Google search ad growth slows to 12% as AI Mode lags

Google's search advertising revenue growth slowed to 12% in the third quarter, according to a report by The Information. Google chief business officer Philipp Schindler cited weak monetization of the company's AI Mode conversational search feature as a partial cause of the slowdown.

The figure marks a further deceleration from earlier in the year. In the first quarter, Google's search ad revenue growth was 19%, and in the second quarter it was 17%.

Google has been layering generative AI into its core search product. It introduced AI Overviews at the top of search results in May 2024, and about a year later added AI Mode, a generative AI search chatbot. Advertising was added to both features at a later stage.

Google management is reportedly increasing partnerships and considering acquisitions to deliver useful advertising in AI, and is reportedly reviewing acquisitions of companies with AI tools for ad creation.

The contrast with Meta is sharp. Meta's advertising revenue rose 26% year over year to $63.1 billion in the third quarter, from $50.1 billion a year earlier, according to CNBC. The 14-percentage-point growth gap is reported as Meta's most favorable position against Google since 2021 — a recovery helped by improved monetization of Reels, the TikTok-like video service Meta expanded on Facebook in February 2022.