Once again, Google highlights the promising trends of AI Overviews and announces plans for expansion while skillfully avoiding the release of specific metrics.

At Google Marketing Live in May, Google announced that ads would be integrated into AI Overviews. While we’re still waiting for this implementation, Philipp Schindler, Alphabet’s senior vice president and chief business officer, confirmed during last night’s Alphabet Q2 earnings call that ads in AI Overviews are coming “soon.”

So, what can advertisers expect and when? Schindler explained:

“And as you probably noticed at GML, we announced that soon we’ll start testing search and shopping ads in AI Overviews for users in the U.S. These ads will appear within the AI Overview in a section clearly labeled as sponsored when they’re relevant to both the query and the information in the AI Overview, allowing us to innovate and advance this feature.”

Meanwhile, ads appearing above and below AI Overviews “continue to provide valuable options for people to take action and connect with businesses,” according to Alphabet/Google CEO Sundar Pichai. Schindler added, “People are finding ads, either above or below AI Overviews, helpful.”

Why we care: advertisers have been anticipating these ads for two months. Although no testing has yet been observed, we know it’s because the testing phase will begin “soon.” Search ads have been a reliable source for leads, conversions, and revenue for brands for decades, but ads in AI Overviews are a new and unproven format. Advertisers will be closely monitoring the impact on ROI.

Positive trends. As mentioned in Q1 and Q4 earnings calls, Google reported “positive trends” from AI Overviews (formerly Search Generative Experience), noting increased searches and higher user satisfaction.

“We see even higher engagement from younger users aged 18 to 24 when they use Search with AI Overviews,” Pichai said. When asked about these “positive trends” and click-through rates, Pichai remained vague, saying, “All the feedback we have seen is positive.”

Google plans to expand AI Overviews to more countries this year. Pichai stated that Google has “taken a conservative start, focused on quality, ensuring healthy metrics, and so on.”

However, there was no mention of the problematic post-launch issues, where AI Overviews provided bizarre and dangerous advice, like recommending drinking urine to pass kidney stones or promoting the health benefits of running with scissors. This led to a significant reduction in AI Overview visibility:

• “Google AI Overviews only show for 7% of queries, a new low” (July 11)
• “Google AI Overviews showing less often, with less Reddit, data shows” (June 20)
• “Google AI Overviews visibility drops only shows for 15% of queries” (June 4)

Quality improvements. During the earnings call, Pichai mentioned significant investments in improving the quality of AI Overviews. He said, “Over the past quarter, we have made quality improvements, including doubling the core model size for AI Overviews while improving latency and maintaining flat cost per AI Overview served. We are focused on matching the right model size to the complexity of the query to minimize cost and latency impact.”

Alphabet Q2 2024 revenue. According to Schindler, Alphabet reported Google Search and other advertising revenues of $48.5 billion, up 14% year-on-year, driven largely by retail and financial services. YouTube ad revenues reached $8.7 billion, up 13% year-on-year, driven by brand followed by direct response advertising.

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