What did Google report on October 28?
Alphabet reported third-quarter 2026 revenue of $127.6 billion, up 25%, in its October 28 earnings release. Search ad revenue grew 12% to $63.4 billion, its slowest pace this year, and Google's chief business officer named AI Mode as one reason: people use it a lot, and it makes less money per search.
Search grew 19% in Q1 and 17% in Q2, according to Relevant Audience. Compared with Q2, Search revenue barely moved, up about $79 million. Here is how the ad lines looked against the same quarter last year:
| Line | Q3 2025 | Q3 2026 | Change |
|---|---|---|---|
| Google Search and other | $56.6B | $63.4B | +12% |
| YouTube ads | $10.26B | $11.21B | +9% |
| Google Network | $7.35B | $7.46B | +1% |
| Total Google advertising | $74.18B | $82.01B | +11% |
| Google Cloud (not ads) | $15.16B | $30.71B | +103% |
Cloud doubled. Ads grew at less than half the company's overall rate. PPC Land reported the stock fell about 7% after hours, then more than 11%.
Why does AI Mode make Google less money?
AI Mode answers a question with a written response, and that response carries fewer ad slots than a page of ten blue links with ads on top. As more searches move into AI Mode, more of them have fewer chances to show an ad, so revenue grows slower than search volume.
Philipp Schindler said on the call that "the strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode," per the Motley Fool transcript. He also said currency swings were the single largest driver of the slowdown, so AI Mode is one cause among several. Google did not disclose AI Mode revenue, cost per click or ad load.
Sundar Pichai gave two numbers that matter to anyone buying search ads. AI Mode queries are on average three times longer than traditional searches, and year-over-year query growth is the highest it has been in five years. Schindler added that many AI Mode queries are upper-funnel, meaning people are still researching.
What did Google change for advertisers the same day?
Hours after the results, Google said ads in AI Mode are expanding to 10 more countries and that multiturn ads are launching in the US. Multiturn ads show up on answers to a person's follow-up questions, labeled Sponsored, according to PPC Land.
- New AI Mode ad markets: Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines and Singapore.
- Brazil, Mexico and the UK are planned for Q4.
- Google says click-through rates are already similar for sponsored and organic product listings inside AI Mode. It gave no number for text ads.
- Eligibility is the same as in Google's May 2025 announcement: Performance Max, Shopping, and Search campaigns using broad match, including AI Max for Search.
So Google told investors AI Mode earns less, then opened more AI Mode inventory to advertisers the same evening. Expect a steady push to move more ad budgets into those slots.
What does this mean if you run Google Ads for a local business?
Your ads will show more often next to long, conversational questions asked inside an AI answer, and the person clicking will have already read a summary of their options. They arrive further along in comparing you, and they leave fast if nobody answers.
I've been running ads since 2013. Every time a platform adds new inventory, the first few months are cheap for some advertisers and expensive for others, and the difference is usually whether they watched their search terms and their cost per booked job or only the click-through rate. A long query like "emergency plumber near me that does payment plans open Sunday" is a great lead if you answer it. It is wasted money if your campaign matches it and your page says nothing about payment plans or Sunday hours.
The other half is what happens after the click. Someone who asked an AI a detailed question expects a detailed, fast reply. The speed-to-lead math gets harsher when the lead has already compared three businesses in one chat window.
KenjiAI's Conversation AI and Voice AI agents answer new leads by text and phone within seconds, at any hour, and book them straight onto your calendar. When your Google ads start showing on AI Mode follow-up questions, every click that turns into a call or a form gets an answer while the person is still deciding. See how it works on our voice agents page.
What should you do this week?
Pull your search terms report, find the long question-style queries already in it, and decide which ones you want to pay for. Then make sure your landing page and your follow-up can answer those questions, because that decides whether AI Mode traffic makes or loses you money.
- Filter your search terms for queries of eight words or more. Add negatives for the ones that will never buy.
- If you run broad match, Performance Max or AI Max, you are already eligible for AI Mode placements. Judge them on cost per booked appointment, not clicks.
- Put the answers to your top five customer questions on the landing page in plain words: price range, hours, service area, financing, how fast you can come out.
- Reply to every lead inside five minutes, by text and by phone.
- Plan 2027 budgets from your own account numbers. Run them through our ROAS calculator before you raise spend.
Start with step one today. It takes about 20 minutes and shows you exactly what Google is already matching your ads to.