Google search queries climb with AI, but ad revenue growth slows

Google is seeing more people search than at any point in the past five years, but that surge has not yet turned into faster revenue growth for its core business, according to a report by The Verge based on parent company Alphabet's latest quarterly earnings.

Slower growth in revenue and paid clicks

In the third quarter, Search revenue rose 12 percent compared with a year earlier, a step down from roughly 17 percent in the prior quarter. Growth in paid clicks, the ad clicks that bring in money, also eased, falling from 13 percent to 8 percent. Alphabet shares have dropped about 14 percent since the results, as investors weigh the company's plan to spend about $200 billion this year on infrastructure, much of it for AI.

Chief Business Officer Philipp Schindler attributed most of the slowdown to currency effects and shifting spending by advertisers in certain industries. He also acknowledged that queries in AI Mode, the conversational search option, are growing strongly but bring in less money per search than standard results. Google maintains that most of these queries are additional rather than replacements, and that early ad tests look promising.

Advertisers lack a clear view

Google is expanding ads inside AI Overviews and AI Mode, including outside the United States, and has suggested similar formats could reach its Gemini app, without giving a date. Advertisers working through the agency Tinuiti raised Google search spending 14 percent year over year while hitting their return targets. However, they cannot separately target or measure AI ad placements, so it is unclear how those ads actually perform.

Analysts quoted in the report see a genuine shift. Nate Elliott of eMarketer described it as the first major disruption to Google's core business in decades and noted that finding effective ad formats can take years. An October working paper cited in the piece found that retail visits from ChatGPT ads produced less revenue per session than those from Google Search ads, though that study did not measure Google's own AI ads, and differences in purchase intent may explain part of the gap.

What it means for web users and site owners

For people who follow the internet and online tools, the figures point to a search experience in transition. As more answers appear directly in AI summaries and conversations, the way users reach websites, and the way businesses pay to be found, may keep changing. Site owners and online advertisers may want to watch how click-through patterns and ad formats develop in AI-driven search over the coming quarters.