Direct Offers in Google AI Mode: What Advertisers Need to Know About the New Ad Format

Google is testing a new ad format called Direct Offers inside AI Mode. Unlike traditional Shopping ads that drive clicks to your website, Direct Offers let you present exclusive deals directly in the AI shopping conversation—right when a shopper is ready to buy.

This is part of Google's broader push toward agentic commerce through the Universal Commerce Protocol (UCP)—a future where AI agents handle product discovery, comparison, and even purchasing on behalf of consumers. Direct Offers are among the first concrete ad formats designed for this new paradigm.

In this guide, you will learn exactly what Direct Offers are, how they differ from the Shopping ads you run today, who qualifies for the pilot, and what you should do right now to prepare. Whether you are an e-commerce brand, an agency, or a retail marketer, this is a format you need to understand.

What Are Direct Offers?

Direct Offers are a Google Ads pilot program that lets brands present exclusive discounts directly inside AI Mode when Google determines a shopper has high purchase intent. Think of it as a sponsored deal that the AI delivers at the exact moment someone is most likely to convert.

This is not a traditional Shopping ad. Direct Offers pull from your verified Merchant Center feed and advertiser-uploaded promotions. The AI decides when and whether to surface a deal based on intent signals it reads from the conversation. It never invents a discount or fabricates a promo code—it relies strictly on your verified feed data and the promotions you have uploaded.

Here is what the experience looks like in practice: a shopper asks AI Mode to help them find a rug for their living room. As the conversation progresses and the AI recognizes strong purchase intent, it surfaces a "Sponsored deal" from a retailer—say, 20% off with a specific promo code, valid through a set date. The shopper sees a "Get code" button right in the AI conversation and can redeem the offer immediately.

How Direct Offers Differ from Traditional Shopping Ads

The difference between Direct Offers and the Shopping ads you manage today is not incremental—it is structural. The entire user journey changes.

Traditional Shopping Ads Flow

1. User searches for a product on Google
2. Your Shopping ad appears in the results
3. User clicks the ad and visits your website
4. User browses your site, adds to cart, and (maybe) buys

Direct Offers Flow

1. User has a product conversation in AI Mode
2. Google's AI detects high purchase intent in the conversation
3. Your exclusive deal surfaces as a sponsored offer inside AI Mode
4. User gets your promo code and completes the purchase—potentially without ever visiting your site

The key difference is that Direct Offers remove the click-to-your-site step. The conversion happens inside Google's AI surface. This has major implications for your attribution, ROAS measurement, and bidding strategy.

There are other important distinctions. Direct Offers are triggered by intent signals, not keyword bidding. You cannot game the system with aggressive bids—you need to have genuine promotions and real discounts. The AI matches offers to shoppers based on relevance and purchase readiness, not how much you are willing to pay per click.

Who Can Use Direct Offers?

Direct Offers is currently a pilot program with a small group of advertisers. Google has not opened it to the general public yet. Known participants in the pilot include Petco, e.l.f. Cosmetics, Samsonite, and Rugs USA—a mix of large retail brands across different categories.

Based on the pilot structure, the requirements to participate are:

• Active Merchant Center feed: Your product data must be live and verified in Google Merchant Center
• US-based campaigns: The pilot is currently limited to advertisers targeting US shoppers
• Uploaded promotions: You need active promotions with valid promo codes in Merchant Center
• Genuine discounts: The offers must represent real value—not inflated prices marked down to regular retail

Google has indicated it plans to expand Direct Offers beyond simple percentage discounts. Future iterations may support bundles, free shipping offers, gift-with-purchase, and other value-based incentives. This broadening will make the format accessible to more advertisers who may not be able to offer deep discounts but can provide other forms of exclusive value.

Business Agent: The Other New Tool

Alongside Direct Offers, Google launched another AI-powered commerce tool called Business Agent. While Direct Offers are an ad format, Business Agent is a branded AI chatbot for your store that lives inside Google Search.

Business Agent is already live with brands including Lowe's, Michaels, Poshmark, and Reebok. It answers product questions in your brand's voice, provides personalized recommendations, and helps shoppers find the right product—all powered by your Merchant Center feed data.

Think of Business Agent as a virtual sales associate that connects shoppers to your products during critical decision-making moments. While Direct Offers close the deal with a discount, Business Agent builds confidence and removes friction by answering the questions that typically cause shoppers to hesitate or abandon.

Together, these two tools represent Google's vision for UCP-powered agentic commerce: AI that guides shoppers from discovery through to purchase, with your brand present at every step. Both tools rely on the same foundation—a complete, accurate Merchant Center feed.

What This Means for Your Bidding Strategy

If you manage Google Ads bidding strategies, Direct Offers introduce several new considerations that you need to plan for.

In their current pilot form, Direct Offers are intent-triggered rather than auction-based. This means your standard CPC bidding does not directly control whether or when your offer appears. The AI makes that decision based on shopper intent signals and the relevance of your promotion to the conversation.

This creates a gap in traditional CPC and ROAS models. A conversion that happens inside AI Mode—where the user gets a promo code without clicking through to your site—does not follow the standard click-based attribution path. Your Smart Bidding strategies may need to account for a new conversion type that looks very different from a standard Shopping ad conversion.

Here is what you should watch for as this format matures:

• New conversion types: Google will likely introduce AI Mode-specific conversion actions in Google Ads
• Server-side attribution: You will need server-side conversion tracking to properly attribute sales that originate from promo code redemptions in AI Mode
• Reporting columns: Expect new Google Ads reporting columns for AI Mode impressions, offer views, and code redemptions
• Smart Bidding adaptation: Google's automated bidding will eventually incorporate AI Mode signals, but early adopters may need manual adjustments
• Budget allocation: You may need to think about how promotional budget for Direct Offers interacts with your existing Google Ads campaign spend

How to Prepare for Direct Offers

Even if you cannot join the pilot today, there are concrete steps you can take right now to be ready when Direct Offers expand. Every one of these steps also improves your current Shopping and Performance Max campaigns, so none of this effort is wasted.

1. Ensure Your Merchant Center Feed Is Complete and Accurate

Direct Offers pull directly from your Merchant Center feed. Every attribute matters: titles, descriptions, prices, images, availability, GTINs, and product categories. A feed with missing or inaccurate data will not be selected for Direct Offers.

2. Upload Promotions and Valid Promo Codes

This is the critical step most advertisers overlook. Direct Offers require active promotions with working promo codes in Merchant Center. If you are not already using the Merchant Center promotions feature, start now. Set up promo codes, define validity windows, and make sure redemption works flawlessly.

3. Monitor the Pilot and Waitlist

Stay in close contact with your Google Ads representative. Watch the Google Ads blog and UCP developer documentation for expansion announcements. Early access often goes to advertisers who have already expressed interest and have their feeds in order.

4. Review Your Margin Strategy

Exclusive discounts need to be genuinely profitable. Running a 20% off promotion on a product with an 18% margin is a fast way to lose money at scale. Before committing to Direct Offers, you need clear visibility into per-product profitability.

5. Set Up Server-Side Conversion Tracking

Since Direct Offers conversions may not follow a traditional click path, you need server-side tracking to capture promo code redemptions. Implement the Google Ads Conversion API or enhanced conversions so you can attribute AI Mode-driven sales back to specific products and promotions.

6. Align Your UCP Readiness

Direct Offers are part of Google's broader Universal Commerce Protocol ecosystem. Understanding how UCP works—and how it compares to alternatives like ACP—gives you the strategic context to make smart decisions about these new formats as they evolve.

Frequently Asked Questions

Conclusion: The First Native Ad Format for AI Shopping

Direct Offers represent the first native ad format designed specifically for AI-powered shopping experiences. Unlike retrofitting existing ad formats into new surfaces, Google built Direct Offers from the ground up for the conversational, intent-driven nature of AI Mode.

For advertisers, this is both an opportunity and a signal. The opportunity is clear: early adopters who get their feeds, promotions, and tracking infrastructure in order will have a significant advantage when Google expands the pilot. You will already be in the system, with proven promotion performance, while competitors scramble to set up basic requirements.

The signal is equally important. Google is investing heavily in making AI Mode a primary shopping surface. Direct Offers, shopping ads in AI Mode, Business Agent, and the Universal Commerce Protocol all point in the same direction—a future where AI mediates the relationship between shoppers and brands. The advertisers who adapt their strategies now will be the ones who thrive in that future.

Start by auditing your Merchant Center feed, uploading promotions, and understanding which products have the margin to support exclusive deals. The tools and infrastructure you build today for Direct Offers will serve you well across every AI commerce format Google launches next.