Google tests Gemini-powered ads in AI Mode and Search

Google is turning AI Mode from an answer engine into a commercial surface, and the shift is already showing up in Search. At Google Marketing Live 2026 on May 20, Google introduced Gemini-built ad formats for Search and AI Mode: Conversational Discovery ads, Highlighted Answers, AI-powered Shopping ads, and Business Agent for Leads.

The practical change is where the ad lives. Conversational Discovery ads are built to answer a specific question inside AI Mode, while Highlighted Answers can place highly relevant ads directly in AI-generated recommendation lists. Google says the new experiences are designed to stay clearly labeled Sponsored, with an independent AI explainer sitting alongside the advertiser’s creative. That matters because the value is no longer just the click. It is whether Gemini decides your offer is the most useful answer in a conversational flow.

Google is also widening its Direct Offers pilot, a sign that discovery and conversion are getting closer together inside Search. The pilot now includes promotion bundling, native checkout for UCP merchants, travel deal integrations, and AI-generated offer recommendations. Chewy and Gap are among the brands involved, and Business Agent for Leads is in open beta in English. For marketers, that is a direct line from question to product detail to transaction, without the old handoff from results page to landing page doing all the work.

Google is telling advertisers to prepare by leaning on Performance Max and AI Max tools. That tracks with the direction of the rest of the company’s ad stack. At Marketing Live, Google also introduced a unified agent built with Gemini that spans Google Ads, Google Analytics, Merchant Center, and Google Marketing Platform. The message is clear: the next competitive edge is not just bidding smarter. It is making sure product data, creative, and offer structure are all legible to the model that is mediating the interaction.

The larger backdrop is AI Mode itself. Google says AI Mode is an early experiment in Labs and uses a custom version of Gemini 2.0, with follow-up questions built in. Google also says AI Mode responses are supported by high-quality web content and can fall back to web links when confidence is not high enough. In a separate note tied to the announcement, Google said 75% of people report making faster, more confident decisions using AI Mode in Search. That is exactly why these ad tests matter: if AI Mode is where decisions happen, Google will make sure ads are there too.