Google has begun showing advertisements within its AI-powered responses, bringing new meaning to how content is delivered and monetised in the search engine environment. With AI Mode and AI Overviews now featuring sponsored placements, this shift reshapes not just Google Search itself, but also how users find information, how advertisers compete, and how publishers retain organic traffic.
As more users interact with structured answers rather than traditional blue links, this change could affect every part of the digital advertising ecosystem—from programmatic advertising platforms to affiliate marketing. This article provides a deep dive into what’s changing, how it impacts different stakeholders, and what marketing pros need to know about the next phase of online advertising.
A Brief Look at Google’s Evolving Search Experience
Over the past two years, Google has been expanding its AI-powered search tools. Search Labs has been instrumental in testing features such as the Generative Experience and Deep Search—capabilities designed to help users resolve complex queries more efficiently.
AI Mode, in particular, marks a departure from traditional search formats. Instead of surfacing a simple list of results, it responds with an AI-generated answer, mimicking conversational interactions. These AI-powered responses include direct links to content publishers and allow users to continue the dialogue with follow-up questions.
Alongside AI Mode is AI Overviews—summaries of information generated from high-quality content across the web. These appear above organic search results, especially in response to complex questions or topic-based search queries. The idea is to reduce friction in the user experience by delivering relevant content faster.
But with fewer people scrolling to organic results or clicking through to external websites, the stakes for publishers and advertisers are higher than ever.
Where and How Ads Are Now Appearing
As of May 2025, Google Ads now appear in both AI Mode and AI Overviews for users in the United States, with international expansion—including English-language ads in the UK—expected later this year. These ads can show up in two ways:
1. Contextual Integration in AI Mode
For example, if a user types a search query like “How to start a podcast?”, they may see an AI-generated step-by-step guide embedded with promotional content from audio editing platforms or podcast hosting services. These are labelled as “Sponsored” and may include video assets, Native Banners, or links from advertisers.
The ads are embedded naturally into the AI-generated response, making them feel more like part of the conversation than standalone advertising banners.
2. Ad Placement in AI Overviews
These ads typically appear underneath the summary, both on desktop and mobile. They’re linked to Search campaigns, including Performance Max and Shopping formats. Brands running ads with broad match keywords may find their content automatically eligible for this new format.
Advertisers don’t need to set up separate campaigns for AI placements. However, the difference between advertisers who are proactively adapting their strategies and those who are not will become increasingly apparent as adoption rates climb.
Google’s Business Model: Ad Revenue Meets AI
Advertising accounts for the majority of Google’s income. In Q1 2025 alone, Alphabet generated $66.89 billion from ads—with Google Search being the largest contributor. As user behaviours shift towards AI-powered search and content consumption patterns become less linear, Google must protect the value of its digital ad space.
By embedding ads directly into AI-powered responses, Google retains monetisation across changing formats. While Performance Max campaigns and broad match keywords still power much of this ad delivery, Google is experimenting with how Demand-Side Platforms and Supply-Side Platforms will interact with these newer surfaces.
“Search is becoming more conversational, and that means the ads must follow,” said Google Ads product liaison Ginny Marvin during a recent webinar. “We’re aligning our formats to match user preferences and evolving buying tools.”
It’s also a strategic move. With competition from OpenAI, Perplexity, and Microsoft’s Copilot growing, Google cannot afford to fall behind in AI-driven search results—especially when those results are tied to multi-billion dollar revenue models.
User Concerns: Trust, Transparency and Commercial Influence
As sponsored content appears more prominently in responses, users are beginning to question the reliability of the results they see. A recent CivicScience poll revealed that more than a third of U.S. adults are less likely to trust brands using AI-generated advertising.
Three key concerns have surfaced:
- Transparency: Can users easily distinguish between AI-generated answers and ads from advertisers?
- Relevance: Will these ads match the search query’s intent or feel like a generic pitch?
- Bias: Could advertisers indirectly influence the AI’s structured answers?
Although ads are marked “Sponsored,” the way they blend into AI responses raises new questions about the boundary between helpful content and promotional content. If a platform like Google AI answers a product-related question with what appears to be advice—when it’s actually an ad—users may feel misled.
Some marketing pros argue that transparency can be improved by offering clearer visual separation or enhanced labelling within the AI-generated responses.
Implications for Publishers: Traffic and Revenue at Risk
For traditional publishers and content creators, the rise of AI-powered search poses a new threat: reduced visibility and organic traffic.
Before these AI experiments, the value exchange was straightforward—Google indexed a page, displayed it in results, and referred traffic through a direct link. Now, those same pages may be summarised, paraphrased, or quoted in AI-generated answers—with users never needing to leave the search engine.
Add advertising into that mix, and publishers are effectively competing with the same platform that indexes their content.
Independent media outlets, affiliate marketing sites, and educational blogs may feel this acutely. If their articles are used as source material for AI Overviews, but monetised by Google Ads with no compensation, the result could be a net revenue loss.
“We’re fuelling the AI but seeing fewer visitors,” one publisher noted. “We’ve invested in high-quality content, only to be bypassed in the search journey.”
So far, there’s been no indication that Google plans to introduce a revenue-share model for content surfaced in Overviews or AI Mode. That’s concerning for the future of the open web.
A New Opportunity for Advertisers?
Advertisers, meanwhile, have reasons to be optimistic. As AI-driven answers take up more real estate at the top of the page, ads shown in these areas may outperform traditional search formats in conversion rates and engagement.
Key advantages include:
- High-quality traffic: Ads within AI Mode appear when users are actively engaging with a complex query.
- Early entry in the buying process: Ads can appear before a user even navigates to a landing page.
- Native feel: The integration into AI-generated content creates an ad experience that feels part of the discovery journey.
Campaigns using Performance Max, Search campaigns, and Shopping formats can already benefit from this. While placement transparency and performance tracking are still developing, advertisers see potential in these experimental surfaces.
Asset Studio and new programmatic advertising formats may eventually allow more tailored creative, including video ads, audio advertising, or even agentic checkout solutions embedded directly in the search flow.
Debunking Common Misconceptions
AI answers are unbiased by default
While Google AI is designed to provide factual information, introducing ads could introduce subtle biases—especially when product comparisons or commercial topics are involved.
Only U.S. users are affected
Although the rollout started in the United States, global expansion is on the roadmap. The UK and other English-speaking regions are expected to see AI-powered search ads in the second half of 2025.
AI ads are optional for advertisers
If you’re running Performance Max or broad match campaigns through Google Ads, your content may already be appearing in AI Mode or Overviews—even if you haven’t specifically opted in.
Industry Trends and Competitive Context
Google is not alone in testing how AI and online advertising intersect.
- Perplexity AI added sponsored responses in 2024, including affiliate links and banners.
- Microsoft Copilot piloted embedded ads but paused expansion following mixed feedback.
- OpenAI may introduce monetisation via ads in future iterations of ChatGPT.
The digital advertising space is shifting, and every major tech platform is experimenting with how to monetise AI search. Whether through direct advertising, programmatic systems, or integrated checkout flows, the search bar is no longer just a list of links—it’s becoming an interactive storefront.
Expert Opinions
“Search has changed before, but not like this. We’re moving towards intent-based advertising layered into natural conversations,” said Rand Fishkin, co-founder of SparkToro.
“These changes demand a rethink of how publishers measure traffic sources. Organic search is no longer guaranteed visibility,” added Barry Schwartz, founder of Search Engine Roundtable.
“If marketers don’t update their strategy now, they’ll fall behind in understanding how users interact with the new AI surface,” commented Aleyda Solis, SEO consultant.
What This Means in Practice
For Users
Expect AI-generated answers to include sponsored content. Be aware of labelling, especially when planning purchases. It’s important to distinguish genuine recommendations from paid suggestions.
For Publishers
Diversify your traffic sources. Relying solely on Google Search could put your revenue at risk. Affiliate marketing, social networks, and direct subscriptions may help maintain audience reach.
For Advertisers
Test AI placements now, while adoption rates are still building. Monitor performance tracking closely, and experiment with Native Banners, video assets, and adaptive content strategies tailored to complex questions.
Looking Ahead: The Future of Search and Advertising
The shift to AI-powered search, combined with embedded advertising, marks the start of a broader transformation in digital content property monetisation.
As Google adapts its platforms, others will follow. Whether via banner ads, video formats, or affiliate links, advertising in search is becoming more integrated, more conversational, and more tailored to user behaviours.
But the balance between utility and promotion is delicate. Transparency, control, and fairness—especially for content publishers—will remain central to whether this model thrives or alienates its core users.
Conclusion
The decision to monetise AI-powered search through embedded advertising represents a significant move in Google’s long-term strategy. As the lines between helpful content and promotional content blur, every player—users, advertisers, and publishers—must adjust their expectations and tactics.
The next phase of digital advertising is already here. And it’s powered not just by keywords, but by prompts, intent, and a reimagined understanding of the search experience.
About Search Engine Ascend
Search Engine Ascend is your source for insightful analysis across SEO, search technology, and digital marketing trends. Our mission is to help businesses understand the complexities of digital platforms, optimise their marketing strategy, and stay ahead in an AI-powered search ecosystem. Whether you’re building campaigns, creating high-quality content, or navigating traffic analytics, we’re here to help you make informed decisions.
