Google announced earnings yesterday, and during the earnings call, Philipp Schindler, Google's senior vice president and chief business officer, said that ads in AI Mode have a "lower monetization" than ads in traditional search.
"It's worth noting that the strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode," Philipp Schindler said at the 37-minute mark into the earnings call.
This goes against what Google said about ads in AI Overviews, where Google said ads on AI Overviews earn the same as without AI Overviews. But that was specific to AI Overviews, not AI Mode.
Schindler added, "To be clear, we feel very good about our trajectory here. Our ad experiments have shown promising results and we're now scaling ads within both AI Overviews and AI Mode to more users and more queries, including, as I mentioned, in the national markets and multiturn ads in the U.S." We covered this AI Mode ad expansion last night.
Google's AI Mode does encourage searchers to search more often, way more often, which is where the multiturn ads come in - Google can show more ads on those additional searches.
Philipp Schindler also spoke about the "change in growth rate from Q2 to Q3" being lower, he said "there were a few drivers here." He said:
First, there was FX. It was the single largest driver of search deceleration relative to Q2. Second, there were vertical-specific dynamics. In retail, some of our APAC advertisers were impacted by the EU eliminating its de minimus exception, In media and entertainment, spend normalized after an unseasonably strong Q2 driven by the FIFA World Cup, which had more matches, and therefore more advertising budgets allocated in June than actually in July.
Here is the video of the call where Philip says this starting at 36:25 into the call:
Glenn Gabe quoted some of this over on X:
AI Mode Usage Is Outpacing Ad Revenue -> Google's Philipp Schindler (finally) explained that AI mode was yielding lower monetization than traditional search...
"Schindler’s point was narrow. Each AI Mode query currently makes less than a traditional search, and he coupled that with the claim that monetization will improve over time."
"Usage only turns into revenue when advertisers pay for it. Schindler announced “the expansion of ads in AI Mode into international markets alongside multi-turn ads in AI Mode in the U.S.” He also argued that many AI Mode queries are upper funnel, meaning early research before a purchase decision." https://t.co/8Kngn98JHr
— Glenn Gabe (@glenngabe) October 29, 2026
Danny Goodwin has nice coverage of these points as well on Search Engine Land.
Forum discussion at X.
