Google is looking to introduce new ad formats native to AI Overviews, which are already being monetised by the search giant at around the same level as normal search.

The search giant gave the insights into its AI summaries – which have many publishers deeply concerned – during an earnings call in which it beat market expectations for the second quarter running.

In terms of the numbers, Google showed its advertising, services and cloud divisions all growing strongly year-on-year. 

Its been a big quarter for Google (Midjourney)

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Advertising, which comprises Youtube, search and Google Network, earned US$71.3 billion, up more than US$10 billion from a year ago. 

Google Network – revenue from ads on non-Google sites such as from Adsense – appeared to be the only area that went backwards (down 1% to $7.4 billion).

The profit engine of the Cloud division rose to $13.6 billion (from $10.3 billion) and subscriptions also rose ($9.3b to $11.2b).

Google chief business officer Phillipp Schindler answered an investor query about whether AI Overviews could continue to drive revenue growth by saying the summaries had been encouraging higher use.

“AI Overviews continued to drive higher satisfaction. They continued to drive higher search usage. They’re scaling up very nicely, and they’re actually working for our entire user base now, scaled to over two billion users in over over 200 countries, so very happy with the development,” he said.

Schindler revealed that Google was investigating “next-generation” ad formats within AI Overviews and in its more extensive AI Mode.

“We see monetization at approximately the same rate, which gives us actually a really strong base on which we can then innovate and drive a few more innovative and new and next-generation ad formats.”

AI Overviews and the more recently introduced AI Mode have publishers worried because they see lower referral traffic where user queries are wholly satisfied within the search environment. A recent Pew survey found that only 1% of users clicked on links within the overview text, and they also were much less likely to click on a traditional link below the AI Overview.

Google repudiated that survey in a separate statement, but said nothing during the earnings call to specifically address lower referral traffic to publishers. Instead, it said that the new AI features result in more searches overall and that it did not “manage to paid clicks and CPC targets”.

Elsewhere in the briefing, CEO Sundar Pichai noted that Youtube Shorts was now as lucrative minute-for-minute as long-form video in many markets. Shorts is Google’s vertical video product similar to Tiktok.

“In the US, Shorts now earn as much revenue per watch hour as traditional in-stream on Youtube,” he said. “In some countries, it now even exceeds in-streams.”

Pichai also said Google was rolling out new AI tools for creators within Shorts.

Google reported that it was increasing its already massive investment in capex, going from US$75 billion to US$85 billion for the full year. The money will primarily be spent on the AI infrastructure of servers and data centres that underpin both Google’s own AI products and its Cloud business.