• by Laurie Sullivan  @lauriesullivan, July 22, 2024

Alphabet will release earnings Tuesday, and advertisers plan to listen for information on how the rollout of AI Overview in Search and YouTube will impact businesses.

Advertisers and agencies also will be listening for any update related to a possible acquisition of cybersecurity startup Wiz for roughly $23 billion, with consideration of how that would affect Alphabet's strong movement into other businesses.

Diversifying Alphabet's business means the company can access multiple revenue sources, reducing the dependence on any one revenue stream. It's not clear whether an acquisition like this would put Alphabet in an awkward position to support Google AI Overview.

Tinuiti Research Director Mark Ballard expects earnings to come in with expectations -- to see slower growth -- but this is not necessarily a bad sign.

“I’m seeing performance comps from a year ago getting stronger, rebounding from late 2022 or early 2023,” Ballard says, adding: I’ll be curious to hear about the impact of AI Overviews. Retail has been strong for them, with Google Shopping, and a lot of that has been powered by Performance Max."

Ballard will be keeping an eye on AI Overviews, and says he is “curious to hear about the impact of AI Overviews” on its business. Liz Reid, vice president and head of Google Search, had announced in a May blog post the feature would roll out to all in the U.S., with more countries to follow soon.

Advertisers and agencies are focusing on how consumers overall continue to adapt to AI-driven search and advertising, businesses relate to cloud services, and creators relate to AI in YouTube features.

Tyler Jordan, Jordan Digital Marketing (JDM) CEO, wrote in a note to Media Daily News that he anticipates profit will continue to grow.

“While Google had to pull way back on AI Overviews after the launch in May went poorly, I think in the long term, the bet on AI will pay off,” he wrote. “That will depend in part on whether they can figure out how to monetize AI-generated responses to queries, particularly if OpenAI isn't planning to incorporate ads.”

Jordan pointed to a recent report, which shows only 36% of today's queries go to the open web. Traditionally, 60% of queries have not led to website clicks, he wrote, so AI Overviews has not affected the landscape that much.

“Searchers are still behaving like they did before AI Overviews launched,” he wrote.

Google Search has been a “moneymaker thanks to advertisements” serving up along with results, but it could take time for Alphabet to find a way to build the feature into its AI-powered search results.

The near-terms financial impact on AI Overviews prompted a downgrade in Alphabet stock by Rosenblatt Securities, reports MarketWatch. Microsoft has the same challenges building ads or links and seeing success AI search.