Ad Tech Briefing: Google’s AI-reckoning

Google's AI-driven search experiences have not yet generated ad revenue at the same rate as conventional search, despite a 25% increase in Q3 revenues to $127.6 billion. Although search queries grew at their fastest annual rate in five years, Google's "Search & other" operations only saw a 12% increase to $63.35 billion, with AI Mode's monetization lagging behind.

Alphabet's CEO, Sundar Pichai, mentioned that AI Mode queries are three times longer than traditional searches and that AI Mode currently monetizes at a lower rate. The company is expanding advertising within AI Mode internationally and introducing multi-turn advertisements in the U.S. Meanwhile, Google's ad tech unit, "Google Network," continues to face struggles, with revenues up only 1.4% and an overall increase in traffic acquisition costs of around 10%.

The situation raises questions about the effectiveness of Google's strategies in the ad tech space and the impact of Apple's restrictions on privacy and security.