Google is expanding advertisements within its AI-powered Search experiences into international markets, as the company seeks new revenue sources while growth in its core search advertising business slows. The announcement was made Wednesday during Alphabet’s third-quarter earnings call, where the company reported $127.6 billion in revenue, up 25% year over year. Despite the overall revenue increase, Search advertising growth decelerated, with Search revenue growing 12% in the third quarter compared to 17% in the second quarter and 19% in the first quarter, causing Alphabet shares to fall 8%.
To counteract this slowdown, Google is scaling high-quality ads within AI overviews and AI mode to more users and queries globally, alongside introducing multi-turn ads in the United States. According to Google chief business officer Philipp Schindler, click-through rates for sponsored product listings in AI mode are comparable to organic listings, and user research shows people find the ads relevant. CEO Sundar Pichai noted that Search queries grew at their fastest year-over-year rate in five years, driven by AI features that encourage longer, more complex, and multimodal queries involving voice, images, and documents.
This expansion builds on Google's May introduction of Gemini-powered ad formats, such as conversational discovery ads and sponsored recommendations integrated into AI answers. During the same quarter, Google Services generated $96.3 billion, Google Cloud revenue surged 103% to $30.7 billion, and the Gemini app surpassed 1 billion monthly users following the release of Gemini 4 Argon and the Pixel 11 lineup.
This matters because scaling generative AI advertising formats globally represents a crucial strategic shift for Google to secure new monetization channels as