The future of search has arrived in AI mode on Google Search, where users now encounter sponsored results alongside AI-generated answers. This development marks the end of the ad-free experience that users had until recently enjoyed.
Ads in Google’s AI Mode
Industry observers first noticed sponsored cards labeled “Sponsored” appearing within AI Mode, particularly for service-related queries like local HVAC repair. These ads appear not only in Google’s experimental Labs interface but also in the regular Search experience, indicating a broader rollout beyond initial testing. The ad layout complements the AI response, showing a synthesized answer first, followed by native-style sponsored cards that resemble organic results rather than traditional blue-link ads.
Reasons for Advertising in AI Mode
Monetization in AI-powered search was inevitable, as advertising remains Alphabet’s primary revenue source. Given the high computational costs of generative AI at scale, integrating ads into AI Mode helps align the business model with Google’s mainstream Search product. Google has previewed this approach by running ads within AI Overviews on mobile and introducing AI-specific ad formats during recent marketing events. AI Mode now extends monetization into a chat-like, task-oriented search experience designed to simplify user interactions.
How AI Mode Ads Work with Google’s Ad Auction
The combination of retrieval and generation in AI Mode changes the context for Google’s ad auctions. Instead of competing for traditional search result positions, ads vie for placement in a curated module beneath the AI-generated answer. This shift raises questions about how factors like Quality Score, query intent, and relevancy are evaluated when the “page” effectively becomes an AI summary. The format is particularly suited for Local Services Ads and lead-generation campaigns for service and local queries, while commerce-related ads leverage Merchant Center data and product images to inform ad selection.
Impact on Advertisers and SEOs
Click-through rates (CTR) may fluctuate initially as users adapt to the new layout. Since AI responses appear first, fewer users may scroll, making the ads that do appear potentially more valuable due to higher intent. Measurement strategies should differentiate between users who find answers directly from AI responses and those who click ads, using new Google metrics for impressions and AI engagement. For SEO, AI Mode favors content that is easily summarized, fact-checked, and authoritative. The presence of ads alongside organic results means paid competition now coexists in AI-native surfaces, potentially accelerating zero-click searches and enhancing the strategic importance of brand visibility in AI snippets and adjacent ads.
User Trust and Policy Considerations
Clear labeling is crucial to maintain user trust. Regulators like the US FTC and UK ASA emphasize transparency and anti-deceptive design, making the “Sponsored” label a baseline expectation. However, placement and visual prominence will determine if users can clearly distinguish ads from AI-generated answers. Accuracy is equally vital, as hallucinated AI responses paired with sponsored cards could confuse users. This scenario underscores the need for robust safety systems and truthful advertiser claims. Industry experts warn that blurred boundaries between content types can erode trust, subjecting AI Mode’s new layout to intense scrutiny.
What to Expect Next
Google’s rollout is currently cautious, with ads limited to service-heavy queries appearing below AI answers and mimicking organic card designs. Nonetheless, future experiments may include ads placed higher in the module, richer commerce cards, or interactive features like appointment booking or lead capture directly within the AI interface. Advertisers should begin testing AI-specific placements and creative formats, while SEOs should focus on optimizing content for extractability and attribution. Monitoring how this evolving ad space shifts user attention within search results will be essential moving forward.
