Search Generative Experience (SGE) is an experimental AI-based feature that’s transforming Google search engine results pages. 

Now, when you search in Google, you’ll usually see an AI overview at the top of the page, giving you a comprehensive summary that relates directly to your search. 

In many cases, SGE results leapfrog not just organic search results, but paid search too. So paid ads automatically appear lower in the SERP than they did before the SGE launch.

This may be at least partly to blame for the click-through rate drop many brands are experiencing in the last few months. According to research from digital marketing agency Seer Interactive, CTRs for ads shown alongside AI overviews have been dropping month-on-month since September 2024:

Chart source: Seer Interactive

Interestingly, CTRs have been decreasing steadily even when AI overviews aren't shown. So how is SGE shaping users’ search behavior? And how can PPC marketers adapt their paid media strategy as Google increasingly embraces AI as part of its product?

Here, find out all about Google’s Search Generative Experience and what it means for PPC.

What is Google’s Search Generative Experience (SGE)?

Search Generative Experience is how Google refers to its new AI-driven search engine results page. When you search, you’ll now see a concise AI-written response to your query. Here’s an example:

With SGE, Google’s large language model — Gemini — processes your query and generates a response designed to fulfil your search needs. Depending on your query, it will include a step-by-step guide (see above), easy-to-digest information points, or even advice.

AI overviews appear at the very top of the SERP, above most organic and paid search results. SGE displays some organic results in a panel on the right. Because SGE results appear at the top of the page, many organic and paid media results are seeing an impact on clicks, site traffic, and conversions.

SGE is currently only available on Chrome desktop (and the Google App in the U.S.). So most mobile users (and those who don’t use Chrome as their desktop browser) will still see Google’s non-SGE search function at the top of the page. This includes featured snippets, paid ads, and knowledge panels.

But as AI becomes more prevalent, it’s likely Google will eventually roll SGE out across all products and locations. Google has said:

“With new generative AI capabilities in Search, we’re now taking more of the work out of searching, so you’ll be able to understand a topic faster, uncover new viewpoints and insights, and get things done more easily.”

SGE allows for clickless searches, facilitating faster information delivery, reducing friction, and improving user satisfaction. It’s currently a highly user-centric model — so how is Google going to appease advertisers if paid CTRs continue to drop?

SGE and paid search: what’s the impact?

SGE is transforming the SERP and user experience, so it’s already impacting performance marketers. AI overviews make ads less prominent, reducing click-through rates and therefore compromising ad effectiveness. According to early research into SGE:

• No ads accompanied SGE snippets in 27% of searches.
• When shown, search ads tend to appear below the AI overview, while shopping ads are more likely to appear above it.
• When a SGE snippet is shown, ads were more likely to appear at the bottom of the SERP than the top.

So while ads are still often displayed alongside SGE results, they may be less visible than before.

Searches that suggest intent to buy often trigger ads alongside SGE content. For example, the query “what's the best console for online gaming, ps5 or xbox one” displays shopping ads below a SGE-generated comparison of the two consoles:

At the moment, ads are shoehorned in around the SGE content. Back in 2023, Google released information about how ads could be displayed when they’re fully incorporated into SGE results. But we’re yet to see this type of structure in real-world searches:

Different industries are also likely to see different impacts. SERanking’s research found that shopping-only ads are already more likely to be displayed for ecommerce and retail searches, while sectors including insurance, finance ads, news, and careers didn’t display any ads at all.

Understanding clickless searches in the SGE era

SGE is a step towards clickless searches, which is why click-through rates are dropping. With SGE, users get all the information they need directly from the SERP — there’s no need for them to click through to a particular site to read more.

Organically, this puts information-based brands (as opposed to those selling products and services) at a distinct disadvantage. SGE also collates information from sites like Reddit and Quora, so forums may take a hit if users trust Google to accurately reflect those opinions and comments.

Clickless searches create challenges for advertisers too. Google’s Search Generative Experience is still in its infancy, so although we’re already seeing reduced click volume, bigger impacts are yet to come. In future, we may see:

• Greater competition for ad slots within SGE (there may be fewer ad placements available).
• A rise in costs-per-click due to limited ad inventory.
• More competitors entering the PPC market as organic traffic decreases.
• Changing advertising KPIs as CTRs decrease — brands may switch to more holistic KPIs like cost-per-acquisition, POAS or ROAS.
• Increased engagement with ads within SGE if AI-generated content keeps users’ attention.
• Lower attribution visibility, making it harder to see which channels are contributing to lead generation and sales.

Even the most successful PPC campaigns and seasoned advertisers are likely to feel the impact of SGE, especially as it rolls out to more browsers and devices. So you’ll need to adapt to these changing conditions and think ahead to the potential challenges.

What PPC marketers think about SGE

Since Search Generative Experience is a massive change that (currently) prioritizes user experience over advertisers, let’s see what PPC professionals think of SGE so far.

Let’s start with a pretty comprehensive (and alarming) take. CMO Hugo Bernard highlights how marketers must change strategies to adapt PPC campaigns since SGE landed:

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Hugo suggests PPC is still a valuable strategy, but that brands must make changes if they’re going to succeed. You need first-party data for accurate targeting, as well as a shift to focus on AI-driven ad platforms.

But not all marketers agree that AI overviews and SGE are going to have a profound impact on PPC. This may be due to Google’s business model, since it depends heavily on ads to make money:

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Others believe that Google just hasn’t found a way to incorporate ads into SGE meaningfully. Which means that we’re unlikely to see the current iteration of SGE rolled out because ads are essential to Google’s business model:

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Some marketers highlight concerns about training AI models on existing content. In addition to the legal and ethical issues around training LLMs on copyright-protected content, questions have been raised about how AI companies will respond when information-rich websites go out of business thanks to the advent of clickless searches. This may leave Google (and other AI developers) with limited resources on which to train their LLMs:

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Google isn’t the only platform where ads could run alongside AI-generated content. In this webinar, self-professed Google Ads Aficionados Curry, Cheese, and Vegemite discuss how native ads might look on platforms like ChatGPT for PPC and Perplexity AI:

For advertisers, this could open opportunities to get in front of the fast-growing number of AI users. Curry, Cheese, and Vegemite speculate that platforms like these might focus on ads targeted to specific user profiles, rather than search terms.

The consensus among marketers seems to be that Google will need to find a way to incorporate ads into its SGE. But questions remain about how this will happen, and what that will mean for PPC advertisers. 

Tips & strategies to optimize paid search for SGE

It’s not yet clear exactly how ads are going to form part of Google’s Search Generative Experience. But based on the current iteration of SGE, here’s what you can do to give your ads the best possible chance of display and conversion.

1. Capture first-party data

With the demise of third party cookies, it’s really important to capture genuine lead and customer first-party data. Google is actively encouraging brands to capture first-party data:

“Developing strong relationships with customers has always been critical for brands to build a successful business, and this becomes even more vital in a privacy-first world. We will continue to support first-party relationships on our ad platforms for partners, in which they have direct connections with their own customers.”

First-party data lets you enhance targeting, personalize messaging and improve conversion rates. So you can optimize your current ads to ensure they reach and resonate with the right audience.

2. Start using GEO tactics

Generative engine optimization — the process of optimizing your content and campaigns for large language models (LLMs) — can help your brand become a trusted source in AI-generated overviews.

At the moment, GEO tactics are similar to SEO tactics. But it’s worth watching for any developments in how generative models source and process information, and how to encourage LLMs to trust your brand.

Strong brand signals can increase the likelihood of being referenced in AI-generated answers. These include:

• Unique selling propositions (USPs) – Highlight key differentiators like quality, ethics, or innovation.
• Customer reviews & testimonials – Positive social proof can enhance your brand’s credibility.
• Domain & URLs – Make sure your brand has recognizable and trustworthy website links.
• Messaging & tone – Create a clear, compelling, and consistent brand voice that carries across all your messaging.

3. Try new ad formats and placements

Trialling new ad placements will be essential as SGE and other types of generative AI become more popular. Based on current trends (including decreased CTRs and lower Search ads visibility), it’s time to experiment with new platforms and placements to reduce your reliance on Search ads.

Native ads on YouTube, LinkedIn, and Google Discovery may offer higher CTRs in different formats. Using native ads can get your ads in front of more relevant audiences. 

In addition, it’s likely that AI chatbots (like ChatGPT and Perplexity AI) may serve ads in the near future. So you may need to familiarize yourself with advertising opportunities on these platforms.

4. Understand how the buyer journey is changing

SGE encourages longer search journeys rather than quick transactions, so it may take longer to clinch sales. As a result, you’ll need to effectively tailor your campaigns to different stages of the buyer’s journey.

In many cases, you can expect to spend more on informational top-of-funnel queries. Take a softer selling approach that builds trust with potential buyers to generate sales more organically.

5. Optimize your ads with enhanced assets

Maximize your existing ad conversions by including enhanced assets across your campaigns. You can:

• Improve your Google Ads quality score with sitelink assets. Set up several per campaign to help boost your click-through rate.
• Use callout assets to highlight key aspects of your business, such as free shipping or ethical production. This helps to showcase your unique selling points to potential buyers.
• Drive customer actions with call and lead form assets. Call assets encourage direct phone calls, while lead form assets generate in-ad enquiries.
• Optimize for modern search with assets like images to showcase your products and app assets to drive downloads or engagement, allowing users to access your app or the app store directly from your Search ad.
• Set up message assets in Performance Max campaigns to communicate directly with mobile users via WhatsApp.

6. Leverage conversational search data

Understand common follow-up queries from your most important keywords, then align your campaigns with how users refine their searches. By identifying common next questions, you can adjust keywords, ad copy, and assets to match evolving search intent.

This increases ad relevance and enhances engagement by addressing user needs at different stages of their journey. It may also improve ad visibility in AI-generated search results as follow-up questions become a major feature of SGE.

The future of PPC in AI-driven search

As search trends towards greater automation, advertisers must adapt to the changing PPC landscape. Here’s what to expect over the next few years in AI-driven search.

Google will monetize SGE (somehow)

In its current iteration SGE isn’t generating much ad revenue for Google. So it’s pretty certain that Google will start monetizing SGE sometime soon. Some ways this could play out include:

• Paid reference links — Advertisers can pay for their ad to feature in AI-generated content.
• AI-enhanced paid ad units — Advertisers can pay to be featured in AI-generated ad summaries or interactive ad cards, which are displayed prominently on the SERP.
• Referral fees — Google takes a referral fee when they direct users to your website via SGE.
• Charging for SGE — Google may expect users to pay to receive AI-generated content (a model similar to ChatGPT and Perplexity AI).

Paid reference links and paid ad units give advertisers the chance to cut in on the demand for SGE. And Google has released images of how these ad types might look in future SGE queries, so it’s likely this will play a significant role in their monetization efforts.

But other monetization models may not give advertisers as much scope, so performance marketers will need to keep a close eye on how Google changes SGE to suit its business model.

Conversational ad experiences

PPC advertisers can expect to bid for ad slots not just related to the first search query, but also any follow-up queries.

As searches become more refined, advertisers will need to anticipate user intent, create contextually relevant ads, and guide users through the decision-making process.

More PPC competition

SGE is leading to declines in organic traffic, which may force these brands to turn to PPC to claw back some of their traffic. This could drive up PPC costs for existing advertisers.

Additionally, PPC tends to work better for certain market segments, so it’s not the most natural fit for all brands. It may not be a viable option for businesses with slim profit margins.

Increased automation

Google has launched a whole suite of tools that use PPC automation, from Performance Max — its fully automated campaign type — to Customer Match and smart bidding strategies. With SGE, Google continues its push towards automated, AI-driven user experiences. 

Protecting ad performance in the age of SGE

As SGE takes off, advertisers will need to adapt. Whether that means experimenting with new ad placements, implementing GEO tactics, or capitalizing on your first-party data, you’ll need to prepare and modify your campaigns to perform well in SGE-dominated SERPs. Test, experiment, and monitor performance continuously as SGE evolves, so you can be proactive and get the most from your campaigns.

Given the rate at which AI is advancing, bot traffic is expected to rise significantly in the next few years. AI lets bad actors generate bots with almost zero coding knowledge, so simple bad bots are becoming more widespread. According to the Imperva Bad Bot Report, simple bots now make up almost 40% of all bad bots.

But advanced bots are still the most prolific, making up 48.1%. That means protection against bot traffic is more important than ever.

Lunio protects all campaigns across all channels from bot traffic. By eliminating bots, you can:

• Get more genuine conversions for the same ad spend.
• Eliminate time spent chasing fake leads.
• Improve performance marketing efficiency and reduce wasted ad spend.
• See real results and analytics that aren’t skewed by bot traffic.

See how IVT is affecting your Google Ads with a free two-week traffic audit, and learn how much you could save by eliminating bot traffic from your paid ads.