A new generation of ads for the AI era of Search

Google is leveraging its Gemini models to transform advertising in Search, particularly within the new AI Mode, which already helps 75% of users make faster, more confident decisions. Two new ad formats are being tested: Conversational Discovery ads, which dynamically generate creative responses to specific user queries (e.g., how to make a home smell like a spa), and Highlighted Answers, which integrate relevant ads into AI-generated recommendation lists. Both formats include an independent AI explainer to provide transparency and build trust, while remaining clearly labeled as 'Sponsored.'

Beyond AI Mode, Google is rolling out AI-powered Shopping ads that automatically pull the most relevant products and generate custom explainers based on user searches (e.g., espresso machines). The Business Agent for Leads feature allows users to interact with a smart chatbot directly within an ad, turning static forms into dynamic conversations for lead generation.

The Direct Offers pilot, which has already seen success with brands like Chewy and L’Oreal, is expanding with three key upgrades: promotional bundling (using Gemini to create optimized deal combinations), native checkout integration for UCP merchants to streamline purchases, and travel expansion (partners like Booking.com and Expedia can surface offers within AI-assisted trip planning).

For ad ops decision-makers, these developments signal a shift toward hyper-personalized, conversational, and transparent advertising that blends seamlessly into the search experience. The emphasis on independent AI explanations helps mitigate consumer skepticism, while features like Business Agent for Leads promise higher engagement and conversion rates. Advertisers should prepare to supply detailed product data, guardrails, and promotional flexibility to leverage these formats effectively.