The highly anticipated "AI Business Model": Google takes the lead in introducing advertising in Gemini

Wallstreetcn
2026.01.12 01:16

Advertisers will be able to offer exclusive deals to consumers preparing to purchase products through Google's AI model. Google has also launched a "Universal Commerce Agreement," allowing shopping agents to research products and complete purchases within its platform. This agreement was co-developed with major retailers and marketplaces such as Walmart, Target, and Shopify

Google is introducing new personalized advertising features in its AI shopping tool, marking a key step for the tech giant in the AI monetization race.

Google announced on Sunday that advertisers will be able to offer exclusive deals to consumers preparing to purchase products through Google's AI model, powered by its Gemini model. This move represents a significant shift in Google's traditional advertising model.

Vidhya Srinivasan, Vice President of Google Ads and Commerce, stated, "This is a new concept that goes beyond our traditional search advertising model," allowing retailers to provide value to AI model shoppers at the most critical moments "to facilitate transactions." Google's AI will determine when to display offers based on users' shopping behavior and likelihood of purchase.

This initiative comes as AI chatbots pose a threat to Google's traditional "sponsored" ad placements, which generate billions of dollars in revenue for Google each year. Meanwhile, Google is seeking to leverage the momentum of its latest large language model, Gemini 3, which has made progress in competing with OpenAI's GPT-5.

Google has also launched a "Universal Commerce Agreement," enabling shopping agents to research products and complete purchases within its platform. This agreement was co-developed with major retailers and marketplaces such as Walmart, Target, and Shopify.

Beyond Traditional Search Advertising Models

Google's new advertising features will allow brands to offer highly personalized ads through its chatbots, such as discount codes, giving it a step forward among AI competitors. This feature will utilize contextual information from users' conversations with the AI model chatbot and trigger offers based on relevant products the user has clicked on.

Retailers can set the offers they wish to provide, and then Google will use AI to determine the best timing to present deals to potential customers. Existing Google Shopping partners include pet brand Petco, cosmetics retailer e.l.f. Cosmetics, and luggage manufacturer Samsonite.

Srinivasan noted that Google initially focused on discounts in its pilot program and will expand to support the creation of offers with other attributes, helping shoppers prioritize value beyond price, such as bundled sales and free shipping.

Intensifying AI Monetization Race

Google is leveraging its massive market share in online search to showcase its AI models to billions of users through the "AI model" added to the search page last year. Its standalone chatbot Gemini still lags behind ChatGPT in popularity.

Last month, OpenAI paused internal discussions about advertising products after CEO Sam Altman announced the need to improve ChatGPT's "red code." This move stemmed from concerns that competitors were narrowing its early lead in the cutting-edge technology development race.

AI companies, including OpenAI, Microsoft, and Perplexity, have been racing to introduce e-commerce features in their chatbots over the past year to find new ways to generate revenue from their popular but costly AI products. According to a report by the Financial Times, OpenAI has been rolling out its checkout feature, with the AI startup taking a cut from sales on ChatGPT

Tech Giants Bet on AI Shopping

Microsoft launched Copilot Checkout on Thursday, a feature that also provides users with recommendations and checkout services in its AI chat. Microsoft stated that users shopping through Copilot saw a 53% increase in purchases within 30 minutes of interaction compared to those who did not use the feature.

Google CEO Sundar Pichai said at the National Retail Federation's annual conference in New York, "We need to work together. I think if we do it well, this will be an extraordinary moment of expansion."

The "Universal Commerce Agreement" launched by Google will allow shopping agents to research products and make purchases without leaving their platform. The agreement was co-developed with major retailers and marketplaces such as Walmart, Target, and Shopify

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