Google says its AI-powered advertising tools are starting to deliver meaningful results, including big revenue gains for some marketers, as it tests how ads work in AI-driven search.
Big picture. Fears that AI chatbots like ChatGPT would disrupt Google’s core search business have not materialized, and instead the company’s ad business continues to grow, suggesting that AI may augment the way people search rather than replace it.
In numbers:
- Alphabet Inc. exceed $400 billion in revenue by 2025.
- Q4 ad revenue: $82.28 billion (+13.5% YOY).
- YouTube Ads: $11.38 billion (+~9% YOY).
What’s going on. Google is embedding ads into its AI-powered search experience, including AI Mode powered by Gemini, while introducing new ad formats designed for conversational questions and tools that allow brands to shape how they appear in AI-generated responses, with a new “business agent” feature that allows companies like Poshmark and Reebok to control how their products are represented.
Driving results. AI-driven campaigns like Performance Max and AI Max match ads with more detailed search intent and conversation, and Google says that queries in AI mode are often two to three times longer than regular searches, giving the system more context to connect users with the right products, as seen with Aritzia, which reported an 80% increase in revenue after adopting AI Max.
How does this work. The system scans a retailer’s website and creative assets, translates user intent into conversational questions, and dynamically aligns products and messages in real time. This is even more important considering that 15% of daily searches are completely new (according to Google) and cannot be predicted using common keywords.
Why do we care. Google is moving from keyword-based ads to intent-driven, AI-powered advertising, meaning campaigns can reach consumers with greater precision at the moment they’re ready to buy. As search becomes conversational and unpredictable, marketers who rely on traditional targeting risk following those using AI-driven formats that automatically adapt to new user behavior.
Zoom in on the image. Google is testing new formats such as “direct offers,” which deliver personalized promotions when users indicate purchase intent, using Gemini to analyze conversational context and behavior, with brands such as Elf Beauty, Chewy and L’Oréal participating in early trials.
Commerce push. Google is also improving its commerce strategy with the Universal Commerce Protocol developed with Shopify, which allows purchases to take place directly between AI conversations.
Yes, but. Google isn’t alone in testing AI search ads, and early results across the industry have been mixed, with Amazon reportedly seeing limited traction from ads on its AI shopping assistant, OpenAI continuing to test monetization models, and Perplexity AI starting to eliminate ads after a lot of hard work.
What they sayGoogle positions itself as a “matchmaker” rather than a marketer, emphasizing that AI helps deliver more relevant and personalized ads while allowing brands to maintain control over their messaging and build user trust by showing the right product at the right time.
What’s next. Google says it has no current plans to launch ads directly on Gemini but will continue to explore and expand advertising within AI Mode, including personalized offers and AI-driven shopping experiences.
Bottom line. AI is not replacing search but reshaping it, and for Google that change is making advertising more conversational, more targeted and, in some cases, more profitable.
Celebrate deeply. Google says its AI-powered ads are helping some brands increase online sales by 80%.
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