Ads will soon be included by Google in its newly developed AI-generated search results. It’s an experiment to see how the company’s main source of income can change in the generative AI era.
Google drastically changed its search algorithm last week, giving consumers artificial intelligence (AI)-generated results for their requests. The business now claims that it will shortly begin putting advertisements into those so-called AI Overviews, or automatic responses.
In an announcement on Tuesday, Google hinted that it will be testing search and shopping ads in the AI summaries. This might usher in a new era of Google domination in search advertising. It’s unknown how widespread or soon adverts will start to display, even though Google immediately rolled out AI Overviews to all US English users last week after debuting the feature at its I/O developer conference.
According to screenshots made public by Google, when a person searches for advice on how to remove wrinkles from clothing, they may receive an AI-generated summary of suggestions derived from the internet along with a carousel of advertisements for wardrobe-freshening sprays underneath.
Google created AI Overviews in an attempt to prevent people from switching to ChatGPT and Perplexity, two startups that answer a lot of queries that Google isn’t usually asked. Regarding Google’s ChatGPT catch-up approach, there has been much uncertainty about how and when the corporation would incorporate adverts into AI Overviews. The company’s main source of income is search advertising, and even little adjustments to the positioning or style of adverts can have a significant impact on Google’s bottom line.
Google’s statement on Tuesday included a limited amount of information regarding its new Overview ad style. Google’s vice president and general manager for advertisements, Vidhya Srinivasan, stated in a blog post that when an ad is relevant to both the query and the content in the AI Overview, it “will have the option to display within the AI Overview in a section explicitly designated as “sponsored.” Advertisers cannot fully opt out of the trial or change the settings or styles of their ads to appear in AI Overview because it will be based on ads from already-running campaigns. Advertisers don’t need to take any action, according to Srinivasan.
When Google began testing AI-generated search results last year, it announced that the feature would include product advertisements. An AI-generated list of children’s hiking backpacks had a sponsored option at the top in one example at the time. According to Google’s early testing, people found the advertisements above and below AI summaries to be beneficial. During tests on Monday, GlobalBiz Outlook did not cause any advertising to appear in Bing’s competitor to AI Overview. Bing, a significantly lesser competitor of Google, displays product adverts in its Bing Copilot search chatbot.
Google’s search ad business has been one of the most profitable and stable online businesses for more than 20 years. Every few years, a new technology like ChatGPT appears, leaving investors and the media to wonder if this is the breakthrough that will ultimately bring the company down. Google CEO Sundar Pichai has played down the threats that new search experiences pose to his advertising business in discussions with investors over the past year. He has expressed confidence that the business can adapt to changes as it has in the past, despite threats from Amazon and cell phones.
One contributing factor is that Google’s revenue is becoming less reliant on search as its cloud and hardware businesses expand. For Alphabet, the parent company of Google, search ads accounted for more than 60% of income in 2019. That percentage decreased gradually to almost 57% the previous year. In 2023, total profit came in close to a record $74 billion.
Google will continue to value conventional search advertisements regardless of how well they do in AI Overviews. For starters, AI-generated responses are only displayed for a limited set of searches when its algorithms decide that a summary would be useful. This implies that Google will provide a large number of results pages with space for conventional search advertisements.
Google is looking into further AI applications to help its advertising business. To help advertisers reduce production expenses related to jobs like photography, the business on Tuesday introduced new image-generation capabilities. This might free up more funding for advertisers to use with Google to run actual advertising.
According to Srinivasan’s post, Google also intends to develop a new search ad experience that walks users through “complex purchase decisions.” For example, AI may recommend short-term storage choices based on user-uploaded images of their furnishings. When more advanced AI-enabled formats like that are introduced, Google may be able to charge more than it would for traditional ad spaces, which would benefit the business financially.
