Google's AI Has a New Revenue Stream

From Keywords to Context

This change alters everything for how ads are targeted. The old playbook of building rigid keyword lists is becoming outdated. The new reality is driven by AI, which uses conversational context to serve ads.

• Goodbye, Static Keywords: Google has stated that the "big shift is from queries to conversations." Instead of relying on a single search term, the AI will analyse the full conversational exchange to determine user intent. This means an ad can be perfectly tailored to a user's needs, even if their initial query was broad or exploratory.

• A Broader Canvas for Ads: Ads in AI Mode and AI Overviews aren't confined to the top of the page. They are being tested and integrated directly into the AI-generated responses, becoming a part of the answer itself. This is a prime placement that businesses need to be in.

• The Rise of AI-Powered Campaigns: To be eligible for these new ad placements, you can’t rely on old campaign types. Google is prioritising its AI-centric solutions, such as Performance Max and the new AI Max for Search. These campaigns empower Google's AI to find new customers and serve ads in all the new places where users are engaging.

Your New Advertising Superpower: Google Performance Max

At the heart of this revolution is the Performance Max campaign type. While it's been around for a while, its role is now more critical than ever. Performance Max is a goal-based campaign that uses Google's AI to find converting customers across all of Google's channels from a single campaign. This includes YouTube, Display, Gmail, Maps and, crucially, the new AI search features.

Think of Performance Max not as a traditional campaign, but as a collaboration with Google's AI. Your role as a business owner or a marketing manager is to provide the AI with the right ingredients and the AI’s role is to find the best-performing combinations.

To get the most out of Performance Max for AI search, you must focus on these key inputs:

• High-Quality Creative Assets: Provide a diverse range of headlines, descriptions, images and videos. The more high-quality assets you give the AI, the more relevant ad combinations it can create and serve across different formats.

• Audience Signals: You can't manually target keywords, but you can tell the AI who your best customers are. By feeding the campaign first-party data (like customer lists) and relevant audience segments, you guide the AI toward the right people from the start.

• Clear Conversion Goals: The AI works to achieve your specific business goals. You must define what a "conversion" means to you, whether it's an online sale, a lead form submission or a phone call. The AI will then optimise in real-time to drive more of those valuable actions.

The bottom line is that to compete in the AI-first search world, you need a campaign type that's built for it. Performance Max is that campaign. 

Why Google Had to Monetise AI Search

 Many business leaders have correctly observed that providing instant answers with AI Overviews could cannibalise Google’s core revenue stream of paid search ads. A user who gets a full answer on the Search Engine Results Page (SERP) may never click on a link, let alone an ad.

 However, Google is in a race to stay ahead of competitors like OpenAI and Microsoft. They understand that AI is the future of information retrieval. To maintain their position as the world’s leading search engine and protect their business model, they had to solve a central question:

How do you generate revenue from a conversational, instant-answer format?

1. Protecting a Multi-Billion Dollar Revenue Stream: Google’s parent company, Alphabet, relies heavily on search ads to fund its entire ecosystem, from Android to YouTube and Google Cloud. The company cannot simply replace its cash cow with a non-monetised AI tool.
2. Unlocking New Commercial Intent: Google's data shows that with AI, users are asking more complex, multi-step questions that often have commercial intent hidden within them. For example, a user asking "how to remove wine stains" might also be a perfect target for an ad for a specific cleaning product. Google's AI is built to identify these nuanced commercial signals and connect them with relevant ads.

By integrating ads, Google is not just protecting its revenue; it's creating new opportunities for advertisers to connect with customers at the most relevant moment.

Is Your Business Ready to Compete?

This isn't a theoretical change for the distant future. The rollout is in full swing.

• Google AI Mode has already launched in the US, India and the UK and is continuing to expand globally.
• Google is actively briefing agencies and brands about the broader rollout of ads in AI Mode, with a major push expected before Q4 2025 to capitalise on the holiday marketing season.
• The new AI Max for Search campaigns, which make traditional Search campaigns eligible for these AI-powered placements, are expected to be available to all advertisers in Q3 2025.

The time to invest is not next quarter, but right now. The businesses that are proactive and have their campaigns prepared for these AI-driven features will be the ones that capture the most valuable new ad placements and gain a massive competitive advantage.

Simply maintaining your old campaigns will not be enough to compete for the most valuable new ad placements. The investment required to win in this new landscape is not a simple campaign tweak, but a strategic commitment of time and resources to audit, set up and continuously test these new AI-powered campaigns. 

At iCandy Design, we've been tracking these changes from the beginning and are here to help you navigate this transition. We specialise in a unified approach that combines Answer Engine Optimisation (AEO) with advanced paid campaign management. This ensures your business is not only present in the new AI-driven landscape but is also positioned as an authoritative voice that drives meaningful results.

 The future of search is here and with a proactive strategy, your business can lead the way. Contact us today to ensure your brand thrives in the new AI-powered landscape.