Google’s parent company had a rough day on Wall Street. Shares of Alphabet fell more than 10 percent Thursday after the company reported third quarter results on Oct. 28.
Profit per share came in at $2.12. Analysts expected about $3.01. Revenue reached $127.6 billion, just short of forecasts.
For business owners, the bigger story is what investors are worried about. Many fear artificial intelligence is changing how people search. That change could pull advertising dollars away from traditional Google search.
What the Numbers Show
Google search revenue grew 12 percent in the quarter. Total ad revenue grew 11 percent. That is still growth, but reports described it as a sharp slowdown for the company’s core business.
Meanwhile, Alphabet is spending heavily on AI. The company expects to spend roughly $200 billion this year on data centers, chips and other equipment. That spending pushed free cash flow about $9.1 billion into the red.
There is an irony here. Google Cloud, the division that sells AI computing power to other companies, more than doubled its revenue. The company is making money from AI while also worrying that AI is reshaping its search business.
Part of the slowdown may be coming from Google itself. A senior Alphabet executive told investors Wednesday that the company’s own AI Mode search feature was resulting in fewer ads, according to NBC News. In other words, the more people get answers from Google’s AI, the fewer ads they see along the way.
Why a Main Street Business Should Care
For years, the playbook was simple. Show up on Google, and customers would find you.
That is changing. More people now ask ChatGPT, Google’s own AI answers or other AI tools a question and get one answer back. They may never scroll through a list of links or ads. If your business is not part of that answer, you may not be seen at all.
When a company the size of Google is unsure how this shift will play out, local business owners should not assume the old approach will keep working.
Three Things Local Businesses Can Do Now
Make your business information consistent everywhere. AI tools pull from many sources. Your name, address, phone number, hours and services should match on your website, Google Business Profile, Facebook page and directory listings. Mixed information makes it harder for these tools to trust and recommend you.
Show up where local people already read. AI tools gather information from across the web, including news sites. Being featured or advertising on local news sites puts your business in front of real neighbors. It also strengthens your online footprint.
Do not rely on a single channel. If most of your customers come from one source, a change there can hurt fast. Spread your marketing across search, social media, email and local media. One shift should not knock you off course.
Learn More at the Nov. 12 Workshop
I will be speaking at the Nordonia Hills Chamber of Commerce Coffee and Connections series on Thursday, Nov. 12, from 8:30 to 10 a.m. The topic is how to get found in AI search. Chamber members attend free, and nonmembers are asked for a suggested donation.
Details are at spidercatmarketing.com/blog/nordonia-hills-chamber-hosts-workshop-on-getting-found-in-ai-search. Questions? Email me at julie@spidercatmarketing.com.
Frequently Asked Questions
Why did Alphabet stock drop?
Alphabet missed profit expectations and search ad growth slowed. A company executive said Google’s own AI Mode search feature was resulting in fewer ads. Heavy AI spending also pushed free cash flow negative.
What is Google AI Mode?
AI Mode is a Google search feature that answers questions in a conversational way. Users get a written response instead of a traditional list of links.
How does AI search affect local businesses?
Fewer people may scroll through search results. If an AI tool does not mention your business in its answer, potential customers may never see you.
How can a local business get found in AI search?
Keep your business information consistent across the web. Earn mentions on trusted sites like local news outlets, and use more than one marketing channel.
When is the Nordonia Hills Chamber AI search workshop?
It is Thursday, Nov. 12, from 8:30 to 10 a.m., part of the chamber’s Coffee and Connections series. Chamber members attend free.