Google Ads Direct Offer: AI Mode discounts

A discount that only reaches people who were going to buy anyway costs you margin and wins you zero new customers. That is the exact risk built into the new Google Ads Direct Offer asset. According to Search Engine Land on October 7, 2026, Google is testing a beta that serves one-time discount codes directly in AI Mode, and Google's AI decides who sees which offer.

The Direct Offer asset is a Google Ads beta that shows discounts and one-time promo codes beneath a Sponsored result in AI Mode, labelled "Claim one-time code". According to Google, it only serves in campaigns using AI Max or text customization, and Google AI picks the offer and can write the offer text itself. It only pays off if you know your break-even discount up front, set daily limits, and use the one-time codes to measure redemptions against your margin.

What is the Google Ads Direct Offer asset?

On October 7, 2026, Search Engine Land reported a new option labelled "Direct Offer" appearing in Google Ads, marked as beta. It sits in the assets section next to Promotions, Messages and Lead forms, and you can create it at account or campaign level.

The idea itself is not new. Google announced Direct Offers as a pilot in January 2026: exclusive deals for shoppers in AI Mode who are close to a purchase, starting with discounts and later extending to bundles and free shipping. Google Marketing Live 2026 added expansion plans, such as placing offers directly inside the AI Mode answer and a native checkout for merchants on the Universal Commerce Protocol. According to Search Engine Land, Direct Offers was still a pilot for US advertisers at that point. Google has not said whether or when the new asset beta will reach Europe or other markets. Check your own account for the option instead of building a plan around it.

How does the asset work?

According to the report, when you create the asset you enter:

an internal name, the final URL and a short description of the offer. Google AI uses this description to judge relevance and can generate the offer text from it.
the incentive type and value, plus an optional CSV file of one-time promo codes.
several incentives in parallel. Google AI decides which one to show based on user behaviour and context.
terms and conditions, a URL to those terms, and start and end dates.
daily limits, either by total discount value or by number of redemptions.

In AI Mode, an eligible offer appears below a Sponsored result as "Claim one-time code". Anyone who clicks sees the offer details, the code and a button to your website.

Search Engine Land points out the catch itself: AI-driven offer selection is one more layer of automation. You need to watch redemption rates, margin and incrementality to tell whether the offer creates additional sales or just discounts purchases that would have happened anyway.

AI Max is the entry ticket, and that is a strategic call

According to Google, Direct Offers only serve on campaigns with AI Max or text customization. That is not a formality. Google's help documentation says text customization generates additional headlines and descriptions from your landing page, ads and keywords, and it is a core feature of AI Max for Search. AI Max also bundles search term matching (keyword expansion through broad match and keywordless targeting) and final URL expansion.

Many accounts are already there. Since September 1, 2026, Google has been upgrading campaigns that use automatically created assets to AI Max, and campaigns with campaign-level broad match as well, though those get search term matching only. If you deliberately stayed off AI Max to keep tight control over search terms and ad copy, you now face a trade-off: to access a discount asset, you hand over control of reach and copy. Don't make that decision because of a beta asset. Make it based on whether AI Max delivers incremental conversions at an acceptable CPA or ROAS in your account.

Keep this asset separate in your head from the automated promotions Google switches on by default from October 12, 2026. There, Google pulls offers from your website on its own. What that means for Search and Performance Max is covered in our piece on Google Ads automated promotions. With Direct Offer, you actively set the incentive, codes and limits. What both share: discounts reach your ads faster than your finance team notices.

When does a Direct Offer pay off? The break-even discount

The key question is not "Does conversion rate go up?" but "How many of these redemptions are truly additional?" Every buyer who would have bought without the code costs you the full discount. Every additional buyer earns you the contribution margin after the discount.

That gives you a simple formula for the minimum incrementality share you need:

Minimum incrementality = discount per order ÷ contribution margin per order before discount

Worked example (hypothetical figures): An online shop has an average order value of €80, a gross margin of 45% and €8 in variable costs for shipping and payment.

Contribution margin before discount: €80 × 45% − €8 = €28.
Direct Offer discount: 15% = €12.
Contribution margin after discount: €28 − €12 = €16.
Minimum incrementality: €12 ÷ €28 ≈ 43%.

So out of every 100 redeemed codes, at least 43 must be orders that would not have happened without the offer. If only 30 are incremental, the balance looks like this: 30 × €16 = €480 in extra contribution margin against 70 × €12 = €840 in discount given away. Net result: minus €360, even though conversions and conversion rate look great in the Google Ads report. And that is before you count the ad spend for the extra clicks.

ROAS in Google Ads won't show you this problem, because it measures revenue, not margin. That is exactly why a discount test belongs in margin-based steering, as laid out in our guide to ROAS, POAS and MER.

How to control the risk: daily limits and one-time codes

The two strongest levers in the asset are not creative features. They are control fields.

Daily limits cap your maximum discount exposure per day. Work backwards: if you are willing to risk at most €600 of contribution margin per day during the test and the discount is €12, set the limit to 50 redemptions or €600 total value. The test stays affordable even if the AI serves the offer more widely than you expected.

One-time codes via CSV are your measurement instrument. Each code is unique and can be matched to a specific order in your shop system or CRM. That lets you count redemptions independently of consent gaps and modelled conversions in the ad account. Give Direct Offers their own code prefix so these orders never get mixed up with newsletter or partner codes.

Multiple incentives sound convenient for testing, but they blur the analysis when Google AI is doing the choosing. Start with one incentive per campaign. Only once you know its incrementality is a second incentive worth adding for comparison.

What e-commerce, D2C and lead-gen teams should do now

Check the account. Look in the assets section for the beta "Direct Offer" option. If it isn't there, there is nothing to switch on. Don't plan a campaign around it.
Clarify your AI Max status. List which Search campaigns have been running on AI Max since September and with which features. Review their search terms and CPA before you stack a discount asset on top.
Calculate the break-even discount per product range. Use the formula above for each category. Thin-margin products don't belong in a Direct Offer, no matter how good the conversion rate looks.
Define the test design. Create the asset at campaign level, not account level. That leaves you comparable campaigns without the offer as a rough reference. It is not a clean holdout, but it beats flying blind across the whole account.
Set limits and duration. Daily limit by discount value, fixed end date, clear terms URL. A test without an end date turns into a permanent discount.
Set up measurement. One-time codes with their own prefix, order data with code and margin in your reporting, and three metrics: redemption rate per impression, contribution margin per conversion, and the share of new customers among redeemers. If your data foundation can't deliver that yet, fix tracking and analytics first.
Check for cannibalisation. Compare the campaign's revenue and orders before and during the test, including branded searches. If redemptions rise but total orders don't, you are only discounting existing demand.

For lead generation the picture is less clear. So far Google mostly describes Direct Offers with shopping examples such as product discounts. A one-time code only makes sense for B2B service firms or SaaS companies if there is a real, redeemable offer behind it and the code is tracked in the CRM all the way to the closed deal. Otherwise you are just measuring form fills from people expecting a discount, which often means weaker leads at a seemingly better CPL. The underlying logic is the same as for every other lever in performance marketing: judge it on contribution margin, not on conversions.

FAQ

Is the Direct Offer asset available outside the US?

There is no official statement. The Search Engine Land report from October 7, 2026 doesn't name any markets, and at Google Marketing Live 2026 Direct Offers was a pilot for US advertisers. The only way to know whether you can use the beta is to check your own Google Ads account.

Do I need AI Max to use Direct Offers?

According to Google, Direct Offers only serve in campaigns with AI Max or text customization, and Google's help documentation lists text customization as part of AI Max. If you have deliberately switched AI Max off, the asset won't serve.

How do I measure whether a Direct Offer drives additional revenue?

Use the one-time codes to tie every redemption to an order. What matters is the share of incremental orders, which has to be at least as high as the discount divided by the contribution margin before discount. Compare campaigns with and without the asset and look at total orders over the test period.

Sources

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Google Ads Direct Offer: test AI Mode discounts without burning your margin