The AI paradox: How Meta's ad business is benefiting from artificial intelligence, but Google is suffering

Alphabet’s search ad revenue missed expectations as greater use of AI Mode contributed to slower growth. Meta reported $63.1 billion in ad revenue, with AI helping improve ad creation, targeting and engagement. Google says longer AI-powered queries could create new monetization opportunities.

Last week, Google's parent company, Alphabet, reported disappointing results in the core business of search advertising. Revenue from ads came in at $82 billion, missing expectations of $83.4 billion.

Chief business officer Philipp Schindler attributed ‌a larger-than-expected deceleration in search advertising growth to greater use of AI Mode, a chatbot interface for the search engine with which the company is still experimenting with ads. Google would begin rolling out advertisements in AI Mode to international markets, Schindler told a conference call.

Google vs Meta ad revenue

In contrast, another tech giant, Meta, the parent company of Facebook, Instagram and WhatsApp, reported $63.1 billion in advertising revenue in the third quarter.

While Google remained slightly ahead in terms of ad revenue, Mark Zuckerberg’s social media juggernaut is closing in on the search engine behemoth on its core business. The trend has been in favour of Meta for the past few years, and in April this year, it was reported that the social media company was on track to dethrone Google in digital advertising revenue globally by the end of 2026.

What worked for Meta

In a post on X, Simon Smith, EVP of Generative AI at Klick Health, the Canada-based

health marketing agency noted that Meta's ad business benefits from AI and Google's search ad business suffers from it.

According to him, Meta benefits from AI by having:

Generating better ads for businesses that perform better

Better match those ads to users

Better algorithms keeping people on platforms longer

“All of this makes advertising on Meta platforms more valuable, which in turn leads businesses to bid more and spend more on ads there,” Smith added.

Bobins Vayalil Abraham