AI Search Behavior Challenges Google’s Advertising Model
For years, Google has been one of the most important channels for colleges and universities to reach prospective students. But as AI changes how people search, it’s also changing how institutions are discovered, how advertising works, and how marketers measure success.
Google’s latest earnings offer a revealing look at just how significant that shift has become.
Following its latest earnings announcement, Google’s parent company, Alphabet, saw its stock plunge 12.6%, wiping approximately $500 billion from its market value in a single day. One contributing factor? A larger-than-expected slowdown in Google’s search advertising business, driven in part by its own AI Mode search experience.
The company that built one of the world’s most successful advertising businesses around traditional search is now seeing that model challenged by the AI-powered experiences it’s introducing.
It was Google’s own acknowledgment that AI Mode contributed to the slowdown, noting conversational search experiences currently generate less advertising revenue than traditional search.
At the same time, Google reported its strongest year-over-year search query growth in five years.
People are searching more, yet advertising revenue isn’t growing at the same pace.
As users increasingly ask complex questions and receive answers directly within AI-powered search experiences, fewer interactions may translate into traditional ad clicks. Google’s earnings demonstrate that this shift is significant enough to affect its core business.
Higher Education Is Already Experiencing the Shift
While Google’s earnings may have captured Wall Street’s attention, the underlying changes in search behavior have been visible across higher education for some time.
Carnegie’s analysis of approximately 100 institutions found that organic search’s share of total website users declined from 46% to 35% year over year, while overall website traffic fell approximately 20%.
 Our Next Gen Learners research also found that 49% of students said they engaged with AI-generated summaries as part of their college search, before exploring other search results.
These findings reflect a shift from a search-and-click journey to a research-and-visit journey.
Students are increasingly researching institutions within AI-powered experiences, then visiting websites later through branded searches or down funnel searches. What we’re seeing is that traditional analytics may be crediting that final visit without capturing AI’s influence on the student’s initial awareness and consideration.
That means for higher education marketers, traditional traffic and attribution metrics no longer tell the full story.
Google’s Hand Has Been Forced to Evolve Paid Search
Google has already begun adapting its advertising technology through AI Max for Search, which is a paid search functionality that uses automation to dynamically show search ads in conversational experiences like AI Mode and AI Overviews.
At Carnegie, we’ve been actively testing AI Max for Search across higher education campaigns for more than a year. While these capabilities create new opportunities, institutions still have limited visibility and control over how their campaigns participate in AI-powered search.
Institutions leveraging AI Max still lack the detailed reporting needed to understand when, where, and how their ads appear within AI Mode and AI Overviews, along with how those placements perform independently of traditional search.
With Google’s revenue growth now feeling the effects of AI search, the pressure to improve these capabilities has increased.
Advertisers need more than additional ad placements. They need greater transparency, more robust targeting, and reliable performance measurement.
AEO Is No Longer Optional
As Google continues to evolve its advertising capabilities, higher education marketers also need to consider how their institutions appear in AI-generated search results.
When prospective students ask AI tools about colleges, programs, costs, or career opportunities, the answers they receive can shape which institutions they explore further. And because these experiences often provide information directly within the response, students may begin forming impressions of an institution before ever visiting its website.
That’s where Answer Engine Optimization (AEO) comes in.
AEO builds on traditional SEO to improve how institutions are discovered, represented, and cited across platforms like Google AI Mode, ChatGPT, and Perplexity.
AI search often consolidates information into conversational responses, highlighting a smaller set of institutions. If an institution isn’t included, it risks missing an opportunity to influence a student’s consideration before they ever visit its website.
As more of the student research journey happens within AI-powered search, institutions have an opportunity to build visibility and influence consideration earlier in the process, even when those interactions don’t lead directly to a website visit.
Earn the Answer, Own the Ad
Google’s latest earnings announcement reinforces an important point. The future of search marketing isn’t a choice between paid advertising and organic visibility. It’s about bringing both together.
The opportunity is to earn the answer and own the ad.
AEO builds visibility within AI-generated answers, while paid search captures demand with targeted messaging and a direct path to action. Together, paid search data and AEO insights help institutions identify visibility gaps, understand student intent, and make smarter investment decisions.
As search continues to evolve, institutions must move beyond traditional rankings, ads, and website clicks to evaluate their presence across the entire student journey.
The goal is to be visible when and where students search and ask, across paid and organic experiences, and turn that visibility into meaningful enrollment outcomes.
Be Discoverable Wherever Students Search
As student search behavior evolves, institutions need a coordinated approach to building visibility and driving enrollment outcomes. Carnegie’s AI Search approach brings AEO and paid search together around shared priorities, using visibility and performance insights to continuously optimize where and how institutions reach prospective students.
Ready to rethink your institution’s search strategy? Start a conversation with Carnegie about improving discoverability and performance across AI-powered search.
