Ads in Google AI Mode, Monetization Still Low

Google has just admitted that monetization of ads in AI Mode remains below expectations. Philipp Schindler, Google's Chief Business Officer, made this acknowledgment during the Q3 2026 earnings call on October 29, 2026. Despite this admission, the company continues to expand AI Mode ads to more countries and search scenarios. This decision shows how Google is trying to generate revenue from AI-powered search while facing realistic monetization challenges.

AI Mode is Google's new search feature that uses artificial intelligence to answer user questions directly. Users do not need to click to other websites. The AI answers on the search page itself. This fundamentally changes how people search for information on the internet. Instead of browsing through multiple search results, users get a single comprehensive answer generated by AI.

What Is AI Mode and How It Works

AI Mode represents a significant shift in Google's search strategy. Traditional search results display a list of links that users must click through to find information. AI Mode, by contrast, synthesizes information from multiple sources and presents it as a conversational answer. The feature uses Google's Gemini model to understand queries and generate responses.

The system works by analyzing the user's question, searching across Google's index, and then generating a natural language response. Citations are provided for source material, but the primary experience is the AI-generated answer itself. This approach competes directly with AI-powered search alternatives like Perplexity and ChatGPT search.

Google first announced AI Mode in early 2026 as an experimental feature. It has since been rolled out to more users in the United States and select international markets. The company plans to make it available globally by the end of 2026.

Monetization Still Below Expectations

Philipp Schindler admitted that monetization in AI Mode is still low. This means Google is not yet generating significant revenue from ads displayed within AI Mode answers. The company sees promising results from ad experiments, but the overall revenue contribution remains modest.

This situation creates a classic dilemma for Google. The company wants to provide direct, useful answers through AI, which improves user experience. At the same time, Google needs to sell advertising to maintain its revenue model. Search advertising has historically been Google's primary revenue source, generating tens of billions of dollars per quarter.

If Google displays too many ads in AI Mode, users may feel the experience is cluttered and commercial. If too few ads are shown, Google misses revenue opportunities. The company is currently testing different ad densities and formats to find the right balance.

Google has launched ads in follow-up queries in the United States. When users ask additional questions after an initial AI Mode response, they may see relevant advertisements. This approach integrates ads naturally into the conversation flow rather than displaying them as separate blocks.

Ads Expanded to New Countries

Despite low monetization, Google is not slowing down its expansion plans. The company has launched AI Mode ads in more countries beyond the United States. This includes markets in Europe, Asia, and Latin America. International advertisers can now target AI Mode users in their regions.

For advertisers in Indonesia, this represents a new opportunity. They can target ads to Indonesian users who search for information through AI Mode. However, they must also consider whether AI Mode ads are effective compared to traditional search ads. Early data suggests that click-through rates in AI Mode may differ from traditional search.

The expansion to new countries also means Google is collecting more data about how users in different regions interact with AI-powered search. This data will help the company optimize ad placement and relevance for each market.

How AI Mode Ads Differ from Traditional Search Ads

AI Mode ads differ significantly from traditional search advertisements. In traditional search, ads appear above or below organic search results. They are clearly marked as advertisements with labels such as "Sponsored" or "Ad." Users can easily distinguish between paid and organic results.

In AI Mode, advertisements need to be inserted into the AI's answer. This requires a different creative approach. Advertisers cannot simply write a headline and description. They must consider how their message fits naturally within a conversational AI response.

The user experience also differs. Traditional search ads are clearly visible as commercial content. AI Mode ads are integrated into the answer, which may make them less obvious to users. This integration can be both an advantage and a risk. It may lead to higher engagement, but it could also reduce user trust if advertisements are not clearly disclosed.

Analysis: What This Means for Indonesian Users

For Indonesian users, this development means Google search will increasingly display advertisements within AI Mode answers. When users search for information through AI Mode, they will see ads inserted within the responses. This can be convenient when the ads are relevant, but it can also be annoying if there are too many.

Indonesian users should be aware that not all information in AI Mode answers is organic. Some content may be sponsored. Users need to look for disclosure labels and consider the source of information when making decisions based on AI Mode responses.

Studies show that users tend to trust information that appears in AI responses more than traditional advertisements. This creates new challenges for advertisers who must clearly label sponsored content.

Ad format comparison:

Indonesian businesses also need to consider AI Mode advertising costs. Although costs are still low at this time, costs will increase as more advertisers join the platform. Long-term budget planning is needed for sustainable campaigns.

The expansion of AI Mode ads also means that Indonesian users may see advertisements from both local and international companies. Local Indonesian businesses can target users searching for products and services in Indonesia. International companies can reach Indonesian users interested in global products.

Impact on Indonesian Advertisers

For Indonesian advertisers, AI Mode represents a new advertising channel. Early adopters may benefit from lower costs because competition is not yet intense. As more advertisers join the platform, costs are likely to increase.

Indonesian advertisers should consider several factors when planning AI Mode campaigns. First, they need to create ad content that works within a conversational format. Second, they should monitor performance metrics closely to understand how AI Mode ads compare to traditional search ads. Third, they should consider the user experience and avoid overly promotional content.

Small businesses in Indonesia may find AI Mode advertising accessible because of potentially lower entry costs. However, they need to ensure their landing pages and offers are relevant to users who arrive through AI Mode answers.

Operational Costs and Infrastructure

Running AI Mode is expensive for Google. AI models require significant computation to generate answers. Each user query requires processing power from Google's servers and GPUs. The company must pay for electricity, cooling, and hardware maintenance.

These operational costs create pressure on Google to monetize AI Mode effectively. If advertising revenue does not cover the costs of running AI models, Google may need to adjust its strategy. Options include introducing subscription fees for AI Mode, increasing ad density, or limiting free usage.

For Google's data centers in Indonesia and Southeast Asia, AI Mode adds to the computational load. The company may need to expand infrastructure capacity to handle increased AI query volume. This expansion requires significant capital investment.

What Indonesian Businesses Should Do

Indonesian businesses need to plan their AI Mode advertising strategy carefully. First, they should try AI Mode ads with a small budget before committing to large campaigns. Small-scale testing will help them understand whether this platform is effective for their business.

Second, businesses should create ad content that is relevant and not intrusive. Overly promotional ads may reduce user trust. Content that provides useful information will be better received.

Third, businesses should monitor ad performance regularly. Metrics such as click-through rate, conversion, and cost per click need to be reviewed to determine whether AI Mode campaigns are worth continuing.

Fourth, businesses should not rely on only one advertising channel. AI Mode should be part of a broader marketing mix that includes traditional search ads, social media, and other channels.

Comparison Table: AI Mode vs Traditional Search Ads

Conclusion

Google is still looking for ways to monetize AI Mode effectively. Monetization remains low, but the company continues to expand ads to more countries. For Indonesian users, this means advertisements will become more common in AI-powered search. For Indonesian advertisers, this is a new opportunity that requires testing and careful strategy.

The fundamental question remains: will AI Mode ads generate enough revenue to justify Google's investment in AI search infrastructure, or will users migrate to alternative search experiences with fewer advertisements?