Everyone is watching Alphabet’s growth. What’s being overlooked is that the source of that growth is shifting.
Revenue rose 25% year over year in the third quarter, but in the same earnings report, growth in core advertising was slowing.
What will make up the difference?
The global rollout of ads in AI Search is meant to fill the gap left by slower growth in core advertising. That’s also the question that deserves the most scrutiny this quarter.
Before ads can be placed in AI answers, regulators will first want to know whether they’re clearly labeled. Until that’s settled, expansion amounts to little more than scaling up, and the revenue can’t be valued separately as a new business.
This assessment no longer holds if growth in core advertising picks up again, or if revenue from AI Search ads is disclosed separately and shown to have filled the gap.
#CanMicrosoftDeliverOnTheAIWindfall
Revenue rose 25% year over year in the third quarter, but in the same earnings report, growth in core advertising was slowing.
What will make up the difference?
The global rollout of ads in AI Search is meant to fill the gap left by slower growth in core advertising. That’s also the question that deserves the most scrutiny this quarter.
Before ads can be placed in AI answers, regulators will first want to know whether they’re clearly labeled. Until that’s settled, expansion amounts to little more than scaling up, and the revenue can’t be valued separately as a new business.
This assessment no longer holds if growth in core advertising picks up again, or if revenue from AI Search ads is disclosed separately and shown to have filled the gap.
#CanMicrosoftDeliverOnTheAIWindfall
