Google’s Search Growth Slows as AI Raises New Questions for Advertisers
Search revenue growth slows
Google’s search revenue growth was 12 percent year over year in Q3, compared with 17 percent in Q2. The business continued to grow, but at a slower pace.
On Alphabet’s investor call, JPMorgan Chase & Co analyst Douglas Anmuth asked whether the change reflected fewer ads in AI Overviews and AI Mode than in standard search results. Chief business officer Philipp Schindler cited foreign exchange rates, Europe’s end to a customs-duty exemption and lower monetization in AI Mode.
Advertiser questions click quality
Anderson argued that slower revenue growth should not be taken as proof that people are abandoning Google Search. The earnings release said the year-over-year search query growth rate in Q3 was the highest in five years.
AI’s mixed effect on ads
Nate Elliott, Emarketer’s principal analyst for AI, described AI as a double-edged sword for Google’s advertising business in an email to The Register. As people get used to AI-based discovery, he said, they may prefer tools other than Google Search.
Elliott also said Google had provided little detail about AI’s specific business impact, leaving observers to interpret limited disclosures. He added that many people appear more concerned that advertising revenue grew by 10 percent.
Key points
- Google’s search revenue growth slowed to 12 percent in Q3 from 17 percent in Q2.
- Philipp Schindler cited lower monetization in AI Mode among several factors affecting growth.
- OnlyFinder CEO Max Anderson criticized charges for clicks he considered lower quality.
- The earnings release said Q3 search query growth was the strongest in five years.