James Murray
November 02, 2026
Good morning, it's James here. Google said on its earnings call that AI Mode makes less money per search than the results page it's replacing, and investors took more than $500 billion off its market value. Its answer, apparently, is to put more ads in AI Mode. As a marketing agency owner (and with a significant portion of my investments tied to Google), I’m not sure.
The Lead: Google Admits AI Search Pays Less
What happened. Alphabet reported Search revenue of $63.35 billion for the third quarter, up 12% from a year earlier, and YouTube ad revenue of $11.21 billion, up 9% (Alphabet). Marketing Dive notes it's "the second consecutive quarter when search, Google's bread and butter, has fallen short of analyst estimates" (Marketing Dive).
On the call, chief business officer Philipp Schindler said "the strong growth in AI Mode queries had an impact because of the lower monetization we're seeing." He added, "To be clear, we feel very good about our trajectory here." The stock fell 12% across the call and the next day (9to5Google).
The same day, Google said it is scaling ads in AI Mode to 10 more countries, including Australia, Canada and India, with Brazil, Mexico and the UK to follow this quarter. In the US it is launching "multiturn ads," which can appear in follow-up questions, and it says "click-through rates are already similar between sponsored and organic product list items within AI Mode" (Google).
Reddit's shareholder letter shows what AI search is doing to sites that rely on search traffic. "During October, we have seen that search traffic has dropped by more than 1 million referrals on average per week," it says, and the company warned that daily users could fall by a low-double-digit percentage in Q4 (Reddit).
Why CMOs should care. Schindler blamed the miss on AI Mode earning less, and Google's response the same day was more ad placements inside AI Mode. My read is that Google will keep adding AI Mode inventory until revenue per query catches up. Google says click-through rates are similar to organic product listings, but the placements are new, so I'd test them before trusting that.
The take. I'd want three numbers from the search team before Q1 budgets lock. How much of your spend already runs in AI Mode or AI Overviews, and can you see it reported separately? What does a conversion cost there compared with the standard results page? And how much organic traffic from Google have you lost since AI Mode launched? If the team can't break out the first number, push Google for that reporting before you add budget.
Musical Chairs
Popeyes dismissed CMO Matt Rubin "less than a year since his appointment," and other members of the marketing team have also left. Same-store sales have fallen in seven of the past eight quarters. US and Canada president Peter Perdue said "sales and traffic" are "not where we need to be" (Nation's Restaurant News). Seven weak quarters out of eight is a longer problem than one CMO's tenure.
Coursera named Amy Weisenbach CMO, effective Nov. 30. She was most recently CMO of The New York Times. CEO Greg Hart said she has "an exceptional track record of helping turn trusted content into a thriving digital business" (Coursera via Yahoo Finance).
In Partnership with Gladly
Zero Results, Zero Sales
By The Numbers: 11%
That's the share of connected TV ad requests that carried a usable show name, in an analysis by streaming tech firm Wurl. 93% carried a genre label, but about 35% of those genres didn't match the program they described (Digiday). The sample was small, two hours of one prime-time evening in August.
If your CTV plan targets by genre, check your own buys. Before Q4 invoices land, ask your partners for show-level reporting and see how much of your spend they can tie to a named program.
The Reading List
Amazon's ad growth slows to 12% (Marketing Dive) Q3 ad revenue was $19.6 billion, down from 26% growth in Q2. Amazon blames the earlier Prime Day and guides to high-teens growth for the holidays.
Stagwell buys Freestar (Digiday) A holding company now owns the firm that sells ads for Fortune and Boston Globe Media. Ask your agency how it separates buying for you from selling to you.
Walmart's CMO on "A Who Knew Carol" (Marketing Dive) William White says running one theme all season "allows a really quick read for customers to know it's Walmart."
UK retail media grew 31.2% in Q2 (Marketing Week) It's now 8.4% of UK ad investment, but AA/WARC forecasts growth slowing to 16.2% in Q4.
Most B2B brands now prioritise AI visibility (Marketing Week) 56.3% of 300 B2B marketers say visibility in large language models is a priority, and 54% are investing in generative engine optimisation.
One More Thing
Last week we cited a Forter survey saying 43% of Americans have found a new store through an AI recommendation. This week Andy Jassy told analysts that "few customers are doing much shopping this way yet," and said AI shopping agents aren't meaningfully hurting Amazon Ads (Marketing Dive). Forter asked about discovery, and Jassy was talking about purchases. Ask ChatGPT and Gemini for the top picks in your category this week and see whether you appear.
See you next Monday.
—James