Why Search Monetization Is Dropping and What Marketers Should Do

In the third quarter of 2026, Google Search revenue growth slowed for the second consecutive quarter, reaching $63.35 billion (a 12% year-over-year increase, down from 19% in Q1 and 17% in Q2). Alphabet’s management officially acknowledged that lower monetization within AI Mode was one of the key reasons behind this trend, coinciding with a record-high growth in search query volume over the past five years.

For digital marketing and PPC professionals in Ukraine, this serves as yet another signal to adapt budget management strategies, as global shifts inevitably impact the local market.

Causes of the Slowdown: Between Traffic Growth and Monetization

According to the official corporate report, the factors driving the slowdown in search advertising revenue include:

1. Currency fluctuations (FX headwinds): Creating downward pressure on overall growth metrics.
2. Changes in the retail and media sectors: Specifically, spending normalization following peak periods (such as World Cups) and the EU’s elimination of the de minimis exemption for low-value imports, which affected advertisers in the Asia-Pacific region.
3. AI Mode characteristics: Generative AI drives massive growth in query volume—much of it upper-funnel and exploratory in nature—however, it monetizes at a lower rate initially compared to traditional search pages.

As Alphabet CEO Sundar Pichai noted, the company is mirroring its mobile transition strategy from a decade ago: first, build the best user experience, and subsequently optimize monetization.

Scaling AI Mode Ads and New Opportunities for Campaigns

Despite the slower monetization, Google is actively expanding the geography and functionality of ad placements in AI Mode. In October, the company announced the rollout of ads in AI Mode across 10 additional countries (including Australia, Canada, India, Singapore, and others), with expansion into Brazil, Mexico, and the United Kingdom planned for the fourth quarter of 2026.

Additionally, multi-turn ads for follow-on queries in AI Mode have been launched in the United States.

Ukrainian PPC specialists must take into account the key operational mechanisms of these updates:

• Automatic campaign participation: Existing search campaigns, Shopping, and Performance Max are eligible for placement in the new blocks by default, with no option to opt out separately.
• Targeting requirements: Advertisers cannot directly target AI Overviews or AI Mode individually. Exact match and phrase match keywords serve only when there is direct commercial intent. For broader, exploratory questions, AI Max for Search, broad match, Shopping, and Performance Max are utilized.
• Generative content (AI Explainers): The system automatically generates short text explanations using Gemini based on the query, AI response, and public sources (including the advertiser’s website). Marketers have no direct ability to edit this content.

Recommendations for Ukrainian Marketers and PPC Specialists

In light of the transformation of Google Search driven by artificial intelligence, specialists in Ukraine are advised to implement the following steps:

1. Review match type strategies: Given that exact and phrase match keywords do not capture broad upper-funnel queries in AI Mode, marketers should apply Broad Match and AI-driven tools (AI Max) judiciously while closely monitoring traffic quality.
2. Active use of negative keywords and brand exclusions: These remain among the few effective levers for controlling a company’s presence in automated placements. Regular monitoring of Search Terms Reports is mandatory.
3. Optimize for a mixed decision-making cycle: Since the majority of AI queries are exploratory in nature, website landing page content must address users’ informational needs at the early stages of the sales funnel, rather than focusing solely on the point of direct conversion.
4. Prepare for global scaling: If a business targets international markets (especially in regions experiencing active AI Mode ad deployments), product feeds and media assets should be proactively adapted to automated Google delivery formats.

Conclusion

The transformation of Google Search under the influence of artificial intelligence is altering the economics of advertising. The temporary decline in AI Mode monetization is a natural phase of platform adaptation. Marketers in Ukraine must review their approaches to managing automated campaigns, tighten cost controls through negative keywords, and prepare for the reality that a significant share of customer interactions will occur through deeply integrated conversational interfaces provided by Google.

Read this article in Ukrainian.