Google has a plan to keep ads alive even when AI agents do the shopping

Google aims to maintain advertisements even as AI agents handle shopping tasks, according to the tech giant's recent statements. The company's AI models have generated more searches than ever, but it's not currently generating revenue at the same rate. This has raised concerns among investors who have long predicted that AI chatbots and agents would threaten Google's search business. Google's Q3 revenue fell short of analyst expectations, causing shares to drop by 10% after hours.

Philipp Schindler, Google's chief business officer, addressed investors during the company's earnings call, explaining that while AI can automate the more mundane aspects of shopping, users still value the process of comparing brands, prices, and perks. Schindler stated that users do not always prioritize the cheapest option; they also consider brand loyalty and customer service.

To incorporate advertisements into AI-assisted shopping, Google believes there is still room for ads in this process. For example, when offering insurance products, Google would present multiple options with different premiums, deductibles, and special discounts. Schindler emphasized that there is rarely a single perfect solution for any shopping decision, which he believes opens up opportunities for advertising within agentic search.

Google has been exploring ways to address this challenge without simply inserting traditional ads into a chatbot. The company has been testing ideas like displaying offers during travel planning and showing clearly marked sponsored links within AI-generated lists. In the most recent quarter, Google reported revenue of $127.58 billion, slightly below the expected $127.97 billion.

The company's earnings per share were $2.12, compared to the expected $3.01, primarily due to an $8.2 billion unrealized loss on its investment in SpaceX. Consequently, Google's shares dropped approximately 10% in after-hours trading.