As you can see from the screenshots above, targeted pay-per-click ads continue to show as they normally would. You might even notice on the “hotels” screenshot above that Google Instant showed a locally-targeted ad for a hotel in Spokane. Google says ads are now being shown for predicted queries, and the ads will change as searchers continue to type.
Google says ad impressions will only count in three situations (much like the organic impressions listed above) :
1. The user clicks anywhere on the page after beginning to type a search query
2. The user chooses one of the predicted queries from Google Instant
3. The user stops typing and search results are shown for at least three seconds
For more on Google Instant and paid search, see our article, Will Google Instant Kill The Long Tail? Also, this AdWords help page may answer your questions about Google Instant.