Google is actively looking to insert different types of ads into its generative AI search

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Google works on new ad formats for its search experience powered by generative AI

On its quarterly earnings call, Google confirmed that it is working on different ad formats for its generative AI-powered search experience. Google had shared some ideas earlier this year, and the mention on the quarterly earnings call may indicate that rollout could come sooner rather than later. This project is particularly important for the company as the majority of its revenue still comes from ads, despite several attempts to diversify revenue streams through Google Cloud, services and other bets, including hardware.

A native ad format for Google's generative search experience

On the Q3 2023 earnings call, Alphabet and Google CEO Sundar Pichai said the company plans to experiment with a native ad format tailored to its Generative Search Experience (GSE) that is "personalized at every stage of the search journey".

Confidence in the transition from traditional to new research

Although it's still early days for his generative AI-based search experience, Pichai also said he feels confident about the transition from traditional to new search.

"We've always gone through these transitions, whether it's from desktop to mobile, or from mobile to an AI-enhanced experience. And so it's nothing new, and I feel very comfortable that, as we move forward, the strength of our teams - both on the organic side and the ad side - to deliver the right user experience, including ads, will pay off," he said on the earnings call.

Search powered by Google's generative AI

Google introduced its AI-powered search experience at the Google I/O developer conference in May. The feature was initially available to users in the US, and was extended to users in Japan and India in August.

Personalized ads in the generative search experience

The company is already showing ads above (on desktop) and below (on mobile) the SGE results box. But it also showed examples of personalized ads in SGE and how they might appear. For example, if you're looking for a surfing experience in Maui, it could show a personalized ad for a travel experience in SGE with a "sponsored" tag.

Upcoming advertising formats

The company did not give details of the formats in its latest earnings call. But commercial director Philipp Schindler said that "advertisers still have the opportunity to reach potential customers throughout their search journey".

Google financial results

The company reported sales of $76.69 billion for the third quarter of 2023, representing year-on-year growth of 11%. Advertising accounted for $59.65 billion in revenues, and the Cloud generated $8.41 billion - below analysts' expectations of $8.64 billion.

The rise of Shorts on Google

Google said that people watch more than 70 billion Shorts a day, up from the 50 billion daily views previously announced in February. In its Q2 2023 results, the company mentioned that more than 2 billion connected people watch Shorts every month. This figure remained unchanged in the latest results. Schindler said the company was making its video ad campaigns available on various formats, including Shorts, from November.

Google is actively seeking to insert different types of advertising into its generative AI search.