Published on October 25, 2023, 6:30 am
Google has confirmed that it is working on developing new ad formats for its generative AI-powered search experience. The announcement came during the company’s recent earnings call, suggesting that a rollout could happen in the near future. This project holds great importance for Google, as a significant portion of its revenue still comes from ads, despite efforts to diversify through Google Cloud, services, and other ventures.
During the earnings call for the third quarter of 2023, Sundar Pichai, Alphabet and Google CEO, revealed that the company plans to experiment with a native ad format specifically tailored to its Search Generative Experience (SGE). This format aims to provide a customized advertising journey for users throughout their search process. Pichai expressed confidence in this transition from traditional search to a new AI-enhanced experience. He emphasized that Google’s teams are well-equipped to ensure an optimal user experience and drive revenue through ads.
Google initially introduced its AI-powered search experience at the Google I/O developer conference in May. The feature was initially available only to users in the United States but has since expanded to include users in Japan and India. Currently, Google displays ads both above (on desktop) and below (on mobile) the SGE results box. Furthermore, customized ads within the SGE have been showcased at marketing events. For example, if someone searches for a surfing experience in Maio, they might see a personalized ad promoting a travel experience within SGE, accompanied by a “sponsored” tag.
During the earnings call, specific details about ad formats were not provided. However, Philipp Schindler, Chief Business Officer at Google, mentioned that advertisers still have opportunities to reach potential customers throughout their search journeys.
In terms of financial performance, Google reported $76.69 billion in revenue for Q3 2023—a year-over-year growth of 11%. Of this revenue, $59.65 billion came from advertising and $8.41 billion from Google Cloud. While the advertising figures fell below analysts’ expectations of $8.64 billion, the company continues to demonstrate its strength in this field.
As for Google’s short-form video feature, Shorts, it has seen significant growth with over 70 billion daily views—an increase from the previously announced 50 billion daily views in February. Additionally, during Q2 2023 earnings, Google disclosed that over two billion monthly logged-in users were watching Shorts. This figure remained unchanged in the latest earnings report. Schindler mentioned that starting in November, Google will make its video reach campaigns available across formats, including Shorts.
In conclusion, Google’s development of ad formats for its generative AI-powered search experience is a significant step toward enhancing user engagement and further monetizing its core advertising business. With continued growth in revenue and a focus on expanding features like Shorts, the company remains committed to providing innovative solutions for both users and advertisers alike.