Google tests personalised ads inside Search AI Mode with new ‘Direct Offers’ pilot

Google Search

• Google tests Direct Offers, displaying discounts in AI-driven search chats.
• Ads appear only when AI detects users are close to making a purchase decision
• Petco, e.l.f. Cosmetics, and Shopify merchants are testing the new feature.

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Google has announced a new pilot programme that introduces personalised advertising inside Search AI Mode, signalling a broader rethink of its ads business for the artificial intelligence era. The new format, called Direct Offers, allows retailers to surface discounts directly within Gemini-powered search conversations rather than through traditional sponsored links.

According to Google, the pilot is part of its effort to expand advertising experiments in AI Mode and better align ads with user intent. Instead of showing ads at the top of a results page, Direct Offers are designed to appear only when Google’s AI determines that a user is nearing a purchase decision. This is a significant departure from the long-standing sponsored link model that has defined Google Search advertising for years.

Google explained the idea using a shopping-style query, such as a user searching for a modern rug that is durable and easy to clean for frequent hosting. In such cases, Search already highlights relevant products based on the query. With Direct Offers, Google says retailers can also present a targeted discount at the right moment, helping users decide to buy while giving sellers a better chance to convert interest into a sale.

The company says the timing of these ads is controlled by AI rather than fixed placements. Direct Offers only appear when the system believes a discount would be genuinely useful to the shopper, rather than interrupting early-stage research. Google positions this as a way to balance user experience with commercial intent, especially as search increasingly shifts from lists of links to conversational answers.

Several retailers are already involved in early testing. Google said brands such as Petco, e.l.f. Cosmetics, Samsonite and Rugs USA are participating in the pilot. In addition, merchants using Shopify will be among the first to gain access to the feature.

From a technical standpoint, retailers configure Direct Offers within their campaign settings by defining the discounts they want to promote. Google’s AI then decides when and where those offers are shown during a search conversation. For the initial pilot, Google is focusing only on discounts, but the company has said it plans to expand the system to support other types of offers over time.

Future versions of Direct Offers may include incentives that go beyond price cuts, such as free shipping, bundled products or other value-focused attributes. Google says this will allow shoppers to prioritise overall value rather than cost alone, while giving advertisers more flexibility in how they present promotions.

The move also reflects rising competitive pressure in AI-powered search. With companies like OpenAI pushing conversational tools that bypass traditional search results, Google is under pressure to ensure its core business model remains relevant. Integrating ads more naturally into AI conversations could help Google preserve ad revenue while adapting to changing user behaviour.

However, the approach also raises questions about transparency and user trust. By embedding ads inside AI responses rather than clearly labelled placements, Google will need to ensure users understand when commercial content is being shown. How well Direct Offers strike that balance could determine whether the format scales beyond limited testing.