Google Stock Fell 10% on AI Search Ads Slowdown While Meta Gains

Google's stock price dropped more than 10% after its Q3 earnings call last month, driven mostly by a major slowdown in search advertising growth. The culprit, according to the company's own disclosures, is Google's AI Mode cannibalizing traditional search ads. The losses are flowing straight to Meta, where six advertisers and agency executives told The Information they have shifted budgets after concluding their Google spend was no longer delivering results.

The contrast between the two companies is structural. Meta has invested heavily in new AI products, including its recently launched Muse agent, but those products do not compete with Meta's core ads business. Google's AI Mode, by contrast, sits directly on top of the search inventory that generates the bulk of its revenue.

What does this change for advertisers?

Practitioners face a supply problem on Google before they face a performance problem. "I want to give Google more money," Nicholas Verity, CEO of B2B lead gen company Cleverly, told The Information. He said Google could not make proper use of his $2,000-a-day budget because too few people were seeing or clicking on his ads.

Google is responding on the data side. A person familiar with the matter told The Information that Google is partnering with Hightouch to give advertisers better access to customer data. Better data access, however, does not resolve the core complaint from advertisers: they cannot get their ads in front of enough people.

Chatbot ad inventory is multiplying

Brands want to test ads inside AI search, and the platforms have rushed to build that inventory within the past month:

• ChatGPT announced "visual ads" a month ago, which appear during the waiting period after a user requests an image. Search Engine Land reports these ads are now appearing.
• Google announced multi-turn ads for AI Mode last month, surfacing sponsored results as users ask follow-up questions. Search Engine Roundable confirms they are live in the wild.
• Google also fulfilled an October pledge: AI Mode ads are now available in more than 10 global markets.
• Bing Ads has begun showing ads atop responses in Bing AI Mode, formerly Copilot Search, and within AI Overviews.
• Yahoo Scout, Yahoo's ad-supported agentic search chatbot, has just exited beta.

All of that rolled out within a single week, signaling how quickly AI search inventory is scaling.

The next video pivot may punish publishers

Digital publishers got burned during the first pivot to video in the mid-2010s, when Meta was found overinflating view numbers. The shift to vertical video proved more durable. TikTok's pandemic-era growth pushed Meta Reels and YouTube Shorts to follow, forcing even publishers that avoided TikTok to produce vertical video.

The format worked because it prioritized a stripped-down, authentic viewing experience over polished production. Publishers positioned their reporters as news influencers, struck marketing partnerships with established influencers, and used vertical video to clip podcasts, which surged in popularity after the pandemic.

The Verge reports that platforms are now experimenting with longer formats to drive deeper engagement and insert more ads. YouTube is developing full-length shows with creators, and Instagram is testing a 90-minute horizontal video product called Features. Longer-form video carries higher production costs, so this iteration, effectively pivot 3.0, may not prove as publisher-friendly as the vertical era.

In brief

• FedEx will change its practices and pay a $3 million fine after California privacy regulator CalPrivacy accused it of misleading customers. FedEx claims it did not sell or share personal data but used it for contextual ad targeting.
• OpenAI launched a self-serve Business Hub in beta, letting brands manage their information and access analytics on how people engage with them in ChatGPT, according to Adweek.
• TikTok Shop introduced a paid membership tier that includes order delivery, Modern Retail reports.
• The Online News Association is pausing in-person events and will not host a conference next year, citing shrinking professional development and sponsorship budgets.
• Samsung Ads appointed Nelson Boyce as SVP of ad sales. Operative hired Brian Beirne as senior VP of commercial growth. OneRail named Amit Batra as SVP of supply chain and Nathan Rucker as SVP of strategic growth and partnerships.

With AI search inventory now live across at least five platforms and Google's ad growth slowing at the source, the next quarter of earnings calls will show whether chatbot formats can replace the revenue the traditional search box is losing.