TLDR
Google is now running ads inside AI Mode in Australia, one of 10 countries in its first rollout outside the US. The move came as Alphabet reported Search revenue growth of 12% for the September quarter, its slowest this year, while Google Cloud doubled.
KEY TAKEAWAYS
Ads in AI Mode reach Australia
Google has started running ads inside AI Mode, its conversational search experience, in Australia. "Now we're scaling ads in AI Mode in Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines and Singapore," Shashi Thakur, Google's vice president and general manager of Search ads, wrote on Wednesday.[1]
Brazil, Mexico and the UK are among the markets to follow later this quarter. The ads are labelled "Sponsored", and Google says "click-through rates are already similar between sponsored and organic product list items within AI Mode". In the US it is also launching multi-turn ads, which can appear in follow-up questions within the same AI Mode conversation.[1]
"This includes taking our monetization footprint global for the first time," chief business officer Philipp Schindler told analysts.[3]
Search growth slows
The rollout came on the day Alphabet reported its September-quarter results. Revenue rose 25% to US$127.6 billion, but Search and other revenue grew 12% to US$63.35 billion.[2] That was down from 17% growth in the June quarter and 19% in March, TechCrunch noted.[3]
Chief executive Sundar Pichai said AI was bringing more people back to Search. "Our AI investments are driving overall Search query growth, including commercial queries," he said, adding that "our year-over-year query growth rate is the highest it's been in the last five years."[2] AI Mode queries are about three times longer than traditional searches, he said.[3]
Google Cloud more than doubled to US$30.7 billion, and capital spending rose to US$51.4 billion from US$24.0 billion a year earlier. Net income fell to US$26.2 billion from US$35.0 billion, largely because of an US$8.7 billion loss on equity securities.[2] YouTube ad revenue rose to US$11.2 billion from US$10.26 billion.[4] Alphabet shares fell about 8% after hours.[3]
What changes for Australian advertisers
Until now, Australian search marketers could watch AI Mode take attention without being able to buy inside it. Google has not said which ad formats are running here, but its US launch centred on sponsored product listings.[1] Prompt the Market reported earlier this month that Google is also letting Gmail and Photos data shape AI Mode ads in the US.
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FREQUENTLY ASKED QUESTIONS
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James Dore is founder and editor of Prompt the Market and Strategy Director at Bushnote, a Sydney strategy, SEO and AI search agency. He has a background in strategy, media and financial services, and led consumer product marketing at MONEYME. He writes on AI search, answer engines, technology policy and media economics.
