Think long term, what do you want to see? Do you want a dog that will allow someone he hardly knows to walk up on you without him barking? Or, would you prefer he let you know, thank him, then have him settle?
The key is to work toward what you want to see from your dog. And stop being embarrassed! Take charge and teach him, he's just a puppy! Alerting you is a good thing, and as others have pointed out it's an integral part of the standard for GSDs.
pointed out, communication with your dog IS training. Simply pulling him away and being embarrassed doesn't communicate what you're hoping for the dog to learn, in fact quite the opposite! When you get embarrassed your dog feels that change, but doesn't really understand it, and consequently he goes on even higher alert and acts worse! Tell him, via a leash correction, that you don't like that behavior, then immediately give him something he CAN do, sit, down, spin, it really doesn't matter, just something he CAN do that you then reward with praise, or a treat! But you need to be calm too afterward!
The leash correction, basically a sharp jerk, but not a yank or anything, it's difficult to explain but really easy to demonstrate. But you give a sharp jerk to break the spell and get his attention, then you give the new command and reward. Try your best not to let this kind of thing fluster you in any way, it's a teaching thing. The leash correction is not a punishment, it's an attention grabber and that's it!
Dog's focus on a thing, then wind up, then act. When you see the hyper focus, a smaller leash correction breaks the "spell". And this is the best time to act! When they get a bit more toward the wound up stage, it takes a bit more force to break the spell. When they're wound up enough to act on it, it takes even more force to break the spell. But in all cases it's a "spell breaking" action, not a punishment. And not something you should get upset about, it's training. It's communication, but it takes time!
It's really a perspective thing too. My puppy could never "embarrass" me because, after all it's her acting like an idiot, not me LOL! All puppies are idiots at times LOL! Good luck, and keep us updated!