revenue of $127.6 billion, marking a 25% year-over-year jump. Even with that strong top-line performance, decelerating growth in the core search advertising segment weighed on investor sentiment, driving an 8% drop in Alphabet share prices immediately after results went public.

Google’s core search revenue grew just 12% year-over-year in the third quarter, a clear step down from 17% year-over-year growth in Q2 and 19% year-over-year growth in Q1. That persistent slowdown has raised the stakes for Google to convert its fast-expanding suite of AI search tools into a sizable, sustainable new ad revenue stream.

Global AI Ad Rollout Underway

Philipp Schindler, Google’s Chief Business Officer, laid out the company’s monetization roadmap for investors during the call: “We are now scaling high-quality ads within AI overviews and AI mode to more users and queries. This includes taking our monetization footprint global for the first time. Today, we’re announcing the expansion of ads in AI mode into international markets alongside multi-turn ads and AI mode in the U.S.”

Early performance data is already promising per internal Google measurements: click-through rates for sponsored product listings hosted inside AI mode are now comparable to those for organic listings, and internal user research confirms most users find these AI-native ad placements relevant rather than intrusive.

The new global rollout builds on Google’s earlier May announcement of Gemini-powered ad formats, which include conversational discovery ads designed to respond directly to user follow-up questions, and sponsored recommendations embedded seamlessly inside AI-generated search answer summaries.

AI Is Driving Surges In New Search Behaviors

Google CEO Sundar Pichai highlighted that AI integrations are rapidly reshaping how users interact with Search, noting that global search query volume just posted its fastest year-over-year growth rate in five years (he did not share the exact percentage figure).

New user behavior data underscores that shift: the average query in AI Mode is three times longer than a traditional standard text search, while one in five AI Mode searches worldwide use multimodal inputs such as voice, uploaded images, or documents. The platform now processes more than 50 billion visual searches each month.

“[Search] is bringing the benefits of AI to more people than any other product in the world,” Pichai told investors. “People are using our AI features more, searching in entirely new ways. Their queries are longer, personalized, and multimodal.”

Full Q3 Performance Milestones

Alongside the search ad news, Alphabet shared robust segment-level results for the quarter:

• The Google Services division (which houses Search, YouTube, Gmail, Maps and other core consumer products) generated $96.3 billion in revenue, up 11% year over year

• Google Cloud posted explosive 103% year-over-year growth to hit $30.7 billion in quarterly revenue

The strong earnings capped off a packed quarter for Google, which also saw the launch of the Gemini 4 Argon large language model, the Gemini app crossing 1 billion monthly active users, and the official debut of its latest Pixel 11 smartphone lineup.