Google Launches AI Ads Internationally

Alphabet is banking on AI-generated responses to revive search monetization. Ads are rolling out in AI experiences internationally and in the United States, with encouraging click-through rates reported. Meanwhile, the company is showing mixed results and describes longer, personalized, and multimodal search usage.

Mixed Growth and Evolving Search Usage

Alphabet saw its stock drop by 8% following the release of its quarterly results. Google Search revenues grew by 12% year-over-year in the third quarter, after increases of 17% in the second quarter and 19% in the first. Sundar Pichai stated that search queries experienced their highest annual growth in five years, without specifying the exact rate, attributing this trend to AI features that encourage longer and more complex queries. In AI mode, queries are on average three times longer than traditional searches, and one in five globally involves voice, images, or documents. Google also reported surpassing 50 billion visual searches per month. On the financial side, the Google Services division, which includes search, generated $96.3 billion in revenue, an 11% increase year-over-year, while Google Cloud saw its revenue rise by 103% to $30.7 billion. Overall, Alphabet reported $127.6 billion in revenue, up 25% year-over-year.

Ads Integrated into AI Responses Expand Internationally

Google is expanding ads within its AI-powered search experiences in international markets. The company announced the expansion of AI ads internationally, as well as multi-turn ads and AI mode in the United States. Philipp Schindler noted that high-quality AI-generated ads are being deployed to more users and queries, and that the monetization footprint is expanding globally for the first time. This acceleration comes as the growth of search ads continues to slow.

Early Signals: Comparable Click-Through Rates and Perceived Relevance

According to initial data shared by Google, these new formats appear to be effective. Philipp Schindler stated that for AI-generated sponsored product ads, click-through rates are already reaching levels comparable to organic ads. Internal surveys also reveal that participants find these ads relevant.

AI Formats Already Announced and a Busy Product Quarter

In May, Google had already introduced ad formats powered by Gemini, featuring conversational discovery ads capable of answering questions and sponsored recommendations embedded in AI-generated responses. The quarter was also marked by the release of Gemini 4 Argon, the Gemini app reaching one billion monthly users, and the launch of the Pixel 11 lineup. Google presents this strategy as a way to diversify advertising revenue as search growth slows, a direction detailed during the third-quarter earnings call where Alphabet reported $127.6 billion in revenue, up 25% year-over-year.