Google’s recent launch of AI Overview has improved the search experience for users by providing faster, more direct answers. At the same time, it has created new challenges for advertisers in some industries, who now face less ad space and tougher competition. With AI Overview, and the upcoming AI Mode, expected to compete with ChatGPT and Microsoft Copilot, becoming a regular part of search, the way people use Google is starting to change. That’s why it’s important to understand both the short- and long-term impact on paid search.
The Current Impact of AI Overview on Specific Industries
The negative impact some industries are seeing today comes mainly from the fact that these AI-generated blocks take up a large portion of the search results but aren’t yet open to advertising.
So far, AI Overview only shows up in certain industries or for specific types of searches that Google seems to classify as informational rather than commercial, sometimes incorrectly. Depending on the query, these AI-generated answers may appear either above or below paid ads, but they rarely show alongside the four sponsored links that used to be standard. When only one, two, or three ads appear instead of four, the available ad space shrinks, which reduces the total number of potential clicks.
When AI Overview appears above paid results, it pushes ads further down the page, which naturally lowers click-through rates and reduces the number of clicks available in the auction.
The smaller ad space creates a bigger problem: since budgets usually stay fixed in the short to medium term, advertisers end up competing for fewer clicks with the same investment. This drives up cost-per-click (CPC). In many industries the increase is moderate, but in heavily affected sectors it can be much more severe. For example, one of our clients saw CPC jump by more than 40% in just a few months, with a similar rise in cost per conversion.
Google’s rollout timelines are often unclear since new features are usually released in phases rather than all at once. Still, conversations with Google strategists suggest that ads could be added to AI Overview by the end of 2025 in Canada, and possibly in early 2026 for French-language searches. This means advertisers affected by the change may have to wait before they can benefit from it. In the meantime, we’ve noticed AI Overview showing up less often, or even being removed entirely, for certain queries that Google now seems to classify as more commercial than informational.
Example of AI Overview
The Longer-Term Impact of AI Overview
While AI Overview currently has a negative effect on some advertisers, its long-term potential looks much more promising. Once ad placements are available within AI-generated results, we expect this tool to actually increase demand in certain markets by converting informational queries into commercial intent.
For example, someone researching different insurance products could quickly get their questions answered and then be encouraged to contact a broker for tailored coverage. Another person starting their car-buying journey might narrow down the models that best fit their needs and then be directed to nearby dealerships offering those vehicles.
In my own case, I recently searched for guidance on spacing cedar hedges. AI Overview provided a helpful answer, but it could just as easily have surfaced local discounts, turning my informational search into a commercial opportunity.
This shift from search term to search intent is something Google has been preparing for over several years. The broader use of broad match, the launch of Performance Max, and more recently AI Max, all reflect Google’s strategy of moving away from strict keyword targeting toward a focus on intent. We believe this approach will pay off and ultimately expand available demand for advertisers.
The Growing Importance of Offline Conversion Tracking
Another factor shared by broad match, Performance Max, and AI Max is that they perform best with comprehensive conversion tracking, and poorly when data is incomplete.
This is especially true for lead generation businesses, where not all leads carry the same value. Without proper offline conversion tracking, these campaigns risk generating a high volume of low-quality leads. Supplying the right context through CRM data is therefore critical for helping Google’s algorithms distinguish good leads from bad ones.
Despite Google’s repeated recommendations, many advertisers still lack robust offline conversion measurement. As we often remind clients: algorithms are only as good as the data you feed them. This will become even more crucial in the coming months as AI-driven search expands.
Final Thoughts
In conclusion, while some sectors are currently struggling with the introduction of AI Overview in search results, we firmly believe this is just the first step in a broader transformation of paid search. By making it easier to shift users from informational queries to commercial intent, AI Overview has the potential to be a net positive for advertisers.
However, this shift will place even greater importance on accurate conversion tracking, a long-standing weak point for many advertisers. Those who adopt best practices early will be best positioned to benefit from the coming evolution of paid search.
