Google is working on different ad formats for its generative AI-powered search

During Google’s earnings call, the tech giant confirmed its active pursuit of different ad formats for its generative AI-powered search experience. Earlier this year, Google had already floated some preliminary ideas regarding the endeavor, and the mention of it in the earnings call implies that a rollout could be on the horizon. 

In the earnings call for Q3 2023, Sundar Pichai, CEO of both Alphabet and Google, revealed the company’s intentions to experiment with a native ad format tailored to its Search Generative Experience (SGE), one that is, as Pichai puts it, “customized to every step of the search journey.”

While the generative AI-based search experience is in its early stages, Pichai expressed confidence in the transition from traditional search to this innovative approach, stating, “We’ve always worked through these transitions, be it from desktop to mobile, or from now mobile to an AI-enhanced experience. And so it’s nothing new, and I feel very comfortable that as we go through it, the strength of our teams — both on the organic side as well as on the ad side — to drive the right experience for users, including ads, will pay dividends.”

Google initially introduced SGE during the Google I/O developer conference held in May. This feature was initially available to U.S. users and later expanded to include users in Japan and India by August.

Currently, Google displays ads both above (on desktop) and below (on mobile) the SGE results box. However, they have also presented examples of customized ads within the SGE. 

Unfortunately, the company did not provide further details regarding the ad formats during the earnings call. Nevertheless, Philipp Schindler, Google’s Chief Business Officer, assured advertisers that they still have the opportunity to engage potential customers throughout their Search journeys.

In terms of revenue, Google reported $76.69 billion for the third quarter of 2023, reflecting an 11% year-over-year growth. The lion’s share of this revenue, $59.65 billion, came from advertising, while Google Cloud contributed $8.41 billion—though this figure fell slightly short of analysts’ expectations of $8.64 billion.

Additionally, Google shared that over 70 billion Shorts are viewed daily, a notable increase from the 50 billion daily views reported in February. During the second-quarter earnings report of 2023, the company revealed that over 2 billion monthly logged-in users watch Shorts, which marks a significant increase from 1.5 billion users the company reported the previous year. The figure remained consistent in the latest earnings call. 

Schindler disclosed that the company plans to make its video reach campaigns, which distribute ads across various formats, including Shorts, generally available in November.