The Future of AI Advertising: Online Ads in the Age of LLMs

AI advertising is on the horizon.

Search was built on visibility, and ads made it possible to pay for that attention. Keywords acted as the targeting system. Now, that model is starting to carry over into AI.

Although keywords are not going away anytime soon, AI-driven search is introducing new dynamics¹. Tools like ChatGPT, Perplexity, and Google’s AI Mode are changing how search is conducted and how ads can be shown.

It was only a matter of time before this new way of searching was monetized through AI advertising. Now, the first signs of that future are here.

Ads in Google AI Mode and ChatGPT: What We Know So Far

Recently, Google began pitching² advertisers on Google AI Mode ads. For now, the rollout is labeled an “experiment,” only available to select accounts in the U.S. But with a broader rollout likely before the end of the year, this is the first real example of ads showing up inside a mainstream AI chatbot experience.

According to their pitch deck, Google AI Mode ads are currently being offered in two formats: standard text ads and shopping ads. These appear within Google’s AI-powered search experiences across Search, Shopping, and Performance Max (PMax) campaigns.

Getting into AI Mode ad placements requires adapting to Google’s newer campaign structures, which shift control away from advertisers and toward Google’s automation systems. Instead of manually selecting keywords and placements like in traditional Search campaigns, advertisers are expected to rely on:

• Broad match keywords, which allow Google to match your ads to a wider range of search queries, including ones that don’t exactly match your keywords but are related in meaning.
  
• Performance Max, a campaign type that uses Google’s AI to decide where, when, and how your ads show up across all of Google’s properties (including Search, YouTube, Gmail, and Shopping) based on your business goals.
  
• AI Max, an experimental beta designed specifically for targeting within AI-powered search interfaces, optimized for conversational prompts instead of simple keywords.
  

And while Google’s playbook became public, OpenAI is playing it quieter. 

CEO Sam Altman has publicly voiced his concerns about AI advertising more than once. But while the philosophical resistance is still being paraded on podcasts, the business plan is being inked behind the scenes. A chart of OpenAI’s projection of revenues, present in internal documents and shared online by a user on X³, shows that “free user monetization” (in other words, advertising) is projected to bring in over $1 billion in revenue by 2026. A figure that climbs to nearly $25 billion by 2029.

It’s the logical next step for the whole industry. Elon Musk recently announced plans to introduce ads directly into Grok’s AI-generated responses⁴ as a way to offset the high costs of running the model.

So we’re not speculating whether ads will show up in ChatGPT. They will. The only question is when and how.

How Ads Might Show Up in AI Responses

Monetizing AI search isn’t just about where ads go. It’s about how they feel to users. 

When the goal is to create a seamless, conversational experience, banner ads or sponsored offers can break the immersion. On the opposite side of the spectrum, weaving ads into natural language as part of the response can raise serious concerns about transparency and disclosure, especially when the suggestion sounds like neutral advice. Both approaches could erode trust and backfire, pushing users away.

This makes integrating advertising more challenging, but not impossible. And we already have some clues.

Google’s AI Mode pitch includes one single example, and ChatGPT’s shopping integrations hint at how product suggestions might eventually be monetized.

As we see it, the potential placements for AI advertising can be categorized into a few key scenarios:

1. In-Line With Organic Recommendations

Think product carousels embedded directly within AI answers, similar to how citations show up now. You might see “Here are some running shoes that fit your criteria,” and mixed in with the options are sponsored placements. Same format, different label.

2. Above the Organic Output

An entire ad unit might load before any AI-generated response. A row of sponsored products appears first, followed by the assistant’s recommendation. This mirrors current SERP layouts, but applied to the assistant interface.

3. Below the Organic Output

If AI platforms want to ease users in, they might introduce ads as a postscript. And this is exactly what we saw in the one sample visible in Google AI Mode ads pitch deck.

The AI gives its organic answer, then follows up with “For more information about this, explore the resources below” or “You may also be interested in…” and shows a block of sponsored results, either links or products.

All three of these could coexist, A/B tested endlessly to find the most profitable balance between usefulness and revenue.

Frequently Asked Questions

What is AI advertising?

AI advertising refers to paid placements that appear inside AI-generated answers, like those in Google AI Mode or ChatGPT. Instead of targeting keywords alone, these ads respond to user intent and prompt context.

How to advertise in AI chatbots?

Right now, brands can’t yet simply buy ad space in major AI chatbots like ChatGPT the way they can in Google Ads or Meta. Google AI Mode ads are coming soon, but are still in an experimental phase, only accessible to select advertisers in the U.S., on English queries, via broad match in Search campaigns, Performance Max, and a new beta called AI Max for Search.

How will ads show up in ChatGPT and Google AI Mode?

Ads may show inline with AI answers, as sponsored boxes above or below responses, or as part of product listings. Formats will likely vary, but most will be designed to blend with the surrounding content while remaining clearly labeled as paid.

Is AI advertising replacing traditional PPC?

No. Traditional placements and formats still matter. Search, Shopping, and Display campaigns aren’t going away. What’s changing is the need to support new AI-native formats where prompts, not just keywords, guide what shows up.

What This Means For Brands

Just like SEO is evolving because of AI, so is PPC. Keywords won’t disappear overnight, but they’re no longer the only gateway to paid visibility in search. Prompts, context, and user memory are becoming the new surface area for advertising.

Here’s what brands should do now:

• Get your data in order: Clean, rich, and up-to-date product feeds are non-negotiable if you want to show up in Shopping ads inside AI responses, because accurate data directly affects ad visibility (as well as organic).
  
• Build trust, not just presence: On a similar note, AI assistants will prioritize helpful, credible, well-structured content. That’s true for organic visibility and paid placements alike.
  
• Explore broad match keywords and AI Max: These tools help you adapt to AI-driven targeting based on context and intent, not exact keywords.
  
• Find a forward-thinking partner: Working with an agency like Coalition Technologies allows your brand to focus on your business without having to worry about every new shift that happens.
  

Google is already testing AI advertising in AI Mode, ChatGPT won’t be far behind, and eventually others like Perplexity and Claude will follow. That means brands need to start adapting now. 

At Coalition Technologies, we’ve been helping businesses get ahead in organic AI search from the beginning, and are already preparing for AI-focused ad formats, cleaning up product feeds, and building strategies for this new landscape.

If you want to be ready before this shift even starts, get in touch for a free strategy consultation.

References:

1. https://www.searchenginejournal.com/google-ai-mode-and-the-future-of-search-monetization/548601/ ↩︎
2. https://www.seroundtable.com/google-ai-mode-ads-pitch-39875.html ↩︎
3. https://searchengineland.com/chatgpt-with-ads-coming-454590 ↩︎
4. https://techcrunch.com/2025/08/07/elon-musk-says-x-plans-to-introduce-ads-in-groks-responses/ ↩︎