Google is testing a sponsored shopping format inside AI Mode, its conversational search experience. In a February 11, 2026 letter on where Google’s ads business is heading, Vidhya Srinivasan, Google’s VP and GM of Ads and Commerce, laid out the plan: AI Mode already recommends products, and Google is now testing ads that show the retailers selling them.
It’s still a test, not a finished product. But it shows where paid search is going, and it matters for any business that runs Google Ads or depends on organic traffic.
What Google Is Testing in AI Mode
Srinivasan’s letter describes the format this way: “AI Mode already surfaces organic shopping recommendations based on what’s most relevant to a query. Now, we’re testing a new ad format” that shows the retailers selling those products, “clearly marked as sponsored.” Google says it is testing similar formats in other categories too, starting with travel.
Two other pieces were already in motion:
- Direct Offers. Google announced this Google Ads pilot on January 11, 2026. Retailers set up an exclusive offer in their campaign settings (“like a special 20% off discount,” in Google’s example), and Google uses AI to decide when the offer is relevant to show a shopper in AI Mode. Google named Petco, e.l.f. Cosmetics, Samsonite, Rugs USA, and Shopify merchants as early collaborators. Google Ads Liaison Ginny Marvin told Search Engine Roundtable that “Direct Offers works alongside PMax and Standard Shopping campaigns.”
- Checkout inside AI Mode. Through the Universal Commerce Protocol (UCP), US shoppers can buy items from Etsy and Wayfair without leaving AI Mode, according to the February letter, with Shopify, Target, and Walmart listed as coming soon.
Srinivasan’s own summary of the direction: “We aren’t just bringing ads to AI experiences in Search; we are reinventing what an ad is.”
How Big AI Mode Already Is
The most recent usage number Google has shared is from its Q3 2025 earnings call on October 29, 2025. Sundar Pichai said AI Mode “now has over 75 million daily active users” and had rolled out across 40 languages. That’s the figure Google gave last October, so it’s a five-month-old number, not today’s count.
Even at that size, it’s a lot of people searching in a format with no familiar results page. There are no ten blue links. The answer is a conversation, and Google is now working out how ads fit inside it.
Where This Leaves Paid and Organic Search
Shopping Advertisers Should Watch Their Feeds
If you sell products and run Performance Max or Standard Shopping campaigns, those are the campaigns Google has tied to Direct Offers. Whether you’re in the pilot or not, the direction is clear: the ads that reach AI Mode will lean on your product data and your campaign settings, not on hand-written ad copy. Accurate, complete Merchant Center data stops being housekeeping and becomes the thing your AI Mode visibility depends on.
As these formats move from test to rollout, read unexplained changes in click-through rate or cost per click with that in mind, rather than assuming the old explanations still apply.
Organic Clicks Were Already Under Pressure
AI Mode is a different product from AI Overviews, the AI summaries that sit at the top of regular results, but the overviews give a preview of what conversational answers do to clicks. Seer Interactive’s analysis of more than 3,100 queries across 42 client organizations, reported by Search Engine Land, found a 61% decrease in organic click-through rate on queries where an AI Overview appeared. Paid CTR on those queries fell too.
AI Mode replaces the results page entirely, so we would not expect it to be kinder to organic clicks. If your SEO strategy depends on ranking for broad, simple queries, plan for those clicks to keep shrinking. The pages that still earn visits are the ones cited as sources inside AI answers, and those tend to answer specific questions clearly.
Three Moves for Advertisers and Site Owners
- Clean up your product and offer data. If you sell products, review Merchant Center for missing attributes, stale prices, and weak titles. If AI decides when an offer or product appears, the AI can only work with what you’ve given it.
- Write for the questions people actually ask. AI Mode answers cite their sources. Pages that answer a specific question directly, with clear structure and current facts, are the ones that get cited. This is where solid SEO fundamentals still pay off.
- Review your paid search setup now, not later. If you run Google Ads, check whether your Shopping and Performance Max campaigns are built on good data and sensible goals. Those campaign types are the ones Google is connecting to AI Mode first.
AI Mode Ads Will Run on Your Product Data
The letter shows what the ads will look like: built from product data, triggered by AI, and in some cases ending in a purchase that never touches your website.
If you’re not sure how AI Mode affects your website or your Google Ads, get a free strategy call. We’ll look at your account and tell you what we’d change.
