Google has begun testing a new advertising format called “Direct Offers” inside its AI-powered Search AI Mode, marking a significant evolution in how digital ads are delivered in an AI-centric search experience. This pilot initiative is designed to show users personalized discounts and special deals directly within conversations powered by Google’s Gemini AI, rather than through traditional search ad placements — a move that could reshape how marketers think about reaching consumers in AI-driven environments.

The Direct Offers feature surfaces deals — such as discount codes or value promotions — when Google’s AI detects that a user is close to making a purchase decision. Instead of static ad links above or beside search results, these promotions appear contextually as part of the conversation between the user and AI during product discovery. For example, if someone asks how to find a durable rug for a dining room, the AI may present an exclusive offer for a related product from a participating retailer.

Google says the pilot is part of a broader effort to align advertising more closely with user intent and experience in Search’s AI Mode. By leveraging real-time AI understanding of queries, the system aims to present offers when they’re most relevant — potentially increasing conversion rates for brands and providing a smoother, less interruptive ad experience for users.

Several major retail partners are already testing the feature. Brands like Petco, e.l.f. Cosmetics, Samsonite, and merchants using Shopify are among the early participants in the Direct Offers pilot. This reflects growing interest among advertisers in tapping conversational AI search environments for performance-driven results.

Industry analysts see this move as part of Google’s ongoing strategy to protect its dominant ad business while adapting to the shift from traditional keyword search toward AI-enhanced, dialogue-based discovery and purchase journeys. As user behaviour continues to favour AI-assisted interactions, marketers may need to rethink campaign designs to fit more natural, contextual ad formats that meet customers at the moment they’re ready to buy.