AI isn’t just changing how people search – it’s changing how they shop, how they make decisions, and soon, how they’ll see ads.
For the past 25 years, digital advertising has relied on keywords, clicks, and visible placements. But the rise of AI-powered conversations is rewriting that model. Google, Apple, and OpenAI are already laying the groundwork for ads inside AI assistants and conversational search.
The question is no longer if ads will appear in AI conversations – it’s when and how. And businesses that prepare now will be the ones that win.
In this article, we’ll cover:
- What “ads in AI conversations” actually mean
- Why Google and others are moving from keywords to conversations
- The role your brand plays in whether your ads even show
- How businesses can prepare for AI-driven advertising
- The risks and opportunities ahead
A Brief History of Digital Ads
To understand why conversational AI ads are such a big deal, it helps to look back.
- Early 2000s: Google launched text-based search ads — short, clickable results above organic listings. It was simple, effective, and quickly became the backbone of online advertising.
- 2010s: Display ads and remarketing emerged, following users around the web. Product feeds and Google Shopping gave eCommerce brands new ways to compete.
- Mid-2010s onward: Video advertising took off, with YouTube Ads blending into content people were already consuming.
- 2020s: Automation and AI-powered campaign types (like Performance Max) started taking the wheel, using signals instead of keywords.
And now, in the mid-2020s, we’re facing the next transformation: ads integrated into AI conversations. Unlike previous shifts, this isn’t just a format change — it’s a redefinition of how ads appear, when they appear, and how users experience them.
What Are Ads in AI Conversations?
Traditional ads are obvious. Search results on Google. Sponsored posts on Facebook. Display banners that follow you across the web.
But conversational AI changes the experience. Instead of clicking through lists of links, users ask for what they want and get an answer. That answer may soon include sponsored suggestions:
- A product recommendation when asking Siri for the “best running shoes under $300.”
- A brand placement inside ChatGPT when someone compares software platforms.
- A preferred partner shown in Google’s AI Overviews during research.
These ads won’t feel like interruptions – they’ll feel like part of the conversation. And that’s exactly why they’ll be so powerful.
If this sounds far-fetched, look at Amazon’s sponsored product listings. Many shoppers don’t realise the first results are ads – they just look like trusted recommendations. AI conversation ads will follow a similar path, but with even deeper context.
From Keywords to Conversations
For decades, Google Ads were built on keywords. You bid on “pizza near me,” and your ad shows when someone searches those words.
AI search breaks this model. People aren’t just typing short queries anymore. They’re writing full conversations:
“I’m looking for a long-lasting fragrance similar to Dior Sauvage, but under $100, and something I can wear to the office daily.”
That single query tells the AI:
- You want a designer-inspired fragrance
- You have a clear price range (under $100)
- You care about longevity (lasting power)
- You’re looking for a versatile scent for work
This level of context is gold. Ads won’t trigger on a keyword anymore – they’ll trigger when the AI determines your product fits the entire conversation.
For a brand like Amara Parfums, this is a game-changer. Instead of hoping to appear for “Sauvage dupe” as a keyword, the AI could directly recommend Amara’s Aquaman, a fresh blend inspired by Acqua di Giò, tailored to the exact intent behind the query. (This is where eCommerce SEO ensures feeds and product pages are AI-ready.)
Industry examples:
- Retail: Instead of “best laptop,” a user might ask “What’s the best laptop for video editing under $1,500 with strong GPU performance?”
- Healthcare: Instead of “physiotherapist near me,” a query might be “I’m recovering from a knee injury and need a physio in Melbourne who bulk bills.”
- B2B: Instead of “CRM software,” a user might ask “What’s the best CRM for a construction company with under 50 staff?”
- Hospitality: Instead of “hotel Sydney,” a user might ask “What’s the best family-friendly hotel in Sydney with free parking under $250/night?”
- Professional services: Instead of “accountant Melbourne,” a query might be “Which accountant in Melbourne specialises in property investors?”
- E-commerce: Instead of “dog food,” a query might be “What’s the most sustainable dog food for medium breeds under $100/month?”
This shift means advertisers will need to think beyond keywords and focus on intent, context, and conversation relevance.
Your Brand Is the Targeting Strategy
Here’s the shift most businesses don’t see coming: your brand presence is now your targeting strategy.
Google’s AI doesn’t just scan search queries. It scans:
- Your website content
- Your customer reviews
- Your product feeds
- Your social media presence
- Even what people are saying about you online
It builds a brand profile, and that profile determines whether your ad gets served.
If your product descriptions are thin, reviews are poor, and your social media is inconsistent, AI will downgrade your relevance. But if your feeds are rich, your messaging consistent, and your reviews strong, you’ll be rewarded with better ad placement.
Think of it like entity SEO:
- Use schema markup to make your content machine-readable.
- Keep your Google Business Profile updated.
- Ensure your reviews reflect trust and authority.
- Build consistent brand mentions across media and social platforms.
Phoenix Wolf’s Intelligent Visibility Optimisation (IVO) approach tackles exactly this: ensuring your brand is visible, consistent, and AI-ready across every digital touchpoint.
Google Ads as an AI Training System
Think of your Google Ads account not just as an ad platform, but as an AI training system.
Every conversion you track, every piece of data you feed, every signal you send – it’s all teaching Google’s AI what your best customer looks like.
What to do now:
- Track the right conversions → Don’t just track leads; track sales, repeat buyers, and customer lifetime value.
- Leverage Performance Max → PMax campaigns already feed into AI Mode, giving you early exposure to conversational queries.
- Embrace Smart Bidding → Instead of tweaking keywords daily, guide AI with clear goals (“I’ll pay more for repeat customers”).
- Feed clean data → Your product feeds should include conversational details (e.g., “best for video editing” not just “Intel i7”).
The businesses that train the AI well today will lock in compounding advantages. Once the system learns your ideal customer, it keeps getting better at finding them.
What Businesses Risk by Ignoring AI Ads
Some businesses may be tempted to “wait and see.” That’s a mistake.
- Loss of visibility: If competitors dominate conversational placements, your brand may never appear in AI answers.
- Higher costs later: Early adopters train the AI now, locking in efficiencies. Late adopters may pay more to catch up.
- Exclusion risk: If your brand isn’t recognised as an entity or lacks structured data, you may be invisible in AI ad formats altogether.
In short, not preparing today could mean being written out of tomorrow’s digital marketplace.
Risks and Considerations
Like every big shift, there are two sides:
Risks
- Ads may blend so seamlessly into answers that users don’t always realise they’re sponsored.
- Click-through rates could decline if purchases happen directly inside AI platforms.
- Measurement models may change — instead of CPC, we could see CPA (cost per action inside AI) or impression-based billing.
- Regulatory scrutiny around transparency will likely increase.
Opportunities
- Ads in AI conversations happen at the exact decision moment.
- Intent signals are 10x richer than keywords ever were.
- Early adopters will “train” AI platforms to favour their brand, making it harder for competitors to catch up later.
Small businesses with clean, consistent data could outperform bigger brands that lag in optimisation.
How Businesses Can Prepare Now
Think of this as your training plan for the AI-driven ad world:
Action | Why It Matters in AI Search |
Optimise your brand entity | Ensure your website, schema, Google Business Profile, and social presence are consistent. AI uses this data to decide if your brand is trustworthy and recommendable. |
Invest in AI-ready ad campaigns | Performance Max and Search campaigns already feed signals into AI Mode. Running them now helps train the system with your best customer data. |
Update your product feeds | Go beyond specs. Structure product data to answer conversational queries like “Is it long-lasting? Inspired by luxury? Versatile for day and night?” |
Build trust signals | Reviews, case studies, and authoritative content aren’t just for people — they’re proof for AI systems that your brand is credible. |
Test and track smarter | Don’t just measure leads. Track which leads convert and repeat. Feeding this back teaches AI who your high-value customers are. |
Partner with AI-focused specialists | Most agencies stop at page-one rankings. Phoenix Wolf blends SEO, ads, and Intelligent Visibility Optimisation (IVO) to prepare you for AI conversations. |
The businesses that treat their presence like a training ground for AI will be the ones dominating tomorrow’s ad landscape.
Stay Competitive in the AI-Driven Ad Era
AI advertising isn’t science fiction. It’s rolling out now. Google has already briefed agencies on ads in AI Mode, with wider rollout expected by the end of 2025. Apple and OpenAI aren’t far behind.
At Phoenix Wolf, we’re helping brands prepare for this shift by combining Google Ads, Meta Ads, and Intelligent Visibility Optimisation, to make sure our clients aren’t just visible today, but competitive in tomorrow’s AI-driven ad landscape.
Ads in AI conversations aren’t a maybe – they’re inevitable. The businesses that act now will be the ones AI learns to favour tomorrow.
Ready to future-proof your advertising? Partner with Phoenix Wolf and stay ahead in the AI era.
FAQs About Ads in AI Convsersations
Will AI assistants start showing ads?
Yes. Google, Apple, and OpenAI are all exploring ways to monetise conversational AI. Google has already confirmed that ads will appear in its AI Overviews, with a broader rollout expected before the end of 2025. Apple’s World Knowledge Answers project and OpenAI’s partnerships suggest similar directions. In practice, this means users will start seeing sponsored product recommendations, branded citations, or “preferred partners” woven directly into AI-generated answers. The key difference is that instead of clicking through a list of links, people will encounter ads seamlessly within the conversation itself.
How will AI advertising differ from Google Ads?
Traditional Google Ads revolve around keywords. You bid on terms like “running shoes” or “SEO agency Melbourne,” and your ad shows when those words are searched. AI ads work differently: they compete for conversation relevance. For example, instead of just matching “perfume under $100,” an AI system might serve an ad for Amara Parfums if someone types “I’m looking for a long-lasting fragrance under $100, similar to Dior Sauvage, for everyday wear at work.” The ad is triggered not by a single keyword, but by the deeper intent revealed in the conversation.
Measurement may also evolve. If AI assistants handle purchases inside the chat, advertisers could be charged per action or per conversion, not just per click. That means stronger intent but potentially fewer clicks to websites – shifting the emphasis from traffic to outcomes.
Does this mean AI ads will replace traditional Google Ads and social ads?
Not entirely. Google Ads, Meta Ads, and display campaigns will continue to exist and deliver results. However, budgets are likely to shift as AI-driven ad formats mature and prove more effective. Think of it like the rise of social ads in the 2010s: search didn’t disappear, but marketers reallocated spend to where audiences were paying the most attention. Similarly, businesses will need a balanced approach, keeping proven channels active while investing in AI-driven placements to avoid being left behind.
Can small businesses compete in AI ad placements?
Yes, and in many ways, small businesses may have an edge. AI-driven ads reward clean data, consistent messaging, and strong customer trust signals more than sheer budget size. A small business with great reviews, a well-structured website, and rich product information may outperform a larger competitor with outdated or inconsistent digital assets. The key is preparation: smaller brands that take entity optimisation seriously now can be surfaced more often when AI assistants look for trustworthy answers.
How do I prepare my business for AI-driven ads?
Start by treating your brand like an entity that AI needs to understand. That means:
- Optimising your website and schema so your information is machine-readable.
- Running campaigns like Performance Max to train AI systems with your best customer data.
- Updating product feeds to answer conversational questions, not just list specs.
- Building credibility with reviews, case studies, and content that proves your authority.
Partnering with an agency that specialises in both SEO and AI search readiness, like Phoenix Wolf, accelerates this process.
Will local businesses benefit from AI ads?
Absolutely. Many conversational queries include location-specific needs, such as “Which physio in Melbourne bulk bills?” or “What’s the best Italian restaurant near St Kilda with vegan options?” If your business has strong local SEO, accurate Google Business Profile, consistent NAP (Name, Address, Phone) data, and positive local reviews – AI systems are more likely to feature you in conversational ad results. For local businesses, this could be even more powerful than traditional local search ads because the AI is answering with personalised, intent-rich recommendations.
Will AI ads be transparent or hidden?
This is one of the biggest open questions. Regulators and users are pushing for transparency, meaning ads will likely be labelled clearly as “sponsored” or “promoted.” However, because they’ll be integrated into the flow of the conversation, they may still feel more natural than today’s banner or text ads. Businesses should expect disclosure rules, but also prepare for user trust to hinge on whether AI ads feel genuinely helpful rather than intrusive.
How will AI ads be measured?
Click-through rates (CTR) may become less important, since many interactions and purchases could happen directly inside AI platforms. Instead, advertisers might pay per impression, per engagement (such as a “recommendation accepted”), or per conversion that happens in-chat. While the exact billing model is still being tested, one thing is clear: AI ads will prioritise outcomes tied to intent, making every engagement more valuable than a standard keyword click.
When will AI ads officially launch?
Google has already started experimenting with ad placements inside AI Overviews, and agencies have been briefed on a wider rollout expected before Q4 2025. Apple’s World Knowledge Answers is still in early stages, but given Apple’s track record, monetisation through ads or brand partnerships seems inevitable. OpenAI is also testing monetisation routes, which could include ads inside ChatGPT responses. For businesses, the timeline is short – preparing now ensures you’re ready when the switch is flipped.
