More Searches Than Ever. Fewer of Them Reach Your Business.

Alphabet reported its third quarter on October 28, and two statements from the call belong in one sentence. Sundar Pichai said the year over year query growth rate is the highest it has been in five years. Chief business officer Philipp Schindler then explained part of the slowdown: "the strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode."

Google concedes AI Mode monetizes lower, without naming a comparison or a dollar figure. I run SEO and local campaigns for about 40 clients at First Rank, and if your business runs on Google search traffic and AI referrals, that gap lands on your desk.

The numbers, in one place

Search and other revenue reached $63.35 billion, up 12%, nearly flat against the second quarter's $63.27 billion. The growth rate has fallen two straight quarters, from 19% to 17% to 12%. Outside arithmetic on Alphabet's releases puts the quarterly gain at about $80 million, against $2.38 billion in the same step a year earlier.

AI Mode passed one billion monthly users per Google's Q2 remarks, and AI Overviews passed 2.5 billion monthly users around I/O in May. This call's one billion milestone was the Gemini app.

One number never appeared. The release and the call gave no count of clicks sent to websites, a figure Google talked gladly about a quarter ago.

Why your referral traffic keeps thinning

Schindler said Google is scaling ads within AI Overviews and AI Mode to more users and more queries, with multiturn ads rolling out in the United States and AI Mode ads expanding to ten more markets, Canada among them. Every existing Search, Shopping, and Performance Max campaign is eligible for those placements by default, with no separate opt out.

Pichai framed the sequence: build the best Search user experience first, monetization follows. Schindler also noted that the majority of AI Mode queries are incremental. Google says sponsored and organic product listings inside AI Mode already earn similar click through rates, citing its own internal US data from two weeks in late August and early September. Treat it as a claim under test.

Every query settled inside the answer is a visit that never reaches your site. Sponsored slots inside answers will multiply because Google's margin depends on it. Organic presence inside those same answers is allocated from business data and page content. Profile facts, review text, and service pages decide it.

The AI referral stream outside Google is real, and smaller than the hype. A study of 145 million sessions that I broke down last week on dalindegraff.com found ChatGPT sent 0.62% of Google's traffic and converted at 13.8% against Google's 3.02%. Worth winning, and far too thin to replace a slide in Google referrals. That is why this call's missing clicks number matters more than any user count.

Reddit writes the answer and loses the visit

One day later, Reddit reported its own quarter, and the two calls belong together. Revenue rose 53%. Chief executive Steve Huffman told investors search referrals fell by more than one million on average each week during October. His words: "Google is crawling us as hard as ever, so the demand hasn't changed from their point of view either. The reality is, the AI mode does not drive traffic, not for us and not to anybody." Reddit warned daily users could fall by a low double digit percentage this quarter if referral traffic keeps falling. The stock fell 18% in extended trading and more than 25% at Friday's open.

Peec AI's analysis of 30 million citations ranks Reddit as the most cited domain across ChatGPT, AI Mode, Gemini, Perplexity, and AI Overviews, and Reddit licenses its data to Google and OpenAI. Reddit's threads help compose the answer people read. On Huffman's own account, that answer surface does not send traffic back to anybody.

For your business, the trade is now explicit. Strangers discussing your category on Reddit shape what the AI answer says about you, even on days Reddit sends you nothing. Read those threads, answer honestly under your own name, and treat what they say as part of your storefront.

What this means for a local business

Local searches carry the highest intent of all. A near me search, a price question, an opening hours check, and a booking request get answered from a Google Business Profile, review text, and the facts on the business's own pages. The website visit becomes optional. The call, the direction request, and the booking carry the value.

I saw this shift early with a Winnipeg therapy clinic whose calls grew 300% through local SEO. Those calls start as questions an assistant can now answer in place. If the answer names your clinic, quotes your services accurately, and offers a booking path, the conversion survives the missing click. If it names a competitor with cleaner profile data, no click comes back to save you.

For Canadian owners, AI Mode ads reaching Canada mean a competitor can buy position inside an answer your profile earned organically. Those placements arrive by default for existing campaigns and report blended with everything else. Judge them on cost per call or booking. Click through rate on a surface designed to remove clicks will mislead you.

Universal Cart put checkout inside Search, and Connected Apps put services themselves inside the answer. A completed task inside the answer is inventory Google can sell around.

What I am changing on client accounts

Five changes, all cheap.

First, treat the Google Business Profile as the source document the answer reads. Services named the way customers search for them, prices the business can stand behind, hours and attributes current, photos recent. Gaps in that profile are gaps in the answer.

Second, keep one official page per service with the facts an answer needs: what the service includes, a price range, proof, and a booking path that needs no hunting. I made the same case when Google began testing official pages as the cited source.

Third, run reviews like an input you work every week. The answer summarizes sentiment from review text. Ask at the moment of service, answer every review, and fix the recurring complaint reviews keep naming, because the summary will repeat it.

Fourth, change the headline metric. Report calls, bookings, and direction requests weekly, split AI referrals out in analytics so ChatGPT, Perplexity, and Gemini visits show as their own line, and log a fixed panel of money queries to record whether the business is cited, linked, or able to complete the task.

Fifth, plan budgets on outcomes as the paid and organic lines blur in reporting. When Google blends AI Mode placements into standard campaign reports, booked jobs are the unit that survives the blend.

Search demand is growing at its fastest rate in five years, and the share of it that reaches your website keeps shrinking. A business that feeds the answer clean facts, current prices, real reviews, and a way to act stays inside the surface where its customers finish their questions. That is where I am putting client budgets this quarter.