Ads pressured to evolve as AI changes Google search

As Google tests weaving ads into its new AI Mode online search it remains to be seen how well marketing messages will be clearly and smoothly worked into results
By Glenn CHAPMAN
As Google races to lead in artificial intelligence, it faces the challenge of making sure the technology doesn't slow its profit-pumping advertising engine.
The internet giant is dabbling with ads in its new AI Mode for online search, a strategic move to fend off competition from ChatGPT while adapting its advertising business for an AI age.
"There's no question that AI is becoming more commonplace as a source for answers," IDC advertising and marketing technology research director Roger Beharry Lall told AFP. "That will inevitably result in a shift in terms of search and the opportunities to promote a brand."
The integration of advertising has been a key question accompanying the rise of generative AI chatbots, which have largely avoided interrupting the user experience with marketing messages.
However, advertising remains Google's financial bedrock, accounting for more than two-thirds of its revenue.
"Google certainly needs to find a way to monetize AI search in the way that it has monetized its past versions of search," Techsponential analyst Avi Greengart told AFP at the tech giant's annual developers conference this week.
A new AI Mode enables conversational interaction with Google during search queries, providing answers in diverse formats, such as video, audio or graphs.
The internet giant said it is testing integrating ads into AI Mode responses, building on insights gained from AI-generated summaries, or "Overviews," introduced to search results a year ago.
These Overviews display comprehensive AI-generated summaries of results above traditional website links and ads.
"The future of advertising fueled by AI isn't coming — it's already here," stated Vidhya Srinivasan, Google's vice president of Ads & Commerce. "We're reimagining the future of ads and shopping: Ads that don't interrupt, but help customers discover a product or service."
Google is extending ads in AI Overviews to desktop in the U.S., following successful mobile implementations.
More than 1.5 billion users see AI Overviews monthly, according to the company.
"Google's doing very good job of adapting," Beharry Lall said. "The move right now is to experiment and to gain traction, just as they have."
Google's aggressive push into generative AI intensifies its competition with OpenAI's ChatGPT, which added search engine capabilities to its popular chatbot.
Google announced it is making AI tools available to streamline the creation of online ads, mirroring similar initiatives by Facebook-owner Meta, Google's primary rival in online advertising.
New features, available in the United States, will enable merchants to leverage AI for effective marketing campaigns and to "power an algorithm capable of targeting new searches and generating additional conversions," Google said.
"AI helps a lot in advertising as far as targeting customers more precisely," Creative Strategies analyst Carolina Milanesi told AFP.
Google should have opportunities to charge for AI tools for ad campaigns, and even for insights from data the tech firm has about its users' lives.
"When you have AI agents doing things for you, those agents are going to need data," Milanesi said. "To get access to that data, you're going to have to pay."
For example, Google knowing the kinds of restaurants or places someone has searched for online would have value for targeting ads, she said.
Making money from AI tools and data could help Google diversify revenue sources at a time when its ad business is under pressure from regulators, according to Milanesi.
"There could be entirely new business models around how a brand connects into those AI results," said Beharry Lall. "In the long run, it's going to be additive and beneficial to Google."
How Google and other platforms make clear the difference between paid messaging and organic results generated by AI "is going to be the $64 million question," Beharry Lall said. "It'll be incumbent on regulatory bodies to develop guidelines," the analyst said.
© 2025 AFP

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Japan Today

5 hours ago

• Japan Today

Europe's lithium quest hampered by China and lack of cash

The 'lithium triangle' formed by Chile, Argentina and Bolivia accounts for nearly half of the world's lithium reserves By Alvaro VILLALOBOS Europe's ambition to be a world player in decarbonized transportation arguably depends on sourcing lithium abroad, especially in South America. Even the bloc's broader energy security and climate goals could depend on securing a steady supply of the key mineral, used in batteries and other clean energy supply chains. But Europe has run into a trio of obstacles: lack of money, double-edged regulations and competition from China, analysts told AFP. China has a major head start. It currently produces more than three-quarters of batteries sold worldwide, refines 70 percent of raw lithium and is the world's third-largest extractor behind Australia and Chile, according to 2024 data from the United States Geological Survey. To gain a foothold, Europe has developed a regulatory framework that emphasizes environmental preservation, quality job creation and cooperation with local communities. It has also signed bilateral agreements with about 15 countries, including Chile and Argentina, the world's fifth-largest lithium producer. But too often it fails to deliver when it comes to investment, say experts. "I see a lot of memoranda of understanding, but there is a lack of action," Julia Poliscanova, director of electric vehicles at the Transport and Environment (T&E) think tank, told AFP. "More than once, on the day that we signed another MoU, the Chinese were buying an entire mine in the same country." The investment gap is huge: China spent $6 billion on lithium projects abroad from 2020 to 2023, while Europe barely coughed up a billion dollars over the same period, according to data compiled by T&E. Lagging investment At the same time, the bottleneck in supply has tightened: last year saw a 30 percent increase in global demand for lithium, according to a recent report from the International Energy Agency (IEA). "To secure the supply of raw materials, China is actively investing in mines abroad through state-owned companies with political support from the government," the IEA noted. China's Belt and Road Initiative funneled $21.4 billion into mining beyond its shores in 2024, according to the report. Europe, meanwhile, is "lagging behind in investment levels in these areas", said Sebastian Galarza, founder of the Center for Sustainable Mobility in Santiago, Chile. "The lack of a clear path for developing Europe's battery and mining industries means that gap will be filled by other actors." In Africa, for example, Chinese demand has propelled Zimbabwe to become the fourth-largest lithium producer in the world. "The Chinese let their money do the talking," said Theo Acheampong, an analyst at the European Council on Foreign Relations. By 2035, all new cars and vans sold in the European Union must produce zero carbon emissions, and EU leaders and industry would like as much as possible of that market share to be sourced locally. Last year, just over 20 percent of new vehicles sold in the bloc were electric. "Currently, only four percent of Chile's lithium goes to Europe," noted Stefan Debruyne, director of external affairs at Chilean private mining company SQM. "The EU has every opportunity to increase its share of the battery industry." Shifting supply chains But Europe's plans to build dozens of battery factories have been hampered by fluctuating consumer demand and competition from Japan (Panasonic), South Korea (LG Energy Solution, Samsung) and, above all, China (CATL, BYD). The key to locking down long-term lithium supply is closer ties in the so-called "lithium triangle" formed by Chile, Argentina and Bolivia, which account for nearly half of the world's reserves, analysts say. To encourage cooperation with these countries, European actors have proposed development pathways that would help establish electric battery production in Latin America. Draft EU regulations would allow Latin America to "reconcile local development with the export of these raw materials, and not fall into a purely extractive cycle", said Juan Vazquez, deputy head for Latin America and the Caribbean at the OECD Development Centre. But it is still unclear whether helping exporting countries develop complete supply chains makes economic sense, or will ultimately tilt in Europe's favor. "What interest do you have as a company in setting up in Chile to produce cathodes, batteries or more sophisticated materials if you don't have a local or regional market to supply?" said Galarza. 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Japan Times

13 hours ago

• Japan Times

Masayoshi Son pitches $1 trillion U.S. AI hub to TSMC and Trump team

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A person familiar with the chipmaker's thinking said that SoftBank's project has no bearing on TSMC's plans in Phoenix. Codenamed "Project Crystal Land,' the Arizona complex represents the 67-year-old SoftBank chief's most ambitious attempt in a career that's spanned numerous bet-the-house bids, thousands-fold-returns and billions of dollars in losses. Son, who's often expressed disappointment in his own legacy, has repeatedly said he means to do everything he can to hurry AI development. SoftBank officials have spoken with U.S. federal and state government officials to discuss possible tax breaks for companies building factories or otherwise investing in the industrial park, including talks with U.S. Secretary of Commerce Howard Lutnick, the people said. The Japanese billionaire is also personally sounding out interest among an array of tech companies, they said. The project has been floated to executives at South Korea's Samsung Electronics, they said. Shares of SoftBank rose 2.7% Friday. TSMC's stock price rose 1.9%, while Samsung's gained 0.5%. Representatives of SoftBank, TSMC and Samsung declined to comment. A Commerce Department spokesperson did not immediately respond to a request for comment. SoftBank's attempts to get businesses investing in a U.S. industrial park follow signs that its campaign alongside ChatGPT-maker OpenAI to raise hundreds of billions of dollars for U.S. data centers is moving slower than initially expected. Crystal Land would need to address crucial details, such as whether there's demand and funding on par with its grandiose scale, to become reality. Son has pulled together a list of SoftBank Vision Fund portfolio companies that might take part in the Arizona manufacturing hub, the people said. SoftBank-backed startups working on robotics and automation technologies — such as Agile Robots — may set up production facilities at the industrial complex, they said. 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The Tokyo-based company has since tapped its T-Mobile U.S. stake, selling roughly a quarter of what it held in March to raise $4.8 billion this month. SoftBank also has net assets valued at ¥25.7 trillion, of which chip designer Arm Holdings makes the single largest portion, allowing it to borrow billions more as needed. SoftBank is exploring project financing for Stargate data centers, a model that could be adapted to a big endeavor like Crystal Land. Common for large-scale infrastructure like oil or gas pipelines, the project finance template would allow the tech investor to raise funding on a project-by-project basis and require less money upfront. Son's restless search for growth has resulted in projects that proceed in fits and starts, making it difficult to gauge how committed he is to any one venture. The billionaire is often goaded by the desire to boost SoftBank's stock price and repay retail investors who've held onto the company's shares from before the dot-com boom and bust, people close to the SoftBank chief have said. Many investors have waited for decades for the stock to regain dot-com bubble levels — something it's flirted with only a few times since 2020. If Son's primary motivation is to clear the way for AI, it may be more cost-efficient to encourage partnerships that link manufacturing expertise with that of AI engineers and specialists in fields from medicine to robotics, and incubating smaller companies, according to Melissa Otto, head of research at Visible Alpha. But pouring cash into data centers may help lower the cost of developing AI applications and spur broader adoption, she said. "He's a long-term thinker, and he takes risks,' Otto said. "It's just too early to tell.'

Asahi Shimbun

a day ago

• Asahi Shimbun

Closed schools find new lives as businesses, research centers

A dome tent stands on what was previously the yard of an elementary school, against the background of the former schoolhouse, at the Glamping & Port Yui lodging facility in Shimada, Shizuoka Prefecture, on April 30. (Tetsuro Takehana) SHIMADA, Shizuoka Prefecture—While the declining birthrate has forced many public schools across Japan to close, some have found second lives as camp sites, artificial intelligence research centers, "senbei" rice cracker factories and more. Hundreds of public schools have closed annually over the last two decades or so, leaving many officials wondering how best to use the campuses. However, efforts to repurpose school facilities face common challenges as well. The now closed Yui Elementary School in Shimada, Shizuoka Prefecture, stands surrounded by idyllic tea fields. On a recent day, 21 tents were lined up on its former schoolyard. In addition to the typical dome-shaped tents, some less-typical tents allow guests to bring their dogs. Glamping & Port Yui, as the 'glamorous camping' facility is called, opened for business in March 2022, roughly a year after the school closed. The reception area is in the former school library, where the lyrics of the school song still hang on the wall. The complex takes full advantage of the school facilities and has become popular for the variety of activities it offers. For example, guests can play basketball and other sports in the gymnasium and learn to make matcha-flavored sherbet in test tubes in the science and home economics rooms. The glamping site is about a 15-minute drive from the Tomei Expressway interchange. Iwa Connect Co., the Shimada-based operator of the complex, has signed a 20-year lease agreement with the city authorities. 'Business hotels account for the bulk of the available accommodations in Shimada,' Iwa Connect President Kazuhiro Fukazawa said. 'There used to be few facilities where families could stay.' Despite the COVID-19 pandemic, Glamping & Port Yui achieved an 80 percent occupancy rate in its first year. The occupancy rate remained close to 70 percent in the summer of its second and third years. About 80 percent of the guests come from outside Shizuoka Prefecture, typically from Tokyo and Aichi and Kanagawa prefectures. A community space on the premises regularly hosts a market where locally grown vegetables and other products are sold. A SECOND LIFE In Miyawaka, Fukuoka Prefecture, the facilities of three closed schools have been transformed into AI research and development centers and other facilities. Miyawaka is located roughly midway between Fukuoka and Kita-Kyushu, about a 40-minute drive from either city. Trial Holdings Inc., a Fukuoka-based discount retailing giant that has a training facility in Miyawaka, approached the city about using the closed schools. The Miyawaka city government spent 1.15 billion yen ($7.98 million) to refurbish the former municipal Yoshikawa Elementary School, which closed in 2017. The AI research and development center opened in the school's facilities in 2021. City officials granted Trial Holdings the right to administer the facilities under a private finance initiative (PFI), which aims to utilize the know-how of the private sector in operating public facilities. The school's classrooms were remade into offices and meeting rooms, which are decorated with flasks, beakers and other classroom items, alongside a map of Japan. A farm produce shop was set up on the school's playground and a farm-fresh restaurant was opened in the gymnasium. Trial Holdings also acquired, this time for a fee, the facilities of two other schools that had closed—another elementary school and a junior high school. They are now being used for research and development on retail and physical distribution methods. 'We hope all this will promote long-term residency in the area,' said an official with the city government's secretarial and policy division. Elsewhere in Japan, other school buildings are finding success in their new lives as well. The former Hokuyo Elementary School in Koshimizu, Hokkaido, has been converted into a rice cracker factory with its own shop attached. The former Imazu-Nishi Elementary School in Takashima, Shiga Prefecture, is now a mushroom farm, while the former Shiina Elementary School in Muroto, Kochi Prefecture, has been transformed into an aquarium, attracting many tourists. DETERIORATION LOOMS School closures have increased due to the extensive municipal mergers of the 2000s. Education ministry figures show an average of 440 schools closed annually during the 20 years through fiscal 2023. The annual number of school closures peaked at 597 in fiscal 2012 and has since been on the decline. Of the 8,850 schools that closed during those two decades, 7,612 had not been demolished as of May 2024. Three-quarters of those school facilities were being used in some way, but 1,951 were in disuse. The former Nagase Elementary School in Nabari, Mie Prefecture, which closed in 2008, became a call center for a major transport company the following year. However, the lease was discontinued in 2023, partly because of the age-related deterioration of the 40-year-old schoolhouse. A survey by the education ministry asked respondents to list reasons that uses for closed school facilities had not been decided upon. 'A lack of requests from local communities,' and 'age-related deterioration of buildings,' were both cited in more than 40 percent of the cases. 'It is essential to enlist the help of the private sector to use closed school facilities effectively so they will not be left neglected as a 'negative legacy,' but will instead be used for regional revitalization,' said Toru Hatakeyama of the Organization for Urban-Rural Interchange Revitalization. Because leaving schools and other public facilities disused presents security risks—possible collapse during an earthquake or crimes such as trespassing—the internal affairs ministry in fiscal 2025 began allowing about half of demolition costs for these buildings to be covered by the central government's local allocation tax. Hatakeyama pointed out that if an effective use cannot be found for these closed school facilities, local governments have no choice but to take responsibility and demolish them. (This article was written by Yoshiko Aoyama, Michiko Yoshida and Yoshinobu Motegi.)