Google announced that ads would be coming to AI Overviews at Google Marketing Live in May, and while it hasn’t been announced yet, ads on AI Overviews are coming “soon,” Alphabet senior vice president and chief business officer Philipp Schindler confirmed during Alphabet’s Q2 earnings call last night.
soon. So what can advertisers expect and when? Schindler said:
- “As you may have already noticed at GML, we announced that we will soon begin testing search and shopping ads in AI Summary for US users. These ads will have the opportunity to actually appear in a section clearly marked as sponsored within AI Summary if they are relevant to both the query and the information in your AI Summary. This allows us to innovate here and take this to the next level.”
Meanwhile, the ads that appear above and below the AI Overview “continue to provide valuable options for people to take action and connect with businesses,” Alphabet/Google CEO Sundar Pichai said.
- “People find ads that appear above or below the AI overview helpful,” Schindler added.
Why we care. Advertisers have been waiting for these ads for two months, and while they haven’t seen any in the test yet, they were informed that this is because the test will begin “soon.” Search ads have been a reliable source of leads, conversions, and revenue for brands for decades, but AI-powered ads are a new and unproven format, so advertisers will be watching closely to see how this impacts their ROI.
Positive trend. As it did during its Q1 and Q4 earnings calls, Google talked about “positive trends” from AI Overviews (formerly known as Search Generative Experience) and, specifically, how AI Overviews is leading to increased search and improved user satisfaction.
- “We’ve seen that using Search with AI Overview leads to greater engagement among younger users ages 18-24,” Pichai said.
When asked about these “positive trends” (specifically regarding click-through rates), Pichai was typically vague, saying:
- “All the feedback we’ve seen has been positive.”
Google plans to roll out AI Overviews to more countries this year. Pichai said the company is “starting conservatively, focusing on quality and making sure our metrics are healthy.”
But there’s no mention of the nightmarish post-launch events that likely led to a more conservative start, when the AI Overview gave strange and dangerous answers, like telling users to drink urine to pass kidney stones or touting the health benefits of running with scissors.
This has been a major setback for the AI brief. We report on the following:
Improve quality. One takeaway from the earnings call was that Google has been investing heavily in improving the quality of AI Overviews. Pichai said:
- “Over the past quarter, we have doubled the core model size for our AI summaries while also improving latency and making quality improvements, such as keeping the cost per AI summary served constant. We are also focused on matching the right model size to query complexity to minimize the impact on cost and latency.”
Alphabet Q2 2024 Earnings. Alphabet said Google search and other advertising revenue rose 14% year over year to $48.5 billion, with most of the growth coming from retail and financial services, Schindler said.
- YouTube advertising revenue was $8.7 billion, up 13% year over year, with growth driven by brand advertising followed by direct response advertising.
