Google's management commentary on AI Overviews alleviated concerns regarding the impact of generative AI on its search advertising business. The new format, powered by Google's Gemini AI model, showcases conversational summaries before links, enhancing user experience. In Q1, Google reported $50.7 billion in internet search advertising revenue, exceeding estimates. Analysts see AI Overviews as a crucial strategy in countering competition, asserting that the volume of search queries is rising, with businesses experiencing a 26% growth in conversions due to the new format. Yet, competition remains fierce, exemplified by OpenAI's growing user base.
AI Overview commentary was arguably the best pushback to the bear case to date with AI Overviews now rolled out to 1.5 billion monthly active users.
The total volume of search queries is increasing and AI Overviews are monetizing at roughly the same rate (as legacy search)... 26% year-over-year increase in conversions for goals such as purchases and leads.
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