Google tests AI-powered Search ads as Gemini reshapes discovery

Google used its May 20 Marketing Live event to show how Search ads are being rebuilt for an AI-first results page. The company said it is testing Gemini-built formats called Conversational Discovery ads, Highlighted Answers, and AI-powered Shopping ads, all designed to read less like interruptions and more like help inside the search flow. Each format will be clearly labeled Sponsored, and Google said an independent AI explainer will sit alongside advertiser creative to explain why a product or service is being recommended.

That setup matters because Google is no longer talking about Search as a static list of links. The company said 75% of people report making faster, more confident decisions using AI Mode in Search, and it also said brainstorming queries in AI Mode have grown 30% faster than queries overall since launch. Add in the scale of AI Overviews, which Google said are now used by more than a billion people, and the direction is clear: more discovery is happening inside conversational answers, where ads can be woven directly into the guidance itself.

For agencies, the immediate effect is less about a fresh ad unit and more about a different buying environment. Creative quality, product feed hygiene, audience signals, landing-page clarity, and full-funnel measurement all matter more when the user journey no longer follows a simple keyword-to-click pattern. Google’s own framing pushes advertisers toward Performance Max and AI Max, signaling that campaigns need to be structured for machine-assisted matching and richer inventory rather than built around isolated Search placements.

The pressure is getting sharper because AI Max for Search campaigns is moving out of beta, and legacy Dynamic Search Ads, automatically created assets, and campaign-level broad match will automatically upgrade in September. Google has described AI Max as its fastest-growing AI-powered Search ads product, and that gives agencies a hard deadline to rethink older Search setups that still depend on manual keyword logic and fragmented reporting.

The broader shift is bigger than one launch. Google said moving at the speed of AI requires simplifying data connections and understanding what is driving growth, which is another way of saying Search strategy now lives at the intersection of SEO, paid media, feed management, and analytics. As Gemini reshapes discovery, agencies that can connect those pieces will be better placed to keep clients visible when the answer, the recommendation, and the ad all appear in the same conversational frame.