Google has spent a year telling advertisers that AI Mode is where search is heading. On 28 October it told investors that AI Mode is also where search earns less.

Alphabet’s third-quarter results showed revenue from Google Search & other up 12% year on year, at roughly $63bn and almost flat on the second quarter. Growth had been 19% in the first quarter and 17% in the second. On the earnings call, chief business officer Philipp Schindler gave three reasons for the slowdown. Currency was the largest against the previous quarter, and retail and media advertisers spent less. The third was the strong growth in AI Mode queries, which held revenue back because of what Schindler called “lower monetization we were seeing in AI Mode”, according to The Register.

The admission lands awkwardly for search marketers because of what Google published the same day. A post on Google’s blog by Shashi Thakur, vice-president and general manager for Search ads, said ads in AI Mode are now scaling in Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines and Singapore, with Brazil, Mexico and the UK among the markets planned for the fourth quarter. Google also said it is launching “multiturn” ads in the US, which appear in follow-up questions inside an AI Mode conversation. Google now has a plain commercial reason to fill AI Mode with ads. Advertisers, under its current rules, cannot see how much of their budget ends up there.

What did Google say about AI Mode and Search revenue?

Google put AI Mode third on its list of reasons, behind currency, and attached a number to none of them. Chief financial officer Anat Ashkenazi described currency as a small headwind year on year and a larger one quarter on quarter. Schindler traced the retail dip to Asia-Pacific advertisers hit by the EU ending its duty exemption for low-value imports, and the media and entertainment dip to spending settling after a second quarter lifted by the FIFA World Cup.

The AI Mode explanation came in answer to JPMorgan analyst Doug Anmuth, who asked why Search ad revenue was growing more slowly than queries. Chief executive Sundar Pichai said year-on-year query growth was the highest in five years. Google gave no query growth rate, no AI Mode revenue figure and no estimate of how much AI Mode held back the quarter, as Search Engine Journal noted in its analysis of the call.

Schindler framed the gap as an opportunity still to come. He said most AI Mode queries are incremental, meaning they would not otherwise have been searches, and that many sit high in the funnel, where buyers are still researching. Investors were less patient. Alphabet shares were down more than 12% in early trading on 29 October, wiping about $511bn off its market value, according to Bloomberg figures cited by The Next Web.

Google’s one performance claim for AI Mode ads is narrow. Thakur wrote that click-through rates for sponsored and organic product listings in AI Mode are already similar, based on internal US data from 20 August to 3 September. Google published no rates, and product listings are a retail format rather than a lead-generation one.

Which campaigns already serve ads in AI Mode?

Google’s existing Search, Shopping and Performance Max campaigns are automatically eligible to serve in AI Mode and AI Overviews, according to its Google Ads Help page. There is no new campaign type and no separate budget, and the ads run through the same auction as standard Search. The page is explicit that advertisers “can’t target ads exclusively to AI Overviews or AI Mode”, and cannot opt out of them separately from Search either.

How a campaign is built still affects how far it reaches. AI Max for Search, broad match, Shopping and Performance Max can match against both the user’s query and the AI response. Exact and phrase match keywords are limited to queries with direct commercial intent, a rule that grew out of a test Google confirmed in September. Some of the text shown with these ads is not the advertiser’s at all: Gemini writes short “AI explainers” from the query, the AI response and public sources including the advertiser’s own site, and advertisers cannot write, edit, approve or switch them off.

For UK teams the timetable is the practical point. Once the fourth-quarter expansion reaches the UK, campaigns on those types will serve in AI Mode without any setting changing. Google has given no launch date. The expansion also runs alongside a separate Google test of AI Mode ads that can draw on inferences from users’ connected Gmail and Photos.

What can advertisers measure, and what can’t they?

Google reports AI Mode performance only in aggregate. Its Help page says impressions, clicks, conversions and cost from AI Mode and AI Overviews are folded into standard campaign reports, and that the queries triggering those ads appear in the search terms report alongside everything else. There is no AI Mode segment and no split between a first question and a follow-up.

That leaves B2B marketing teams unable to tie a change in cost per click or lead quality to AI Mode with any confidence. Lower revenue per query, on Google’s figures, could reflect fewer ads, cheaper clicks, weaker intent or a different mix of markets. Google has not disclosed enough to tell those apart, and an advertiser’s blended campaign data cannot do it either.

Independent evidence is thin. An SE Ranking study, reported by Search Engine Journal in July, found AI Mode returned a text ad on 29% of the commercial keywords it tested. The rate rose with price: 24% for keywords costing under $2 a click, 54% for those costing $10 or more. The test set was preselected and captured on one date, and SE Ranking sells ad-tracking tools. AI Mode searches also differ in shape: Google’s own data puts them at three times the length of a traditional search.

The controls Google has kept are the familiar ones. Negative keywords, brand exclusions and asset pinning still apply in AI Mode, and the search terms report still shows which queries triggered ads, even if it does not say where the ad appeared. Teams that judge Search on qualified pipeline in their CRM, rather than on conversions reported by the platform, are better placed to notice a shift in lead quality, even when they cannot trace it to a placement.

Google has not said when AI Mode ads will launch in the UK, or whether AI Mode will ever appear as its own line in an advertiser’s reports.