Paresh Dave
Last week Google introduced a radical shake-up of search that presents users with AI-generated answers to their queries. Now the company says it will soon start including ads inside those AI Overviews, as the automatic answers are called.
Google on Tuesday announced plans to test search and shopping ads in the AI summaries, a move that could extend its dominance in search advertising into a new era. Although Google rapidly rolled out AI Overviews to all US English users last week after announcing the feature at its I/O developer conference, it’s unclear how widely or quickly ads will start appearing.
Screenshots released by Google show how a user asking how to get wrinkles out of clothes might get an AI-generated summary of tips sourced from the web, with a carousel of ads underneath for sprays that purport to help crisp up a wardrobe.
Google’s AI Overviews aim to prevent users from switching to alternatives such as ChatGPT or the startup Perplexity, which utilize AI-generated text to answer various queries typically directed at Google. The inclusion of ads in AI Overviews and their timing have been major concerns in Google’s ChatGPT catch-up strategy. As search ads form the bulk of the company’s revenue, even minor modifications in ad placements or designs can cause considerable fluctuations in Google’s income.
In its announcement on Tuesday, Google released limited information about its new Overview ad format. Ads will be given the chance to surface within the AI Overview in a segment distinctly marked as ‘sponsored’ when they relate to both the query and the information in the AI Overview, as stated by Vidhya Srinivasan, Google’s vice president and general Manager for ads, in a blog post.
AI Overview will extract ads from advertisers’ ongoing campaigns, implying they can neither totally opt out of the trial nor alter the settings and designs of their ads to display in the feature. “There’s no action required from advertisers,” noted Srinivasan.
Last year, Google declared that when it started experimenting with AI-generated responses in search, ads for specific products would be integrated into the feature. In an instance at that time, it exhibited a sponsored recommendation at the top of an AI-created list of kids’ hiking backpacks. Google claims that the preliminary testing revealed that users found ads positioned above and beneath AI summaries useful. Bing, Google’s considerably smaller competitor, exhibits product ads in its Bing Copilot search chatbot, but in Monday’s tests, WIRED did not activate any ads in Bing’s rival to AI Overview.
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Every few years a technology such as ChatGPT emerges that gets media and investors wondering whether it will finally be the innovation that topples Google’s search ad business, which has been one of the most profitable and consistent enterprises on the internet for over two decades. In calls with investors over the past year, Google CEO Sundar Pichai has downplayed the risks to his ads business from new search experiences. He has voiced confidence that the company can work through shifts as it has before, including threats from smartphones and Amazon.
It helps that the growth of Google’s cloud and hardware businesses are making the company’s revenue less dependent on search. In 2019, more than 60 percent of revenue for Google parent Alphabet stemmed from search ads. That figure has steadily fallen to about 57 percent last year. Overall profit in 2023 reached a near record of about $74 billion.
No matter how ads in AI Overviews perform, conventional search ads will remain important to Google. For one, AI-generated answers appear only on select queries when its algorithms determine a summary could be helpful. That means Google will be serving up plenty of results pages with real estate for traditional search ads.
Google is also exploring other ways to use AI to boost its ads business. The company on Tuesday announced updated image-generation tools to help advertisers shed production costs associated with tasks like photography, meaning they could have more budget left to spend with Google to actually run ads.
In addition, Google plans to test a new search ad experience that guides people through “complex purchase decisions,” according to Srinivasan’s post. For example, AI could analyze photos uploaded by users of their furniture to suggest short-term storage options. Launching more sophisticated AI-enabled formats like that could allow Google to collect a premium compared with conventional ad slots, lining the company’s pockets more than ever.
