Are Google’s Direct Offers the beginning of the AI-native price war?

Google dropped a small but strategically enormous announcement at NRF 2026: Direct Offers, a new ad product that injects personalized, merchant-funded deals directly into AI Search Mode and the Gemini app. It sits alongside Google’s broader push into “agentic commerce,” including the new Checkout feature that lets users complete purchases inside AI Mode without ever visiting a retailer’s website.

If you squint, you can see the outline of Google’s next decade: Search becomes storefront, Gemini becomes the cashier and retailers become inventory nodes feeding Google’s shopping brain.

And Direct Offers is the first real test of whether retailers will be willing to play along.

Direct Offers is a pilot ad format that surfaces personalized, real-time promotions inside AI Mode responses. Think of it as Google Ads meets Honey meets pop-up website offer, except Google owns the interface, the targeting and the conversion funnel.

Here’s how Google’s agentic commerce AI ad product will work:

1. A user asks a shopping intent query in AI Mode.
2. Google’s AI generates a response and injects a merchant-funded offer (e.g., 10% off, free shipping, $20 off a category).
3. The offer is personalized using Google’s first-party signals.
4. The user can redeem the offer directly inside AI Mode or Gemini, especially once the new Checkout feature rolls out.
5. Retailers pay for the placement as part of Google Ads.

If you step back, this has the potential to be enormously disruptive to coupon extensions (Honey, Capital One Shopping), price comparison sites and the entire world of affiliate marketing. It amounts to Google building a native offer layer into the search experience itself.

Direct Offers appears to sit across:

• Search Ads (AI Mode): Offers appear inline with AI-generated answers.
• Shopping Ads / Merchant Center Next: Retailers already feed product data into Google Shopping; now they’ll feed offer data.
• Gemini Commerce Integrations: Gemini becomes a shopping agent, Direct Offers becomes an incentive layer.
• Universal Commerce Protocol (UCP): Google’s new open standard for agent-to-retailer transactions, enabling checkout inside Gemini and AI Mode.

This is Google building the rails for a world where AI agents, not websites, drive the majority of product discovery and purchase. This is a major industry theme for 2026 and a continuation of Google’s announcements from 2025.

See also: Google’s Shop with AI: Agentic AI disrupting commerce and retail media

As agency veterans know, brands and retailers don’t magically find “new” budgets. They reallocate from existing channels — and Google’s Direct Offers is almost perfectly positioned to siphon spend from affiliate programs. Retailers and D2C brands already fund:

• cash back
• coupon codes
• card-linked offers

Google’s AI search ad products are a version of the same thing.

If you’re deciding between…

• paying a coupon site a 12% CPA for a last-click steal (as we know, affiliate attribution fraud is a thing), or
• paying Google to surface a personalized offer at the top of the funnel, inside an AI search experience itself

… you’re probably going to shift budget toward Google. Which means Google is essentially absorbing the role of value-prop coupon and “deal” partners, such as:

• Honey
• Capital One Shopping
• RetailMeNot
• Rakuten

Except Google has the advantage of owning the search query with the intent signals and now the checkout. The latter part should be a concern for retailers.

On the online retail media front, Google Direct Offers has the potential to be disruptive to the growth of this media channel. Especially for retailers that have spent years conditioning marketers (and shoppers) to offers inside the digital storefront.

Amazon, Walmart, Target, Kroger and Walgreens product-page offer moments may arguably become less valuable to consumers. Think: Amazon’s clippable coupons, Walmart Cash offers, Target Circle deals, Kroger Boost coupons, Walgreens Cash, etc. Direct Offers shifts consumer expectations to Google’s AI layer, upstream of any retailer site. This could also disrupt retailer loyalty programs, as clippable offers and deals often function as a loyalty benefit.

Direct Offers creates a structural incentive for consumers to “deal hunt” inside AI Mode, even when they weren’t planning to.

That’s a problem. Here’s why:

1. It trains consumers to wait for a deal and to game the system

If AI Mode starts showing personalized offers, users will inevitably try to manipulate the AI by:

• rephrasing queries
• switching accounts
• clearing history
• testing different prompts

All to trigger a better offer. (I can already imagine a whole Reddit discussion about this. For example: “Just ask Google again or put a competitor XYZ in your query and you will get a better offer.”)

Retailers end up funding a game they can’t control and it could open up a whole new can of worms on misattribution and fraud.

2. It could create a price/offer arms race

Retailers will feel pressure to:

• out-discount competitors
• increase offer frequency
• widen eligibility

Once one retailer in a category participates, the rest must follow. Google wins. But retail margins do not. We’ve seen this dynamic play out in other categories on Google, most notably flights and hotels. I can’t think of any retailer that truly wants to race to the bottom on discounting. Even if Google allows for targeting of offers via an audience-match offering, sharing and ceding this to Google is a high-risk game for retailers.

3. It risks undermining loyalty

If Google becomes the arbiter of the “best offer,” then:

• brand loyalty weakens
• retailer-owned loyalty programs lose power
• the customer relationship shifts from the retailer to Google

Yes, Google may let users tune the offers to their preferred retailers, but even then, it’s shifting a lot of the power dynamic away from retailers and brands.

If you look at Google’s moves in their entirety — Direct Offers, Checkout in AI Mode, the Universal Commerce Protocol — they’re components of a larger shift of Google moving to be the storefront. The progression over time is:

• Google Search becomes conversational
• Discovery becomes agent-led
• Offers become native in AI search results
• Checkout becomes embedded (agentic checkout in Google)
• Retailers and brands become data providers

End game: Google becomes the storefront.

Direct Offers is the behavioral nudge that makes the whole system sticky for consumers.

We’re not saying you shouldn’t participate or experiment with Direct Offers. There’s always value in understanding how Google’s AI shopping layer evolves and measuring the results (as with any Google product we test for clients), but you need to protect yourself.

For retailers, long‑term economics hinge on owning the customer relationship, not ceding it to an AI interface that’s incentivized to disintermediate everything. Lifetime value of owning a customer should beat short‑term arbitrage every time.

Google Direct Offers creates an opening for retailers to reassert control over their highest-value customers. If Google is going to commoditize digital offers, the countermove is to shift the most strategic incentives offline and directly into the hands of your best prospects.

As I’ve noted before, the defensible area in an AI-disintermediated mix is about physical media and experiences.

A well-timed direct mail postcard that’s targeted, personalized and tied to your loyalty data (or prospects built from your existing customer profiles) becomes harder to game, harder to arbitrage and far more defensible than an AI-surfaced discount. Instead of training shoppers to prompt-hack Google for a better deal, retailers and D2C brands can use direct mail to reinforce loyalty, reward actual behavioral value and keep their most profitable customers inside their own ecosystem. In a world where AI flattens digital incentives, physical mail becomes a surprisingly durable way to deliver differentiated offers without feeding Google’s machine.

Google’s Direct Offers is clever, inevitable and a way of infusing ad products into AI search that feel native enough without undermining consumer trust in the authenticity of the AI results. For Google, it’s a way to claw back dollars that have been lost to online retail media — but for retailers, it’s a trap disguised as an opportunity.

The more you participate, the more you:

• erode your margins
• weaken your loyalty programs
• train customers to expect discounts
• shift power to Google’s AI interface

And once Google owns the offer layer and the checkout layer, it will own the customer.

Retailers and brands need to think very carefully before handing Google the keys to their promotional strategy without having a mitigation and risk management strategy in place.

Want to learn more and continue the conversation? Rise can help.