Google says its AI-powered ad tools are delivering measurable results for some brands, as the world\u2019s largest seller of ads experiments with new ad formats, shopping integrations and AI-powered tools.<\/p>\n
The debut of ChatGPT in late 2022 sparked early speculation that AI chatbots were tantamount to \u201cGoogle killers,\u201d<\/a> threatening the company\u2019s main business, Search, which drives about 60% of parent company Alphabet\u2019s revenue. But those fears have yet to materialize.<\/p>\n In 2025, Google generated more than $400 billion in revenue for the first time. Ad revenue totaled $82.28 billion in the fourth quarter, up 13.5% year over year. YouTube ad revenue rose nearly 9% to $11.38 billion.<\/p>\n Google is now testing how advertising fits into its AI search products, including AI Mode, its Gemini-powered search product. The company began rolling out ads<\/a> within AI Mode last year. Google is also testing tools that allow brands to shape how they appear inside AI search. A new \u201cbusiness agent\u201d feature<\/a> lets retailers customize how product questions are answered in their own brand voice, with early adopters including Poshmark and Reebok.<\/p>\n Google is also testing new ad formats built for how people shop through AI search. One pilot program<\/a>, called \u201cdirect offers,\u201d allows brands to present personalized promotions to shoppers who show signs of purchase intent within AI Mode. Using Google\u2019s Gemini models, the system analyzes conversational context and user behavior to determine when a promotion may be most relevant.<\/p>\n As part of its broader commerce push, Google introduced the Universal Commerce Protocol<\/a> earlier this year, developed with Shopify<\/a>, which lets U.S. brands enable purchases directly within AI conversations. <\/p>\n Google is not alone in trying to figure out how ads will work in AI search. Companies including Amazon and OpenAI are also experimenting with ads in AI search. Results so far have been underwhelming. A year and a half after AI startup Perplexity introduced ads, the company began phasing them out<\/a>. Amazon\u2019s sponsored prompts inside its shopping assistant Rufus are reportedly generating limited traffic compared to traditional Amazon ads, according to The Information<\/a>.<\/p>\n To learn more about how AI is influencing Google\u2019s advertising strategy, Modern Retail spoke with Courtney Rose, vp of retail at Google Ads, at Shoptalk Spring about early results from AI-powered campaigns, how marketers are adapting and what comes next.<\/p>\n This interview has been edited for length and clarity. <\/p>\n The term \u201cGoogle killers\u201d has been bandied about with the rise of LLMs, but the strength of Google Search and its ads business suggests the company remains resilient. How is AI impacting Google\u2019s ads business?<\/p>\n \u201cSearch is not some zero-sum game. Everything we have seen in the last few years is that search is in this expansionary moment.\u00a0<\/p>\n When I\u2019m walking through Vegas and I see somebody\u2019s purse that I like, I can take a picture of that and immediately search for it. A lot of the searches we see now in AI mode and in Gemini are two to three times longer than a traditional search. My last search \u2014 I counted it this morning \u2014 was 45 words long. Instead of just searching for \u2018blue cashmere sweater,\u2019 I\u2019m speaking into my phone and saying, \u2018I\u2019m going to Atlanta, it\u2019s in the spring, I don\u2019t know what the weather\u2019s going to be, I don\u2019t want to be too hot in my sweater, I\u2019m probably going to need a purse too, I want to wear it with jeans.\u2019\u00a0<\/p>\n It means that Google is able to understand so much more of my intent: where I am as a consumer, what I care about, the location I\u2019m going to. We\u2019re able to match that intent in a much richer way than we were for just \u2018blue cashmere sweater.\u2019 It enables all of this discoverability for merchants and brands on what they want to surface and how they want to match in that way.<\/p>\n From an ads experience, we try to make that really, really easy for advertisers. When you use AI products like AI Max or Performance Max, you\u2019re able to surface across all of these experiences for the consumer, including AI mode, traditional search and formats like Demand Gen on YouTube, because the system understands your products and creative and matches them to rich, conversational intent.\u201d<\/p>\n What have you learned so far from testing ads in AI Mode?<\/p>\n \u201cWe\u2019re seeing great performance. Aritzia uses AI Max, and that means that they\u2019re able to surface in these various search experiences, including AI mode. When they enabled AI Max, they saw a 80% increase in revenue.<\/p>\n What AI Max does is it goes onto the retailer\u2019s site and understands what is on their site, and it looks at all of their ads and their creative assets, so we understand what it is they\u2019re selling and what they want to sell \u2014 they might prioritize some products over others. That\u2019s why we really study their creative assets.<\/p>\n Then we have all of this rich intent from users, who are more conversational in their search. So we\u2019re able to really understand not just what they want, but why they want it. And then we\u2019re able to make that match: This user has this intent, and this retailer has what they want.<\/p>\n Retailers can\u2019t possibly guess every keyword that that user would search for. Fifteen percent of searches on Google every day are new that we\u2019ve never seen before.\u201d<\/p>\n When you think about the relationship between advertising and AI, how can companies use ads in a way that\u2019s helpful and safeguards user trust?<\/p>\n \u201cWe\u2019re testing ads in AI mode because we want to learn a lot about this. Ultimately, we care about our users. We care about that trust.<\/p>\n When it comes to the retail space, we\u2019re a matchmaker. We are not trying to be a retailer, we\u2019re not trying to be any sort of marketplace. We are that matchmaker between the retailer and the user, and without the trust in that ecosystem, nobody wins.<\/p>\n The merchant, when they are thinking about the ads they want to run, they have all sorts of controls in their ad campaign. They have full control over what is showing and of their creative. There are a lot of AI\u2011enabled campaigns, like AI Max, that can pull together what is the best creative asset and the best product to put in that ad at the moment, so that they are the most relevant thing for the user.<\/p>\n That\u2019s something that develops trust between the user and that merchant, because it\u2019s like, \u2018Oh, it\u2019s showing me exactly the output that I want from that brand.\u2019\u201d<\/p>\n What are Google\u2019s plans to put ads in Gemini, especially as major brands like Gap announce plans to sell through the chatbot?<\/p>\n \u201cWe don\u2019t currently have any plans for ads in Gemini, but the ads in AI mode are really interesting. We\u2019re learning so much from those, and they\u2019re performing really well for the retailers.\u201d<\/p>\n In January, Google announced an advertising pilot called \u201cdirect offers.\u201d How\u2019s that going?<\/p>\n \u201cIt\u2019s really early, and so hopefully over the coming months, we\u2019ll be able to say more about how it\u2019s performing, but that\u2019s something we\u2019re really excited about. Brands including E.l.f. Beauty, Chewy and L\u2019Or\u00e9al\u00a0are now testing it.<\/p>\n When we have this really rich understanding of the intent of the customer, and then we have information like they\u2019re particularly loyal to certain brands, we\u2019re able to give that brand or merchant or retailer the opportunity to give them an offer in the moment.<\/p>\n It can be really helpful to a user, because they\u2019re like, \u2018Oh, I\u2019m going to get free shipping,\u2019 or \u2018I\u2019m going to get a discount,\u2019 or whatever that offer might be. And it\u2019s amazing for the retailer, because they\u2019re able to close that sale really quickly.<\/p>\n When we initially think about an offer, you think about a discount or shipping, but there can be a lot of other things, too. The merchants can get really creative about what an offer really means, and it doesn\u2019t have to be monetary. That\u2019s something that is in the works.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Google says its AI-powered ad tools are delivering measurable results for some brands, as the world\u2019s largest seller…\n","protected":false},"author":2,"featured_media":385790,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[171649,61,60,4313,80],"class_list":{"0":"post-385789","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-technology","8":"tag-digital-marketing-redux","9":"tag-ie","10":"tag-ireland","11":"tag-qa","12":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/385789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=385789"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/385789\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/385790"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=385789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=385789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=385789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}