Google's AI Ads Drive Revenue Growth for Retailers
Google's ad business is expanding, not shrinking, as the company deploys AI tools that help retailers sell more. The company reported $82.28 billion in ad revenue for Q4 2025, up 13.5% year over year, with total annual revenue crossing $400 billion for the first time.
The growth centers on AI-powered ad tools like Performance Max and AI Max. Canadian fashion retailer Aritzia saw an 80% increase in revenue after enabling AI Max, according to Courtney Rose, Google's VP of Retail Ads.
How AI Improves Ad Targeting
Google's Gemini models decode not just what shoppers want, but why they want it. When a customer searches for outfit suggestions for a spring trip to Atlanta-specifying sweater, purse, and jeans-the AI matches that intent to relevant products far more precisely than keyword-based ads could.
Fifteen percent of daily Google searches are entirely new, Rose said. That makes AI-driven matching crucial for retailers who cannot predict every keyword a customer might use.
"Search is not some zero-sum game. Everything we have seen in the last few years is that search is in this expansionary moment," Rose said.
New Features for Brands
Google introduced "direct offers," a feature that presents personalized promotions to shoppers showing purchase intent. Brands like E.l.f. Beauty, Chewy, and L'Oréal are using the format.
A new "business agent" feature lets retailers like Poshmark and Reebok shape how they appear in AI search results, using their own brand voice.
Google has no current plans to add ads to Gemini itself, Rose said, but ads within AI Mode are performing well and generating valuable data for retailers.
Competitors Face Mixed Results
Amazon and OpenAI are experimenting with their own AI ad formats. Perplexity phased out ads a year and a half after launching them. Amazon's sponsored prompts inside its Rufus shopping assistant are generating limited traffic.
Meta Platforms is working toward fully automated AI ads, with tools like Advantage+ handling targeting, budgeting, and creative optimization. Some advertisers, however, remain hesitant about ceding control to these systems.
For sales professionals, understanding how AI reshapes ad performance is increasingly important. Learn more about AI for Marketing and explore an AI Learning Path for Sales Representatives to stay current with these tools.
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