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Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) Google is updating its Search ecosystem with Artificial Intelligence (AI) Overviews, AI Mode, and a redesigned ad experience that groups text ads under a single "Sponsored Results" label, allowing users to hide them with a single click.
The changes aim to boost monetization by improving user experience, enabling more consistent ad loads across queries, and increasing click-through rates or click quality. These updates will roll out globally, including for Shopping ads.
Also Read: Google Designated Strategic Player In UK Search And Advertising Market
JP Morgan analyst Doug Anmuth remained Overweight on Alphabet.
Anmuth said Google is evolving its Search ecosystem with the launches of AI Overviews and AI Mode, along with updates to how text ads appear on desktop and mobile. Google now groups text ads under a single "Sponsored Results" label that remains visible as users scroll, and has added a "Hide sponsored results" control that allows users to collapse ads with a single click, the analyst noted.
He highlighted that while hiding ads might initially seem concerning for monetization, testing shows the changes could boost revenue in three ways, including improving user experience and engagement. He referred to making navigation easier and search more satisfying, enabling higher ad load consistency across queries without disrupting users, and increasing click-through rates or improving click quality as ads appear more like top-ranking organic results while reducing low-value clicks.
Google is rolling out these updates globally, and the "Sponsored" label will extend to other ad units, including Shopping ads, Anmuth added.
GOOGL Price Action: Alphabet shares were up 0.59% at $245.58 premarket at the time of publication on Tuesday.
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