Google revenue shift reaches 90% as network advertising faces decline

Google's advertising revenue distribution has reached a historic milestone, with 90% of revenues now flowing to the company's owned properties rather than through publisher partnerships for the first time in over a decade. According to industry analysis following Alphabet's July 23, 2025 earnings announcement, Network advertising revenues declined 1% year-over-year to $7.4 billion during Q2 2025, marking a concerning trajectory for millions of websites dependent on Google's advertising ecosystem.

The shift represents a fundamental transformation in digital advertising economics. Network advertising, encompassing AdSense, AdMob, and Google Ad Manager, traditionally provided crucial revenue streams for content creators worldwide by placing contextual advertisements alongside publisher content. However, artificial intelligence features increasingly retain users within Google's search interface rather than directing traffic to external websites where Network advertisements generate revenue.

Jason Kint, president of Digital Content Next, highlighted the acceleration of this trend on August 7, 2025. "Just updated data in light of eye-popping acceleration of 'zero-click' searches as Google's AI Overview scheme captures web traffic. I've been watching G's ad revenue mix shift from network (publishers) to its own properties for over a decade. It just hit 90% for first time," Kint posted on social media.

The Mountain View-based technology company reported total advertising revenues of $71.3 billion in Q2 2025, representing 10% year-over-year growth. While Google advertising chief Philipp Schindler characterized this as "robust growth across the company," the distribution reveals strategic changes significantly impacting third-party publishers who participate in revenue-sharing arrangements.

AI Overviews now serve over 2 billion monthly users according to CEO Sundar Pichai, often satisfying user intent without requiring clicks to external websites. "We know how popular AI Overviews are because they are now driving over 10% more queries globally for the types of queries that show them," Pichai stated during the earnings call. This query increase doesn't translate proportionally to publisher traffic, creating what industry analysts term "the great decoupling" between search engagement and website visits.

Platform-controlled inventory commands premium pricing

Google's emphasis on Demand Gen campaigns represents a deliberate strategic shift impacting Network revenue distribution. Rather than directing advertiser spending toward third-party publisher websites through traditional Display campaigns, Demand Gen routes investment toward YouTube, Discover, and other Google-owned surfaces where the company controls both user experience and revenue capture entirely.

YouTube advertising demonstrated this controlled environment advantage, reaching $9.8 billion in Q2 2025 with 13% year-over-year growth. "YouTube saw similar performance across verticals. Its 13% growth in advertising revenues was driven by direct response, followed by brand," Schindler reported. The YouTube performance occurs within an environment where Google maintains complete oversight of content recommendation, user engagement, and advertising placement without requiring external publisher cooperation.

Connected TV advertising within YouTube showed particularly strong momentum, with "YouTube ads viewed on CTV screens drove over one billion conversions" in the past 12 months according to Schindler. QR code integration, direct shopping capabilities, and seamless conversion tracking demonstrate technical advantages that controlled environments enable but Network advertising cannot match across distributed publisher networks.

Google Search and other revenues reached $54.2 billion during the quarter, marking 12% growth despite fundamental changes in result presentation that reduce traditional website visits. "Search and other revenues delivered growth across all verticals with the largest contributions coming from retail and financial services," CFO Anat Ashkenazi reported. The search advertising growth benefits from increased query volume driven by AI features, but this usage doesn't proportionally benefit publishers participating in Network advertising programs.

Publisher traffic reduction documented across studies

Independent research consistently demonstrates traffic reductions contradicting Google's assertions about AI feature benefits. Analysis from Ahrefs revealed that AI Overviews reduce organic clicks by 34.5% when present in search results. The study examined 300,000 keywords, comparing clickthrough rates for top positions with and without AI Overviews present.

For standard informational keywords, average position-one clickthrough rates dropped from 0.056 in March 2024 to 0.031 in March 2025. AI Overview keywords experienced even more pronounced declines, falling from 0.073 to 0.026 during the same period. Additional research published by Tracy McDonald examining approximately 10,000 keywords showed organic click-through rates dropping from 1.41% to 0.64% year-over-year, marking a 54.6% decrease.

IAC's Dotdash Meredith reported during Q1 2025 earnings that AI Overviews "appear on roughly a third of search results related to DDM's content" and publishers "see a little performance decline on those pages." The company experienced a 3% year-over-year decline in core user sessions, which CEO Neil Vogel attributed partially to "weakening referral traffic from search platforms."

Economic implications extend beyond advertising

The Network advertising revenue decline represents only direct impact on publisher monetization. Secondary effects include reduced audience engagement opportunities, decreased content production capabilities, and diminished competitive positioning relative to platform-controlled content sources.

Publishers traditionally relied on Google Search traffic to build audience relationships extending beyond individual page visits through newsletter subscriptions, social media follows, and direct website bookmarks. As AI features satisfy user intent without requiring website visits, publishers lose opportunities to establish ongoing audience connections essential for sustainable business models.

Travel bloggers Dave Bouskill and Debra Corbeil watched traffic plummet 90% after AI Overviews began reproducing their content, including their Canadian slang. "I do feel betrayed by Google," Bouskill stated, with Corbeil adding: "Betrayed, that's the word." The couple eventually stopped updating their blog The Planet D, which they had operated since 2008.

Food blogger Giselle McBride, whose HouseOfNasheats.com site generates recipe content, reported display advertising revenue dropped 65% resulting in tens of thousands of dollars in lost income. Google has begun testing a recipe feature that summarizes food bloggers' content directly in search results, offering direct compensation that Marc McCollum, chief innovation officer at media company Raptive, described as "not nearly enough to offset declines in their advertising revenue."

Marketing community adapts to fundamental changes

The advertising performance distribution across Google's properties reveals deliberate strategic choices prioritizing platform control over ecosystem distribution. Marketers increasingly recognize that Google's AI features serve platform objectives potentially conflicting with traditional publisher revenue models.

Performance Max campaigns, which Google positions as the default campaign type, operate through automated inventory selection prioritizing YouTube, Shopping, and other owned surfaces over Network placements. While these campaigns can include Network inventory, algorithmic optimization naturally favors platforms where Google maintains greater control over user experience and conversion attribution.

Smart Bidding Exploration, described as "the biggest update to bidding strategy in a decade," enables automated campaign optimization systematically favoring higher-performing inventory. "Campaigns using Smart Bidding Exploration see a 19% increase in conversions on average," according to Schindler. This optimization inherently directs spending toward Google's owned properties where conversion tracking capabilities exceed those available through third-party publisher websites.

Major news organizations have characterized Google's AI Mode as "the definition of theft" that threatens fundamental economics of digital publishing. "Links were the last redeeming quality of search that gave publishers traffic and revenue. Now Google just takes content by force and uses it with no return, no economic return," stated Danielle Coffey, President and CEO of the News/Media Alliance.

Future trajectory suggests continued pressure

Google's investment priorities indicate continued emphasis on AI capabilities retaining users within platform-controlled experiences rather than directing traffic to external websites. The company's increased capital expenditure guidance to $85 billion reflects infrastructure development supporting AI feature expansion rather than traditional search traffic distribution.

"We expect 2026 to be the year in which people kind of use agentic experiences more broadly," Pichai stated when discussing AI agent development. These agentic experiences operate autonomously within Google's ecosystem, suggesting further traffic retention impacting Network advertising revenue.

The company's approach to AI Mode monetization indicates future advertising integration occurring entirely within Google's interface. "Just like we are doing with AI Overviews and with AI Mode over time, we'll be able to bring very good commercial experiences there as well," Pichai explained. This monetization strategy provides no revenue opportunities for external publishers while potentially reducing traditional search traffic further.

Industry consolidation accelerates amid traffic challenges

Business Insider eliminated 21% of staff citing traffic sensitivity affecting 70% of the company's revenue model. According to CEO Barbara Peng's memo, "We're at the start of a major shift in how people find and consume information, which is driving ongoing volatility in traffic and distribution for all publishers."

Multiple publications have shuttered operations entirely as consumer information consumption habits shift across platforms and distribution channels. At least three sites whose publishers attended Google's creator summit have ceased operations, with significant declines documented across 67 small publisher sites spanning multiple categories.

The power imbalance between Google and individual creators has become so pronounced that many publishers invited to participate in Google's recipe pilot program felt they had little choice, according to Lisa Bryan, author of health-food site Downshiftology. "The big fear is that Google is severing the relationship that we have with our communities and our audiences," Bryan observed.

Enterprise advertising adoption shows particular momentum in platform-controlled environments where conversion tracking and audience targeting capabilities exceed those available through distributed publisher networks. The democratization of sophisticated advertising tools primarily benefits campaigns operating within Google's owned inventory rather than external publisher websites.

Connected TV advertising success demonstrates how controlled environments enable innovative advertising formats difficult to implement across distributed publisher networks. YouTube Shorts achieved significant monetization improvements during the quarter, with important implications for publisher competition. "In the U.S., Shorts now earn as much revenue per watch hour as traditional instream on YouTube. And in some countries, it now even exceeds in-stream's rate," Pichai announced.

The visual search capabilities through Lens exemplify traffic retention dynamics clearly. "The majority of Lens searches are incremental and we are seeing healthy growth with shopping queries using Lens," Schindler reported. While these shopping queries might traditionally drive traffic to e-commerce websites, Google's integration of product information and purchasing capabilities directly within search results reduces external website dependencies.

Timeline

• July 23, 2025: Google reports Network advertising revenue decline to $7.4 billion amid AI feature expansion
• July 17, 2025: Google completes June 2025 core update with continued ranking volatility affecting publisher traffic
• June 30, 2025: Google begins June 2025 core update creating additional publisher traffic challenges
• May 29, 2025: Business Insider cuts 21% of staff citing traffic sensitivity affecting 70% of revenue model
• May 25, 2025: Dotdash Meredith reports AI Overviews impact with 3% session decline in Q1 earnings
• May 24, 2025: Major publishers condemn Google AI Mode as theft following expanded US rollout
• May 21-22, 2025: Google announces AI advertising features including AI Overview advertising competing with publisher inventory
• April 20, 2025: Ahrefs study reveals AI Overviews cut organic clicks by 34.5% despite company claims
• April 7, 2025: Google's AI search overhaul decimates website traffic for independent publishers
• March 5, 2025: Google expands AI Overviews introducing features reducing publisher website visits

Key terminology and concepts

Network Advertising: Google's distributed advertising program encompassing AdSense, AdMob, and Google Ad Manager that places advertisements on third-party publisher websites and mobile applications. This revenue stream declined 1% to $7.4 billion in Q2 2025, representing a fundamental shift away from traditional publisher monetization models. Network advertising traditionally provided crucial revenue for millions of websites worldwide by enabling contextual advertisement placement alongside publisher content, but AI-powered search features increasingly retain users within Google's ecosystem rather than directing traffic to external sites where Network ads generate revenue.

AI Overviews: Google's artificial intelligence-powered feature that provides comprehensive responses directly within search results, now serving over 2 billion monthly users across more than 200 countries and territories. Powered by advanced language models, AI Overviews drive 10% more queries globally for applicable search types while often satisfying user intent without requiring clicks to external websites. This functionality represents a fundamental challenge to traditional publisher business models that depend on search traffic, as users obtain complete answers within Google's interface rather than visiting websites where they might encounter advertising or engage with publisher content.

Publisher Traffic: The flow of users from Google Search to external websites, which forms the foundation of Network advertising revenue and traditional digital publishing economics. AI features increasingly reduce this traffic by providing answers directly within search results, creating significant challenges for publishers who depend on website visits for advertising revenue, audience development, and content monetization. The systematic reduction in publisher traffic affects not only immediate advertising revenue but also long-term audience relationship building, first-party data collection, and content production sustainability across the digital publishing ecosystem.

YouTube Advertising: Google's video advertising platform that generated $9.8 billion in Q2 2025, representing 13% year-over-year growth within a controlled environment where Google maintains complete oversight of content, user experience, and advertising placement. YouTube's success demonstrates the advantages of owned inventory over distributed Network advertising, with Connected TV advertising showing particular strength and Shorts achieving monetization parity with traditional video formats. The platform's growth contrasts sharply with Network advertising decline, illustrating Google's strategic preference for controlled advertising environments over external publisher revenue sharing arrangements.

Search Advertising: Google's core advertising business that generated $54.2 billion in Q2 2025 with 12% year-over-year growth, encompassing advertisements displayed alongside search results and within Google's search interface. While search advertising continues growing, the integration of AI features fundamentally alters how users interact with search results, often providing complete answers without requiring website visits that traditionally supported publisher monetization. The search advertising growth masks significant challenges for external publishers as AI-enhanced results reduce traditional click-through patterns while maintaining advertiser investment in Google's platform.

Demand Gen Campaigns: Google's advertising campaign type that prioritizes YouTube, Discover, and other Google-owned surfaces rather than directing advertiser spending toward third-party publisher websites through traditional Display campaigns. This strategic emphasis reflects Google's preference for higher-margin advertising inventory where the company controls both user experience and revenue capture without requiring revenue sharing with external publishers. Demand Gen represents a deliberate shift toward walled garden advertising environments that systematically redirect marketing investment away from distributed publisher networks toward platform-controlled inventory.

AI Mode: Google's experimental end-to-end artificial intelligence search experience that achieved over 100 million monthly active users in the United States and India, designed specifically for longer and more complex questions that traditional search methods handle less effectively. AI Mode operates entirely within Google's interface, providing comprehensive conversational search experiences that eliminate the need for external website visits. This feature represents the future direction of search interaction, where users engage in extended information-seeking sessions within Google's ecosystem rather than browsing multiple websites, further reducing traffic opportunities for publishers participating in Network advertising programs.

Connected TV Advertising: YouTube's television-based advertising format that drove over one billion conversions in the past 12 months, demonstrating the platform's effectiveness in premium video advertising environments. Connected TV advertising enables innovative formats like QR code shopping integration and direct conversion tracking that would be difficult to implement across distributed publisher networks, showcasing the technical advantages of controlled advertising environments. This advertising category represents YouTube's competitive strength against traditional television broadcasters while providing advertisers with digital precision targeting combined with television-scale reach, capabilities that external publishers cannot match through Network advertising programs.

Platform-Controlled Inventory: Advertising placements within Google's owned properties like YouTube, Search, and Discover where the company maintains complete control over user experience, content presentation, and revenue capture without requiring external publisher cooperation. This inventory type provides superior conversion tracking, audience targeting, and creative format flexibility compared to distributed Network advertising placements on third-party websites. Google's strategic emphasis on platform-controlled inventory reflects broader industry trends toward walled garden advertising environments that prioritize predictable user experiences and comprehensive data collection over the distributed, less controllable nature of traditional publisher networks.

Revenue Distribution: The allocation of Google's advertising revenues between Network advertising (shared with publishers) and owned properties (retained entirely by Google), which has shifted dramatically over the past decade to reach 90% owned properties versus 10% network for the first time in 2025. This distribution pattern reveals strategic priorities favoring controlled advertising environments over external publisher partnerships, with implications extending beyond immediate revenue sharing to encompass traffic flow, audience engagement, and competitive dynamics across the digital advertising ecosystem. The revenue distribution shift correlates directly with AI feature deployment that systematically reduces external website visits while expanding engagement within Google's controlled interfaces.

Summary

Who: Google's Network advertising segment, representing millions of publishers worldwide using AdSense, AdMob, and Google Ad Manager, experienced revenue decline while Google's owned properties grew under advertising chief Philipp Schindler's strategic direction.

What: Network advertising revenues declined 1% to $7.4 billion in Q2 2025, contrasting with Search advertising growth to $54.2 billion (12% increase) and YouTube advertising growth to $9.8 billion (13% increase), as Google's revenue mix reached 90% owned properties versus 10% network for the first time.

When: Performance covers the quarter ended June 30, 2025, announced during the July 23, 2025 earnings call, representing continued pressure on publisher revenue models amid expanding AI feature deployment throughout 2025.

Where: Global Network advertising decline affects publishers across all markets, while YouTube demonstrates particular strength in Connected TV advertising and Google Search maintains growth across retail and financial services verticals through AI-enhanced experiences.

Why: AI Overviews, AI Mode, Lens search, and other platform features increasingly satisfy user intent without requiring external website visits, systematically reducing traffic that generates Network advertising revenue while Google prioritizes owned inventory through Demand Gen campaigns and automated optimization tools favoring platform-controlled experiences over distributed publisher ecosystem participation.