Google starts testing new ad formats in AI Mode and Search: How are they different and what it means for users

Google has begun public testing of several new artificial intelligence (AI)-driven ad formats within its traditional search results and its “AI Mode” as the company moves to monetize generative AI traffic into sustainable advertising revenue, a report has said.

“In a world where AI provides a direct and conversational response, will users still find value in ads? Our answer is, it’s definitely yes, but you have to rethink how to approach ads and what an ad is,” The Wall Street Journal quoted Shashi Thakur, vice president and general manager of Google search ads as saying.

Google’s new AI advertisement formats: How they work

The new ad formats are designed to appear naturally alongside AI-generated content. According to Google, the primary updates include:

Conversational discovery: This format uses Google's Gemini models to build custom advertisements on the go. The AI pulls text, imagery and product details directly from a brand’s website and marketing assets to match the specific context of a user’s prompt.

Highlighted answers: In this type of ads, highly specific product explanations generated by Gemini will be featured and it will be using a company’s internal documentation, directly answering user queries.

Direct offers: These ads display targeted discount codes and promotions. Initially introduced exclusively within AI Mode, Google is now expanding Direct Offers to standard search results.

Business agent for leads: Testing natively within traditional search results, this tool embeds a miniature AI chatbot directly inside a standard advertisement, allowing users to ask questions about a product or business without leaving the search page.

According to Google spokeswoman, regardless of how integrated the copy appears, every new format will be clearly labeled with the word “Sponsored.”

The next step: Bringing ads to Gemini

For now, these advertisements will remain restricted to Google Search and AI Mode; they will not appear inside the standalone Gemini consumer app. However, industry analysts view this public test as a clear pilot program for a broader rollout.

Google Chief Business Officer Philipp Schindler said during the company's recent earnings call that while the current focus remains on AI Mode, Google believes successful formats will eventually transfer over to the standalone Gemini app.

This development comes as digital ad landscape shifts rapidly. Researchers predict that Meta Platforms, the parent company of Instagram and Facebook, could soon overtake Google as the world's largest digital advertising seller, largely due to its automated campaign tools. Meanwhile, OpenAI has been testing ads inside ChatGPT since February.