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Google has confirmed it will place advertising inside AI Mode, its conversational search interface, through two new formats announced at Google Marketing Live on May 20.

The move resolves the question that has hung over AI Mode since launch: whether Google would monetize its most-used AI search surface the same way it monetizes traditional Search, or accept a revenue-light experience to drive adoption. The answer is neither. Google is building a third path that embeds ads into the AI-generated content itself.

The Two Formats

Conversational Discovery ads are triggered by detailed, exploratory prompts rather than keyword queries. When a user asks something open-ended — Google’s example was “how to make my home smell like fancy spas or a rainy forest using low-maintenance solutions” — Gemini generates custom ad creative tailored to the specific context of that conversation. Product features and benefits are highlighted based on the query’s intent, not a pre-written ad copy bank.

Highlighted Answers place ads inside recommendation lists generated by AI Mode. When AI Mode produces a list of product or service suggestions — language learning apps for an upcoming trip, for example — eligible advertisers can appear directly within those recommendations as sponsored entries.

Both formats include an independent AI explainer: Gemini synthesizes information about the product or service and displays it alongside the advertiser’s creative. The explainer is generated independently of the ad. Ads remain labeled as “Sponsored.”

Why the Format Design Matters

Standard Search ads sit alongside organic results. Both formats announced at Google Marketing Live sit inside the AI response itself — inside the answer, not beside it. That is a meaningful structural shift for advertisers and for users.

For advertisers, it moves placement earlier in the decision process. A Highlighted Answer in a recommendation list catches users who are still forming preferences, before they have settled on what to search for next. For users, it creates an environment where sponsored and editorial content share a single response frame, separated only by a label.

Google cited internal research: 75% of people say they make faster, more confident decisions using AI Mode. That confidence is what makes placement inside the AI response more valuable than placement beside it.

Broader Ad Expansion at Google Marketing Live

The two AI Mode formats are part of a larger push. Google is also bringing AI-powered Shopping ads to standard Search, where Gemini generates custom explainers highlighting why a specific product matches the user’s query. Business Agent for Leads embeds a Gemini-powered chat interface inside ads, allowing users to ask product questions before converting.

The Direct Offers pilot, running since January 2026 with Chewy, Gap, and L’Oreal, is expanding to include promotion bundling, native checkout for merchants on the Universal Commerce Protocol, and travel offers from Booking.com and Expedia.

All of these formats are designed to feed through AI Max for Search and Performance Max campaigns, extending Google’s existing campaign infrastructure into AI Mode inventory rather than creating a parallel ad system.

Revenue Stakes

Google’s advertising revenue is built on query intent. Traditional Search ads work because keyword queries signal purchase readiness. AI Mode changes the query structure: users ask conversational questions that are harder to match to specific keywords and easier to match to broad intent.

Conversational Discovery ads are Google’s direct answer to that problem. Gemini interprets context, not keywords, and generates placement. If the model improves, the targeting improves automatically. If it degrades, so does ad relevance — and Google bears the quality control burden directly, since its own AI is generating the creative.

Both new formats are in testing. No confirmed rollout timeline has been announced.