Google’s AI Mode earns less. What does that mean for your ad budget?

On Alphabet’s October 28 earnings call, Google Chief Business Officer Philipp Schindler said that the growing use of AI Mode contributed to slower Search revenue growth because Google was earning less from that activity. If you run Google Ads for a local business, the number to watch is what you spend to get a qualified lead or a booked job. Alphabet’s results explain why it’s worth checking those numbers now. Alphabet’s Q3 earnings call

What Google reported

Google Search & other revenue reached $63.35 billion in the third quarter of 2026, up 12% from a year earlier. Year-over-year growth was 19% in the first quarter and 17% in the second. Schindler named currency effects as the biggest reason growth slowed from Q2 to Q3. He also pointed to changes in some retail and media advertising and to lower monetization in AI Mode. Alphabet’s Q1 results, Q2 filing, Q3 filing

• Search queries grew at their fastest year-over-year rate in five years. CEO Sundar Pichai said commercial queries were part of that growth.
• Paid clicks rose 8% year over year in Q3. That was slower than the 13% increase in Q2.
• Average cost per click rose 4% year over year in Q3. Alphabet’s figures cover Search and other Google properties, including Maps, Gmail and Play.

Alphabet’s filing gives the broader figures for paid clicks and average cost. The earnings call describes how AI Mode contributed to the slowdown without quantifying its share. Earnings call transcript, Q3 monetization metrics

What lower monetization means in AI Mode

AI Mode is Google’s conversational search experience. Someone can ask a detailed question and follow up within the same conversation. Google can show links to supporting pages and has been expanding ads in AI Mode and AI Overviews, including ads that can appear during a longer conversation. When Schindler talked about lower monetization, he was describing how much Google earns from AI Mode activity. Your campaign’s results depend on who clicks, what they do afterward and what those customers are worth to you. Alphabet’s earnings call, Google’s guide to AI search features

What to check before changing your ad budget

Say you spent $600 on ads last month and booked six jobs. That’s $100 in ad spend per booked job. If you spend the same amount next month and book four, the cost rises to $150. That’s the number you can compare with the profit you typically make on those jobs.

1. Count the inquiries you can actually serve. Look at calls and forms from people in your service area who need work you do. Keep track of which ones turn into jobs.
2. Find where the change happened. If booked jobs fell, check whether clicks cost more, fewer visitors contacted you or fewer inquiries converted into bookings. Each points to a different fix.
3. Keep spending where the jobs justify it. Review campaigns by service and area so one expensive campaign doesn’t hide a profitable one. Compare similar periods where you can, especially if demand is seasonal.

Give customers a way to find you through regular search and Maps

Think about the difference between “plumber Hammond LA” and “My water heater is leaking from the bottom. Can it be repaired, and who works on it near Hammond?” Google reports that AI Mode queries were, on average, about three times as long as traditional Search queries in its May 2026 internal data. That’s a reason to use the questions customers already ask you when deciding what to explain on your site. Google’s AI Search research

• Make each service page useful on its own. Explain what you fix or install, where you work, what affects price and what someone should expect when they call. Use examples from real jobs when you can.
• Keep your Google Business Profile accurate. Check your categories, services, hours and contact details. Google says relevance, distance and prominence help determine local rankings. Google’s local ranking guidance
• Ask for honest reviews as part of finishing the job. Send the same neutral request to customers and reply when there’s something useful to say. Our guide to getting more Google reviews

Google’s guidance for appearing in AI Mode and AI Overviews starts with the same SEO fundamentals as regular Search. Make your pages easy for Google to find and useful for customers who need to make a decision. Google Search Central’s guidance

Where Cre8 My Site can help

Our Cre8 Growth plan is $599 per month per location. It includes a ten-page custom website, ongoing local SEO, Google Business Profile management, review requests and reporting. If you’re already running profitable ads, that work gives customers another way to find you across the Northshore.

If you want to see where to start, request a free website and local visibility audit. We’ll look at your website, Business Profile and local competitors and explain what we’d fix first.