Google shifts ad strategy as core search growth cools

Chief Business Officer Philipp Schindler announced that the company is scaling high-quality sponsored listings within AI Overviews, marking the first time these monetization tools will reach a global audience. Early internal metrics suggest these formats are gaining traction, with click-through rates for sponsored product placements matching those of organic results. This strategy follows the introduction of conversational discovery ads in May, which allow for sponsored recommendations directly within AI-generated responses.

While search advertising growth slipped to 12% from 17% in the previous quarter, CEO Sundar Pichai remains optimistic about the shift in user behavior. He noted that search queries are currently expanding at their fastest rate in five years, driven by longer, more complex prompts facilitated by Gemini. These AI-mode queries are now three times longer on average than traditional searches. With Google Cloud revenue surging 103% to $30.7 billion, the company is betting that its multimodal search evolution will offset the cooling demand in traditional ad slots.