Could agents redirect merchant ad budgets toward customer savings?

Tanay Jaipuria argues that once a purchasing agent rather than a human is doing the choosing, some of the money merchants currently spend on sponsored listings could instead flow to the customer as a lower price or better terms. "Today, a merchant might pay a marketplace such as Amazon for a sponsored listing. If an agent is choosing for the customer, the merchant could use some of that budget to offer a lower price, free shipping or better returns. The customer gets more value, which gives the agent a reason to choose that product. In effect, some of the money that went to the platform selling the ad could go to the customer instead." He ties this to a live example: "Google's Direct Offers points in this direction. Merchants can surface deals within AI mode and Google intends to expand the pilot to support more types of promotions." Jaipuria frames one possible end state as "fully delegated negotiation," and restates the mechanism concretely: "instead of spending on ads, merchants could essentially offer their ad budget directly to the consumer via their agent in order to increase the consumer surplus of their product such that the agent will choose it."

The reasoning rests on Jaipuria's distinction between who pays for ads and who earns from them: "Brands and merchants pay to get their products considered. Retailers and marketplaces such as Amazon earn revenue by selling access to human shoppers." Sponsored placement only works as a lever when a human is scanning a results page and can be swayed by position; an agent instead optimizes against whatever criteria it has been given, so a merchant's money is better spent changing the product's actual value to the customer than changing its rank on a page nobody is reading. Jaipuria adds a caveat that paid distribution does not disappear entirely — "Agents may not consider every merchant. Their catalogs, integrations and defaults (web search / model) will shape which products make the shortlist" — so some advertising-like spend could persist as a fight for shortlist inclusion even as in-shortlist competition shifts to price and terms.

This gives a concrete mechanism for how merchants become the agent of choice described in Will brands succeed by building their own AI shopping agents?: rather than winning attention through messaging, a merchant wins selection by converting its ad budget into measurable consumer surplus. It also sits in tension with Can an AI agent serve both merchant and user interests fairly? — where Azhar's concern is an agent whose own fee structure biases it toward merchants, Jaipuria's mechanism describes merchants competing to make the agent's recommendation genuinely favor the customer, which would reduce rather than create that conflict, at least for the portion of competition that moves from referral fees to price concessions. And it is a different lever from the one in Can AI seller agents shift buyer preferences through description edits?, where sellers shifted agent choice by editing product descriptions rather than by changing price or terms; Jaipuria's account suggests description tweaks and price concessions are two distinct tactics sellers could use toward the same end of winning agent selection, and the companion note, Why did Amazon and Shopify respond so differently to AI agents?, names the platforms that would lose the ad revenue this mechanism redirects.

The excerpt presents this as Jaipuria's own forward-looking argument and a single cited pilot (Google's Direct Offers), not a measured outcome: there is no reported data on how much ad budget has actually shifted, how many merchants have made the trade, or whether agents in practice respond to price concessions more than to the shortlist-inclusion factors Jaipuria flags as persisting. The claim that "fully delegated negotiation" is a "possible end state" is explicitly speculative, and the piece does not establish whether this redirection would fully replace advertising revenue for platforms or merely compress it at the margin.