How AI Search Could Put Pressure on Google’s Ad Business

How could AI search affect Google’s advertising business?

Google’s search advertising business depends on people using search and on advertisers paying to show messages to them. In online advertising, companies can bid to have ads appear in search results and other places; some ad models charge when a person clicks. ⁴

AI search can change the experience from a list of links toward an answer written by an AI system, sometimes alongside links or ads. If people reach a website less often from search, that could matter to businesses that rely on those visits. But the sources here do not show how many searches result in fewer clicks, or how that would translate into lost advertising income.

The issue is not simply whether AI is present. Advertisers also need ads to reach people in a useful context, and users need to understand what is an ad and what is an answer.

What did Alphabet’s latest results show?

A report on Alphabet’s third-quarter results said Google Search revenue rose 12% from a year earlier, compared with 17% growth in the previous quarter. Alphabet’s total revenue was reported at $127.6 billion, up 25% year over year, but below Wall Street expectations. ²

Alphabet’s shares fell sharply after the results, amid investor concerns that included the cost of expanding AI operations and the outlook for search. ² A share-price fall reflects investors’ changing expectations. It does not, by itself, prove that AI search has already damaged Google’s advertising business.

The reported figures describe one quarter. They do not establish whether the slower growth came from AI search, other business conditions, or a combination of factors.

Are websites already getting less traffic from Google?

Reddit said shrinking search referrals from Google played a role in its plans to require official user accounts to access the platform, according to CNBC. Reddit CEO Steve Huffman linked the change to Google’s evolving search experience, including its AI features. ¹

That is one company’s account of its own traffic and plans. It is a relevant example of why publishers and online communities are watching AI search, but it does not prove that all websites are losing visits or that Google’s advertising revenue has fallen because of it.

A change in referrals could affect publishers differently. The sources do not provide a broad measurement of website traffic across the internet.

Will AI search ads be useful to people?

Search ads can connect a person’s query with a product or service. In AI search, the ad may appear within or alongside an answer, so its fit with the question matters. ³

WIRED reported tests of ads in Microsoft’s Copilot search experience that sometimes seemed unrelated to the AI response. Its examples included an ice-bath query that brought up backpack ads. The report also described Microsoft’s approach as sometimes showing options that broaden what a searcher might consider. ³

These examples concern Microsoft, not a complete evaluation of Google’s AI search ads. They illustrate a challenge for the wider industry: an ad can be visible without being a good match for what a person is trying to find.

What could this mean for people using Google?

People may see more AI-written answers and different arrangements of links and ads as search changes. The sources do not establish exactly what every Google user will see, or whether AI answers will consistently make it easier to find reliable information.

For users, the practical questions are whether an answer is clear about its sources, whether advertisements are distinguishable from ordinary results, and whether the links provided lead to useful pages. For businesses that depend on search visits, the question is whether the new experience still sends interested people to their sites.

The available reporting points to a transition, not a settled outcome. Google’s revenue figures, one publisher’s experience, and tests of another company’s ads each show part of the picture; none alone tells us what the long-term effect will be.