PPC in October 2026: ads enter AI Mode, and the defaults switch on

On 16 October our mid-month analysis described paid search as a market in which the keyword gives way and the answer takes ads, with Google's automation arriving before the controls to steer it. The second half of the month made both halves of that sentence concrete. Google reported its third quarter and said, in so many words, that AI Mode earns less per query than classic search. The same day it announced ads in AI Mode for ten more countries and ads in follow-up questions in the US. And across Google, OpenAI and Meta, the month's changes arrived the same way: switched on, with an opt-out.

This analysis covers October as a whole. It starts with the money, then follows the inventory — AI Mode, AI Overviews and ChatGPT — then the defaults, the other platforms, costs, and policy and rulings. It ends with our reading and with what to watch in November. Where something is our interpretation rather than a measurement, it says so.

The quarter: growth slowed, and Google said why

Alphabet reported on 28 October. Demand was not the problem. Sundar Pichai wrote that "our year-over-year query growth rate is the highest it’s been in the last five years", that "Queries in AI Mode are on average three times longer than traditional searches", that "one in five AI Mode searches globally use voice, images, or documents", and that the Gemini app "is now at one billion users".

The money moved the other way. PPC Land reports Search revenue of $63.4 billion, with growth slowing to 12% from 17% in the second quarter, and total ad revenue of about $82 billion, up 10.5%. In the second quarter Search and other had been $63.27 billion, so the line was roughly flat from one quarter to the next. On the call Philipp Schindler named exchange rates first — "First, there was FX. It was the single largest driver of search deceleration relative to Q2" — and then AI Mode.

That sentence answers, partly, the first item on our mid-month watch list. Google still gave no revenue figure for AI Mode ads, no paid clicks and no cost per click. But it is the first time the company has tied a slowdown in Search to the economics of its AI surface. More queries, longer queries, and less money per query is the shape advertisers had suspected; now it is on the record.

The rest of the industry reported in the same fortnight. The growth rates are not like for like — Google Search is one product line, Microsoft's figure excludes traffic acquisition costs, and Amazon's, Meta's and Reddit's cover their whole ad businesses — but side by side they show where the quarter's growth went.

Three details matter more than the ranking. Amazon's slowdown, to $19.64 billion and 10.9%, is a calendar effect by its own account: it blames "timing anomalies" after Prime Day moved into the second quarter and says: "We expect year-over-year advertising revenue to grow in the high teens in fourth quarter 2026." Microsoft's search and advertising revenue excluding TAC grew 12%, per Search Engine Roundtable; in July Amy Hood had guided to mid-single-digit growth for the quarter. Meta reported $63.06 billion of advertising revenue, up 26%, on 21 October — the same day a New Mexico judge set a $25 billion penalty that Meta will appeal.

Reddit grew fastest and carries the clearest warning. Its ads rose 54% to $847 million, but growth has slowed for three quarters while daily users stayed at 130.3 million, and its letter to shareholders names the cause it can see: "During October, we have seen that search traffic has dropped by more than 1 million referrals on average per week." For a platform whose audience arrives partly from Google, the AI answer above the results is a supply problem before it is an ad problem.

AI Mode becomes inventory

At mid-month Google had published no country list and no separate reporting for ads in AI Mode. By the end of the month it had a country list, a new ad type and two tests that widen what an AI Mode ad can know about the user. Reporting is still not separate.

The month opened with sightings. On 30 September Brodie Clark spotted a "sponsored products" grid that looks almost exactly like the organic product grid it replaces, and on 2 October an AI Mode ad with sitelinks appeared. On 17 October The Keyword reported that Google is testing ads in AI Mode for users of Personal Intelligence, the feature that connects Gmail and Google Photos — an experience that, citing Search Engine Land, it noted had been ad-free at launch. Google's help page says "Ads will not be based directly on your Gmail inbox or your Google Photos library", but that summaries and inferences drawn from that information "may be used to show you ads". On 27 October Search Engine Journal reported that Google's privacy policy now allows this, in a test for Performance Max, Shopping and broad-match Search.

Then the expansion. On 28 October Shashi Thakur, who runs Search ads at Google, announced ads in AI Mode for "Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines, and Singapore", with "Brazil, Mexico, and the United Kingdom" among the locales planned for the fourth quarter. In the US Google is launching multiturn ads: "To allow ads in follow-up queries in AI Mode, we are launching multiturn ads in the U.S." On 29 October Search Engine Roundtable showed an experiment mixing sponsored and organic products in one Shopping unit in AI Mode; Google said "All sponsored listings are labeled".

That is Google's whole case to advertisers, and it comes without a number. It also sits awkwardly beside Schindler's sentence: if sponsored and organic items click alike, the lower monetisation he described has to come from somewhere else — fewer ad slots per query, lower prices, or queries that carry no ads at all. Google did not say which.

Multiturn ads are the conceptual change. An ad on a follow-up question is an ad on a query the user never typed into a search box as such; it inherits the conversation. Combined with Personal Intelligence signals and broad match, that moves AI Mode further from a keyword auction and closer to an auction on context. For an account manager it means the query report can explain less of where a click came from.

Classic Search did not stand still either. On 26 October Google published a help page for AI review summaries in Search ads — "These summaries are positive only" — on Google.com Search campaigns in English in the US, Australia, the UK and India. From 15 October US shoppers can keep items from many stores in one Universal Cart in Search, including AI Mode, and in the Gemini app. And the canvas these ads sit on is now mostly an AI answer: Semrush counted AI Overviews on 88% of 400 commercial keywords in August 2026, 97.08% weighted by search volume, with ecommerce rising from 32.62% to 85.11% in a year.

ChatGPT: a month of building, and a default

OpenAI spent October turning a fast-growing ad product into a fuller ad platform. The context is the run rate it announced on 31 August — $1 billion annualised in under 200 days — and a footprint of more than 60 countries since 23 September.

The first public performance figures arrived on 29 September. Graphite, using Similarweb panel data across nine markets, measured clicks per exchange that carries an ad, meaning one user message and ChatGPT's reply. The markets where ads launched later click more; the US, where they began, sits below 1%. In the same report B2B SaaS took 19.9% of US ad impressions between 30 March and 4 August, across 1,210 advertisers.

Then came the tooling, roughly a release a week:

• 30 September: bulk creation of product-feed campaigns from a spreadsheet.
• 5 October: a US test, later in the month, of visual ads shown while ChatGPT generates an image, with new measurement partners.
• 14 October: an advertiser posted an OpenAI email introducing a "ChatGPT Ads Account Manager" with biweekly check-ins.
• 16 October: a 404 Media investigation, reported by MobileSyrup, found that advertisers can target users by email address, phone number and unique Android identifiers, alongside "context hints" based on topics and keywords. OpenAI said the data is deleted after 24 hours and that a list must hold more than 25,000 users; the ads-personalisation opt-out still allows ads based on the current chat.
• 22 October: Search Engine Journal summarised OpenAI's account of the ad system: a separate orchestrator model writes queries and checks eligibility before an auction, the system can use earlier turns of the conversation, and an ad that wins the auction can still be dropped by a relevance check afterwards.
• 26 October: a text-ad format with a "Learn more" link was spotted, and Juozas Kaziukėnas reported that some ChatGPT ads are bought through Amazon DSP, inferred "because the click target URL goes through Amazon's click-tracking server".

The change with the most consequence for advertisers came by email on 20 October. OpenAI switched on "creative enhancements" for new and existing self-serve campaigns: the system can rewrite or add headlines and descriptions, translate ad text, resize images and change the destination URL to what it judges a more relevant page on the advertiser's site.

The start date depends on which OpenAI page you read: the email says 30 October, the help page as PPC Land read it on 21 October says 29 October. One toggle, marked Beta, covers all four kinds of change; neither source describes a way to allow translation but forbid a different landing page, nor reporting by version.

Read together, the month describes an auction that reads the conversation, targets customer lists, can be bought through a third-party DSP and rewrites the creative by default. That is the full kit of a mature performance platform, assembled in about eight months. What has not arrived is evidence that the clicks are getting better: our sources report no update to Graphite's US figure and no published result from the visual ads test.

October was the month of defaults

In our mid-month analysis the pattern was "automation first, controls later". In the second half of October it sharpened into something more specific: new behaviour arrives on, and the advertiser's control is an opt-out. The table lists what switched on, or was announced to switch on, during the month.

Automated promotions opened the month. From 12 October Google Ads began finding promotions on advertisers' websites and applying them to Search and Performance Max ads, on by default for accounts with location assets and no promotion assets.

Channel prioritisation is a real control with a contested default. Announced on 14 October and rolling out progressively from 15 October, it replaces on/off network targeting: each channel is set to High or Low priority, Google spends on High first, within the target when tCPA or tROAS is used, and a Low-priority channel can be capped at a daily share of the budget "on a best-effort basis". In Search campaigns, Google Search, Search partners and the Display Network are set separately.

The criticism from practitioners was about the starting point. Every channel starts at High, so Display no longer gets the lower priority it used to have inside Search campaigns. Google's own advice for keeping today's behaviour after the February 2027 migration is to set the Display Network to Low with a 50% allocation, and it warns that the migration may shift spend. Budget allocation is not yet supported in Demand Gen, manager accounts, the API or Editor.

ChatGPT's creative enhancements followed on 20 October, as above. Performance Max image extraction was announced on 21 October for campaigns created from 4 December: Google's AI scans landing pages for high-resolution images and can serve them across Search, YouTube, Display, Discover, Gmail and Maps, and the account-level "Dynamic images" switch no longer decides it for new campaigns. API users get a warning worth repeating: the campaign's automation settings are an array that is "replaced" rather than merged on update, so opting out without re-sending the other entries can clear them. Meta's on-device conversion counting, reported on 28 October, takes effect on 12 November: "Advertisers who do not want it have to opt out."

Not every October change went one way. Google rewrote its Smart Bidding learning documentation to say the Learning status lasts at most seven days, and that budget, target, creative and targeting changes do not restart it; a new strategy, a change in what it covers or a change of goal do. A "Save asset group changes as an A/B test" toggle was spotted in Performance Max on 21 October. Lead form scoring lets advertisers mark up to 12 qualified answers per question. Customer lifecycle goals widened on 26 October: High Value acquisition now works in Shopping, and Re-engagement, Loyalty and Retention-only modes are rolling out across Performance Max, Search and Shopping. And Google Ads API v26, released on 14 October, adds read-only Search Lift reporting with 15 new metrics, with the API now shipping two releases a month.

Two promises from earlier in the year were still open at the month's end. Our 4 October digest found no announcement that the forced move of Search campaigns to AI Max had finished on 30 September, and the unified AI Max report from search term to asset to landing page still had no date beyond "later this year". The digests that followed reported neither.

Microsoft, Meta and Amazon: controls, counting and terms

Microsoft's October update, published 28 October, reads like a list of what Google advertisers ask for. "Age and gender targeting is now generally available on Performance Max." Device targeting "is rolling out to all advertisers in the coming weeks", and audience exclusions "are now in open pilot". Advertisers can "provide up to 40 guidelines to help steer generated copy and protect your brand", and search term landing page reporting "is rolling out to advertisers starting mid-November." Our reading: Microsoft is giving its Performance Max steering that Google offers only in part, which makes it a reasonable place to test budget while its search ad line grows at 12%.

Meta changed how it counts and what it may read. The on-device conversion setting, "Measure conversions on customer devices", lands about two weeks before Black Friday. The same PPC Land piece carries a Resemble AI scan of 37,768 Facebook and Instagram ad files from 509 companies: 3,379, or 8.9%, were flagged as AI-generated or manipulated, and only two of them mentioned AI in the ad copy. Resemble sells detection software, so the flag rate is its tool's verdict. Separately, Meta's revised Commercial Terms and Self-Serve Ad Terms let it crawl websites associated with businesses that use its products. After criticism it removed the word "train" from the clause, keeping "provide, develop, improve, research, and maintain advertising and business products", and on 26 October moved the start date from 30 October to 20 November. The crawl clause is still in both documents. For advertisers the practical reading is that accepting Meta's ad terms is also a decision about Meta's access to your site.

Amazon turned up inside someone else's assistant: some ChatGPT ads are bought through Amazon DSP. That is one practitioner's inference, not an announced programme; if it holds, Amazon is acting as a route into AI-assistant inventory rather than only selling its own.

Costs: what October measured, and what it did not

October did not bring the cost benchmarks we expected at mid-month. Our sources for the month carry no third-quarter CPC or CPA figures from Tinuiti or Skai, so the first measure of the 17 August change to target-obeying bidding and of the AI Max migration is still to come. The last reliable picture is the second quarter's: Google Search cost per click up 1% year on year, non-brand text up 4%, Microsoft Ads CPC up 19% and Meta CPM up 10%, per Tinuiti; WordStream and LocaliQ's annual average search CPC across industries is $5.42.

What October did measure is the value of the traffic around the ads. Marie Haynes, on 21 October, looked at 12 months of GA4 data across 100 websites and more than 145 million sessions: "sessions from ChatGPT amounted to just 0.62% of the volume driven by Google Organic." ChatGPT visitors converted at 13.8% against 3.02% for Google organic, but Google "still drove 96.5% of the total conversions across all channels analyzed". seoClarity estimated on 28 October that ChatGPT's search-like activity is "approximately 7.5% of Google's search-query volume" — a model built on OpenAI's own message data, not a measured count.

Our reading: assistant traffic is small and valuable, and ChatGPT's ad prices will be argued from that conversion rate. Google's admission that AI Mode monetises lower points the other way — toward cheaper inventory per query, or fewer ads per query, inside the surface that is growing fastest. Until Google reports AI Mode separately, an advertiser's own incrementality tests are the only way to price either.

Policy and rulings

October's policy changes were narrow but dated. Financial services verification in Google Ads expanded to the US and Canada on 20 October. On 22 October Google's help page began to say it will "pause ads on Google properties and networks globally for advertisers based in Russia". On 27 October Google rewrote its child safety (CSAE) ads policy to cover AI-generated content, enforced from 11 January 2027. From 30 October Google allows personalised alcohol ads on YouTube where local law permits, with Poland, Egypt, India and Indonesia excluded. And on 19 October WebKit said Safari 27 blocks network access to third parties that turn email addresses into persistent tracking IDs, which bears on every customer-list and identity product — including the email-based targeting reported in ChatGPT three days earlier.

The courts moved on the edges of advertising. On 30 September, in a ruling reported on 1 October, Judge Amit Mehta dismissed Penske Media's and Chegg's federal antitrust claims over AI Overviews, finding no agreement in which Google promised traffic. On 29 September Google appealed to the EU General Court against the Digital Markets Act decisions requiring it to share search data with rivals by January 2027. In the US ad tech case, Judge Brinkema's remedy takes effect 60 days after the final judgment is signed; none of our October sources reported one, so the clock had not started by the end of the month.

What it adds up to

This section is our reading, not a measurement.

• Google has now priced the trade-off, in words. Queries are growing at a five-year high and Search revenue barely moved between quarters; Google named AI Mode's lower monetisation as one reason. Expect Google to close that gap with more ad inventory per conversation — multiturn ads, mixed product units, personal signals — rather than fewer AI answers.
• The unit of buying is becoming the conversation. Multiturn ads, ChatGPT's orchestrator that reads earlier turns, and Personal Intelligence data all describe an ad matched to context the advertiser never wrote a keyword for. Broad match and AI Max are the entry tickets, which is why Google has pushed them.
• Defaults are the new release notes. The defaults table lists seven changes announced or started in October that take effect unless refused, from automated promotions to Meta's device-side counting. The account manager's first job each month is no longer optimisation; it is inventory of what changed without being asked.
• Controls are real but arrive half-built. Channel priorities, Microsoft's Performance Max targeting and the Smart Bidding learning rewrite are genuine steering. Each came with a gap — a High-for-all default, a pilot, a missing API — and the AI Max report is still undated.
• AI ad inventory is growing faster than its evidence. Ten new AI Mode markets and a ChatGPT platform with a full kit, against a US ChatGPT click-through below 1% and a Google CTR claim without a number.
• Measurement is moving to the advertiser. Search Lift in the API, Meta changing its count, Safari blocking email IDs and AI Mode hidden inside Search all push the same way: what you can prove from your own data and experiments is what you can defend in a budget meeting.

What to watch in November

• 12 November: Meta's on-device conversion counting goes live. Watch reported conversions against your own orders through Black Friday.
• 20 November: Meta's revised Commercial Terms and Self-Serve Ad Terms take effect, with the crawl clause. Check whether the wording changes again before then.
• Mid-November: Microsoft's search term landing page reporting starts rolling out.
• AI Mode ads in Brazil, Mexico and the UK, which Google plans for the fourth quarter, and any first separate reporting for AI Mode.
• ChatGPT: whether creative enhancements produce version-level reporting, whether the visual ads test reports results, and whether the Amazon DSP route becomes an announced programme.
• Q3 cost benchmarks, the first that can show the effect of the August bidding change and the AI Max migration.
• The ad tech final judgment, which starts the 60-day clock on Judge Brinkema's remedies.
• 4 December is not November, but campaigns built in November for the holidays will be the last Performance Max campaigns created before image extraction switches on.

How assistants describe a brand next to the ads they show is the other half of this picture; our brands analysis covers it, and Brandscope reads it for one brand at a time.

Sources

Every claim above is dated and linked. Where a number comes from a measurement rather than an announcement, whoever measured it is named.

• Alphabet Q3 2026 earnings: CEO remarks — Google, 28 October 2026
• Google's ad growth slows to 10.5% as AI Mode ads go to 10 more markets — PPC Land, 29 October 2026
• Google: AI Mode ads earn less — Search Engine Roundtable, 29 October 2026
• Alphabet Q2 2026 results, exhibit 99.1 — Alphabet, 22 July 2026
• Microsoft earnings: search and advertising — Search Engine Roundtable, 28 October 2026
• Microsoft search ad growth drops to 10% — PPC Land, 29 July 2026
• Amazon ad revenue growth drops to 11% after Prime Day moves to June — PPC Land, 29 October 2026
• Amazon advertising gains 26% to $19.8 billion — PPC Land, 30 July 2026
• Meta's ad revenue gains 26% on the day a New Mexico judge fines it $25bn — PPC Land, 22 October 2026
• Meta reports second quarter 2026 results — Meta, 29 July 2026
• Reddit ad revenue gains 54% to $847m as daily users stall — PPC Land, 29 October 2026
• Ads in AI Mode are expanding globally — Google, 28 October 2026
• Google AI Mode tests sponsored and all products together — Search Engine Roundtable, 29 October 2026
• Google tests a sponsored products block — Search Engine Roundtable, 30 September 2026
• Google Ads sitelinks in AI Mode — Search Engine Roundtable, 2 October 2026
• Google Tests Ads in AI Mode for Personal Intelligence Users — The Keyword, 17 October 2026
• Connect your Google content apps to get a Search services experience that's tailored to you — Google Search Help
• Google privacy policy: connected apps and AI Mode ads — Search Engine Journal, 27 October 2026
• Google Ads AI review summaries help document — Search Engine Roundtable, 26 October 2026
• Google's Universal Cart reaches US shoppers as Meta flips browsing on — PPC Land, 16 October 2026
• AI Overviews commercial modifiers study — Semrush, 21 October 2026
• ChatGPT Ads reaches $1B annualized in 200 days — MediaPost, 31 August 2026
• OpenAI passes 60 countries for ChatGPT ads — PPC Land, 23 September 2026
• ChatGPT Ad CTR Topped 1% In 4 Markets, Not In The U.S. — Search Engine Journal, on Graphite's report, 29 September 2026
• OpenAI ChatGPT Ads Gains Bulk Product Creation, Product Review Status & More — Search Engine Roundtable, 30 September 2026
• OpenAI To Test Visual ChatGPT Ad Format During AI Image Generation — Search Engine Roundtable, 5 October 2026
• OpenAI ChatGPT Ads Account Manager Representatives — Search Engine Roundtable, 14 October 2026
• ChatGPT lets advertisers target you based on your personal info: report — MobileSyrup, on 404 Media's investigation, 16 October 2026
• Inside ChatGPT's Ad Auction: How Relevance, Bids, And Memory Decide Placement — Search Engine Journal, 22 October 2026
• ChatGPT Ads With Learn More Arrow Link; Some Served Through Amazon DSP — Search Engine Roundtable, 26 October 2026
• OpenAI Auto Enabling Creative Enhancements In ChatGPT Ads — Search Engine Roundtable, 20 October 2026
• OpenAI to rewrite ChatGPT ads by default as advertisers get days to opt out — PPC Land, 21 October 2026
• Google Ads To Automated Promotions For Search & PMax Campaigns Soon — Search Engine Roundtable, 5 October 2026
• Guide your campaign spending with new priority and allocation features — Google, 14 October 2026
• About channel prioritization and budget allocation — Google Ads Help
• New Google Ads Controls: Channel Prioritization & Budget Allocation — Search Engine Roundtable, 14 October 2026
• Google Ads' new channel controls: PPC experts praise the power, question the defaults — Anu Adegbola, TheMarketingAnu, 15 October 2026
• Google turns on PMax image extraction by default from December 4 — PPC Land, on the Google Ads Developer Blog post of 21 October 2026
• Performance Max Sourced Videos Become Opt-Out — PPC News Feed, 21 October 2026
• Google Ads Updates Smart Bidding Learning Doc With 7-Day Limit & Best Practices — Search Engine Roundtable, 21 October 2026
• Google Ads New: Save & Test Asset Group Changes — Search Engine Roundtable, 21 October 2026
• Google Ads Lead Form Adds Lead Scoring For Lead Qualification — Search Engine Roundtable, 16 October 2026
• Google Ads expands customer lifecycle goals in Search and Shopping — Search Engine Journal, 26 October 2026
• Announcing v26 of the Google Ads API — Google Ads Developer Blog, 14 October 2026
• Google Ads API v26 adds 15 Search Lift metrics to measure ad-driven searches — PPC Land, 18 October 2026
• New AI Max language and reporting features — Google Ads & Commerce Blog, 23 September 2026
• What's new in Microsoft Advertising this October — Microsoft Advertising, 28 October 2026
• Meta Pixel counts more sales from Nov 12 as AI ads go undisclosed — PPC Land, 28 October 2026
• Meta Drops Training From Its Crawl Clause And Keeps The Crawl — Search Engine Journal, 19 October 2026
• Meta Delays The Terms That Let It Crawl Business Sites — Search Engine Journal, 26 October 2026
• Tinuiti Q2 2026 benchmark highlights — Karooya on Tinuiti, 11 August 2026
• 2026 Google Ads benchmarks — WordStream and LocaliQ, 2026
• Google turns CPA targets into instructions on 17 August — PPC Land, August 2026
• GEO is a distraction — Marie Haynes, 21 October 2026
• ChatGPT vs Google search volume — seoClarity, 28 October 2026
• Google Ads Expands Financial Services Verification To US & Canada — Search Engine Roundtable, 20 October 2026
• Google Ads pauses Russia-based advertisers globally — Search Engine Roundtable, 22 October 2026
• Google Ads child safety (CSAE) policy — Search Engine Roundtable, 27 October 2026
• Personalised alcohol ads on YouTube — Google Ads policy, 3 September 2026
• Safari 27 blocks identity firms that turn email addresses into tracking IDs — PPC Land, on WebKit's post of 19 October 2026
• Penske AI Overviews lawsuit dismissed because 'no formal bargain' struck with Google — Press Gazette, 1 October 2026
• Google Appeals Europe's DMA Mandate To Share Search History Data — Search Engine Roundtable, 29 September 2026
• Judge Brinkema's remedies decision unsealed — AdExchanger, 16 September 2026