Google tests personalized discounts in AI-powered search

The pilot introduces personalised retail discounts within Gemini-powered search chats, marking a shift from traditional sponsored links as Google adapts its advertising model to AI-led, intent-driven search experiences.

Google has unveiled a new pilot programme that brings advertising directly into its AI-powered Search experience, signalling a significant evolution in how ads may appear in the age of conversational search. The feature, called Direct Offers, allows retailers to present personalised discounts within Gemini-driven search interactions instead of relying on standard sponsored links.

The initiative is part of Google’s broader effort to rethink its advertising business as search increasingly shifts from blue links to AI-generated responses. Rather than placing ads prominently at the top of results pages, Direct Offers are designed to appear selectively, triggered only when Google’s systems detect that a user is close to making a purchase decision.

Ads timed to purchase intent

Google says Direct Offers rely on AI to judge context and intent, ensuring that promotions are shown at moments when they are likely to be genuinely useful. For example, when a user searches for a specific product with clear buying signals—such as durable home furnishings or travel gear—the AI may surface a relevant discount during the conversation, helping nudge the decision-making process.

Unlike conventional ads, the placement and timing of Direct Offers are not fixed. Instead, Google’s AI determines when a promotion adds value, avoiding interruptions during early research stages. The company frames this as an attempt to balance user experience with commercial relevance, especially as search becomes more interactive and conversational.

Early partners and future expansion

Several retailers are already participating in the pilot, including brands such as Petco, e.l.f. Cosmetics, Samsonite and Rugs USA. Google said merchants operating on Shopify will also be among the first to access the feature, making it easier for smaller sellers to test AI-led promotions.

From an advertiser’s perspective, Direct Offers are configured within existing campaign tools. Retailers define the discounts they want to promote, while Google’s AI decides how and when these offers are shown within a search interaction. In its initial phase, the pilot focuses solely on discounts, but Google has indicated plans to expand the system to include other incentives.

Future iterations may support offers such as free shipping, bundled products or additional perks, allowing shoppers to assess overall value rather than just price. For advertisers, this could provide greater flexibility in how promotions are presented.

Pressure on Google’s core business

The experiment comes as Google faces growing competition from AI-first platforms that bypass traditional search results altogether. Embedding ads more naturally into AI conversations could help the company protect its core revenue stream while adapting to changing user behaviour.

However, the approach also raises questions around transparency and trust. As ads become more integrated into AI responses, Google will need to clearly signal commercial content to users. How effectively it manages that balance could determine whether Direct Offers move beyond limited testing into mainstream Search.