Dive Brief:

• Google is testing generative artificial intelligence in search, heralding big changes to the platform’s user experience, e-commerce features and advertising, per a blog post. The announcement was also shared at the Google I/O developer conference.  
• AI is meant to take some of the “heavy lifting” out of search, answering not only the initial user query in detail but also offering follow-up suggestions and links while preserving context from question to question. Google said that ads will appear in dedicated slots in AI-generated responses, similar to how they surface in conventional search today. 
• On the shopping front, Google’s AI-powered search draws on a Google Shopping Graph with over 35 billion product listings to present recent reviews, ratings, prices and product images that can inform purchasing decisions. Google is pushing to keep pace with competitors that have gotten an early lead with generative AI but whose search products are not as widely adopted. 

Dive Insight:

The race to transform search using generative AI is kicking into high gear. While Google’s implementation of the technology is not surprising — and has basically been a given since February — more formal tests demonstrate that the tech giant is moving quickly to address the competitive threat posed by rivals that were early to jump on the trend. Google’s announcement comes a week after Microsoft shifted AI-powered Bing from limited to open preview, welcoming more consumers into the fold. 

Google’s early experiments with generative AI in search, dubbed the Search Generative Experience, are part of a new Search Labs program. Those interested in trying out the features and providing feedback can join a waitlist, with access opening in the coming weeks. The initial run will be in the U.S. and in English only. 

SGE is just one of several bits of AI-related news that dropped at this year’s I/O but carries some of the biggest implications for Google’s core business. Search is the company’s largest ad revenue segment and has made it into a dominant force in digital marketing over the past two decades-plus. It is also an area that has seen growth cool with stiffer competition and weak advertiser demand in a down economy. Google search revenue grew just 2% in the first quarter of 2023, while the firm’s overall revenue from ads was down year-over-year for the second consecutive quarter. Overall revenues for search advertising were up 7.8% in 2022, according to the IAB.

Google seems to be eyeing AI-powered e-commerce as a category where it could have an advantage based on the power of a sprawling Google Shopping Graph. An example shared by Google shows someone looking for a new bike suited to short, hilly commutes. AI-powered search answers with recommendations around design, suspension and motors, along with a page of product listings. The user then dives further into a follow-up suggestion around e-bikes as a topic.  

Google’s AI-powered search will run ads much in the same way that the regular search page does now. Ad placements appear with a “Sponsored” label in bolded black text to differentiate them from organic results. Google said it will take a “thoughtful and responsible” approach to implementing ads and called out its history of using AI in ad products, including a Performance Max campaign tool that it has been promoting heavily. 

AI-powered search still represents an adjustment for brands and users alike, with lengthier responses that condense multiple sources of information in a conversational tone. Generative AI has been known to get things wrong, placing fresh scrutiny on tech companies that are going all-in on the tech. Google said it has put in place safeguards, such as limiting the types of queries that can appear. In the blog post, Google also attempted to allay potential publisher concerns, claiming AI-generated answers are designed to help direct attention to outside sources.   

“As we bring generative AI into Search, we’re committed to continue sending valuable traffic to sites across the web,” wrote Elizabeth Reid, general manager of Google search, in the blog post. 

Microsoft’s AI-powered Bing, which first went into previews in February, has also run ads in a limited capacity since launch. Bing is leveraging the technology of ChatGPT developer OpenAI, widely viewed as a leader in the generative AI category. Executives have said that AI-driven Bing searches last about three times longer than traditional queries, which they believe should help make ad campaigns more addressable and relevant. 

Google will have more to share on advertising in AI-powered search at its Marketing Live event on May 23.