Google to Test AI in Search and Shopping Ads

Google has once again highlighted the positive trends associated with AI Overviews and has outlined plans to expand its use. However, the company has avoided sharing specific performance metrics or detailed figures related to this technology.

During the Google Marketing Live event in May, Google announced that ads would soon be integrated into AI Overviews. This feature is expected to enhance the advertising experience by leveraging AI to provide more relevant and engaging ad content. Philipp Schindler, Alphabet’s senior vice president and chief business officer, reaffirmed this commitment during Alphabet’s Q2 earnings call, indicating that the introduction of ads in AI Overviews is imminent. While the exact timeline for this rollout has not been specified, the company is working towards making this feature available in the near future.

What can advertisers expect and when will it happen? Here’s what Philipp Schindler shared:

“We announced at Google Marketing Live that we will soon begin testing search and shopping ads in AI Overviews for users in the U.S. These ads will appear in a section clearly marked as sponsored when they are relevant to the user’s query and the AI Overview content. This will allow us to innovate and advance this feature.”

Meanwhile, Alphabet/Google CEO Sundar Pichai noted that ads positioned above and below AI Overviews will still offer valuable options for users to engage with businesses.

Philipp Schindler noted, “People are finding ads placed either above or below AI Overviews to be helpful.”

Advertisers have been waiting for two months for these ads to appear. Testing has not yet started, but Schindler confirmed it will begin “soon.” While search ads have traditionally been a dependable source for leads and revenue, ads in AI Overviews represent a new and untested format. Advertisers will be closely monitoring how this impacts their return on investment.

Google has reported positive trends with AI Overviews (formerly known as Search Generative Experience). According to recent earnings calls, these AI Overviews have led to increased searches and higher user satisfaction.

Sundar Pichai mentioned that younger users aged 18 to 24 show even higher engagement with Search when using AI Overviews.

When asked about specific metrics, like click-through rates, Pichai remained vague, stating only that “all the feedback we have seen is positive.”

Google plans to expand the rollout of AI Overviews to more countries this year. Pichai noted that the company has taken a cautious approach to ensure quality and maintain healthy metrics.

However, it’s worth noting that previous issues with AI Overviews included problematic and dangerous responses, such as suggesting drinking urine to pass kidney stones and promoting the risks of running with scissors. These issues likely influenced the more cautious rollout strategy.

This resulted in a notable decrease in the visibility of AI Overviews, as previously reported:

Google AI Overviews now appear for just 7% of queries (July 11)
AI Overviews show up less frequently, with reduced visibility on Reddit (June 20)
Visibility of AI Overviews drops to 15% of queries (June 4)

Quality improvements: Google has focused on enhancing the quality of AI Overviews. Sundar Pichai stated:

“Over the past quarter, we have made substantial quality improvements, including doubling the core model size for AI Overviews. We have also improved latency while keeping costs per AI Overview stable. Our aim is to match the model size to the query complexity to manage costs and latency effectively.”

Alphabet Q2 2024 revenue: Alphabet reported $48.5 billion in Google Search and other advertising revenues, reflecting a 14% increase year-on-year. This growth was largely driven by retail and financial services, according to Philipp Schindler.

YouTube ad revenues reached $8.7 billion, a 13% increase from the previous year. This growth was primarily attributed to brand advertising, followed by direct response ads.