Google Admits AI Mode Queries Pay Less, Push Search Up-Funnel

Google Search & other revenue hit $63.35 billion in Q3 2026, up 12% year over year — and on the same day, Oct. 28, Alphabet's chief business officer told Wall Street why growth is slowing: the AI Mode queries driving the shift simply pay less than traditional searches.

That's the planning problem facing every paid search manager heading into 2027. Shivani Mohan, Google's VP of Data Science and UXR (user experience research) for Search, told advertisers on Google's Ads Decoded podcast that people now arrive earlier in their buying journeys, asking long, detailed questions far from any purchase. The queries are landing at the top of the funnel. Most Google Ads accounts are still judged at the bottom.

What did Mohan's team actually find?

Mohan calls this "an expansionary moment" for search. For most of Google's history, people had to translate curiosity into a keyword. That friction is fading. "People are asking much longer, much more detailed questions," she said — and "net new types of queries that they would have have never thought to ask before."

Host Ginny Marvin asked the question every PPC manager would: are follow-ups piling up because the first answer failed? Mohan said no. Her data science team "penalize[s] queries, which we call man refs, manual refinements," because a user adding words means Google missed the intent. By her account, follow-up growth reflects new curiosity, not bad answers.

That behavior now has a price tag attached. Shashi Thakur, VP and GM of Google Search Ads, says Google is launching multi-turn ads in AI Mode in the U.S., so ads can serve on follow-up queries. And when shoppers near a decision, Mohan noted, "they really don't want to just see the summary" — they want reviews, podcasts and videos from people in their own circumstances.

Which numbers hold up?

Check these before they go in a deck:

• Mohan said query length has tripled; Google's published claim (AI Mode Report, U.S., May 2026) is narrower — AI Mode queries run three times longer than traditional searches.
• "One in every six searches is multimodal," she said; Google's May figure was one in six AI Mode searches in the U.S., and CEO Sundar Pichai said on the October call that "one in five AI Mode searches globally use voice, images or documents."
• The only AI Mode ad performance figure Google has released: click-through rates are "already similar between sponsored and organic product list items within AI Mode" — based on two weeks of internal data (Aug. 20–Sept. 3, 2026), comparing ads to organic listings, not to Shopping ads. Treat it as Google's claim until your accounts confirm it.

Alphabet's 10-Q, filed Oct. 29, doesn't break out AI Mode paid clicks or cost-per-click. That's the durable number advertisers need most, and it doesn't exist yet.

What did the earnings call add?

The numbers behind the story. Paid clicks on Google Search & other rose 8% year over year in Q3, down from 13% in each of the first two quarters, while cost-per-click rose 4%. Pichai said query growth was the highest in five years, including commercial queries.

When JPMorgan's Doug Anmuth asked why queries grew faster than revenue, SVP and Chief Business Officer Philipp Schindler pointed first to currency, then said: "The strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode." His upside case: "the majority of AI Mode queries are incremental, creating more monetization opportunities over time." Google is now scaling ads in AI Overviews and AI Mode internationally.

Pichai compared the moment to the mobile transition — UX first, monetization later. The analogy breaks, though. In Q3 2016, paid clicks grew 33% while CPC fell 11%. This time CPC is still rising, and the gap shows up as query growth outpacing paid clicks. Advertisers aren't getting a discount. They're getting top-of-funnel inventory, priced by the same auction, plus the burden of proving it pays.

What should you change in your accounts?

Marvin's advice, translated into settings:

1. Check eligibility for the new inventory. Only broad match or keywordless targeting (AI Max for Search, Performance Max, Shopping, Dynamic Search Ads) can serve ads inside AI Overviews. Exact match won't block broad from triggering there. If your non-brand runs exact and phrase only, you're opted out of what Google is scaling.
2. Fill the six Merchant Center conversational attributes — question_and_answer, document_link, related_product, item_group_title, variant_option, popularity_rank — via a supplemental feed, starting with top sellers. Black Friday falls on Nov. 27.
3. Build a long-query segment in reporting. Group search terms by word count and compare conversion rate, CPA/ROAS, and path presence. Don't let blended CPA hide discovery spend.
4. Fix the landing page. A 25-word question won't convert on a generic category page — especially with AI Max's final URL expansion picking pages for you. Bring in SEO, content and CRO.

The bill for discovery

Google has the logs, the interviews, and daily shipping. Advertisers have the auction bill and a quarterly budget review. Google checks its user statistics for durability before publishing them, as Mohan explained. Until it applies that same standard to AI Mode ad performance, treat AI Mode and AI Overview reach as a test line with its own budget and its own success metric — not something that quietly drags down blended CPA.

Your CFO will expect the same rigor.