Microsoft Details How Advertising Works on Bing’s AI-Driven Chat-Based Search

Amid frenzied conversations about how artificial intelligence is upending media and advertising, Microsoft is finally giving marketers a peak into how integrating ChatGPT into Microsoft’s Bing search engine will change its ads business.

The answer is, to start, not a lot.

The process of buying advertising on Bing is no different now than it has been earlier in Bing’s 14-year existence. The one differentiator is that now ads can appear within peoples’ conversations’ with an AI chatbot. Marketers will not need to specify that they want their ads in the chat format, nor will they know whether their ads appeared in the chat format when they receive performance reports, corporate vice president of Microsoft Advertising Kya Sainsbury-Carter told a room of reporters this week.

“Advertisers, from what we hear, don’t want to be disrupted right now. Marketers are tired; they have less resources. They’ve had a crazy three years of pandemic and war and economy,” Sainsbury-Carter said. “People aren’t really looking for wild disruption, but rather an evolution and transformation that helps move their businesses forward.”

While marketers appreciate Microsoft’s approach, and are encouraged by its investments in AI, questions remain, such as how to judge success when it’s unclear whether ads show up in the chat.

When the AI chatbot comes up with an answer, a citation is included which is accessible by hovering over the answer. Among the links included in the citation might be an ad. Photo ads can appear at the end of a chatbot’s answer.

Brands don’t need to write new copy that mimics the form of a chatbot answer. Instead, all text ads and other creative assets uploaded into Bing will appear in the new chat formats. Sainsbury-Carter told Adweek, in a separate conversation, that Microsoft doesn’t want to disrupt advertisers’ workflows before they know it works.

“We didn’t want to say there might be a difference so do double the work,” she said.

The current advertising formats have been in place since Microsoft launched its AI-powered Bing search engine in limited preview in February, Sainsbury-Carter said, but the company has not widely communicated how the new tech changes its advertising business until now.

Microsoft also announced that it is moving its AI-chat product from limited preview to open preview and eliminating the waitlist for trial, in the hope of expanding the product’s user base. Microsoft also debuted a slew of new generative AI-enabled features throughout Bing.

Bing has grown to more than 100 million daily active users, the company said, a third of whom use the AI chat daily. Daily installs of the Bing mobile app have increased fourfold since February and the introduction of its AI-powered search.

Working with the advertising community

So far, ad products within Microsoft’s chat AI will operate under the same auction dynamics as Bing search auctions, meaning advertisers won’t necessarily see an inflated cost per click. The search engine is also keeping ad load within chats low to start, Sainsbury-Carter said.

It’s making us think about Microsoft more than we did in the past.

Aaron Levy, vp of search, Tinuiti

Microsoft is currently having conversations with advertisers to flesh out the next steps, and is hosting several “envisioning sessions” with agencies.

From those meetings, which began in April, the platform has learned that advertisers are interested in visually rich, immersive advertising experiences, more automation to learn the best place to serve an ad in real time and formats that lend themselves to shoppable experiences, including visual comparison layouts or shop-the-look formats, Sainsbury-Carter said.

Marketers welcome the measured approach, although expect temporary hiccups, especially if chats don’t convert as well as traditional search.

“To make the ad units perform is going to take a lot of tweaking,” said Aaron Levy, vp of search at performance marketing agency Tinuiti. “What they’ve done now makes sense. I can’t imagine it’s going to stay there.”

And because advertisers currently view Bing as a performance product, the bar will be higher for success.

“The gambit of chat as a branding vehicle…I don’t see advertisers [thinking] that, nor do they have an option to do that because you can’t buy specifically for the chat UI,” said Michael Cohen, evp of performance media services at Horizon Media. “It kind of has to be driven by performance.”

Conversational search shortens the customer journey

The bulk of news Microsoft delivered Wednesday was around the new ways its existing products will incorporate generative AI. Chat will be more visually immersive, Microsoft’s browser Edge will incorporate chat to help users better understand web pages, and people can save and export their chat history, among other features.

The new features are intended to draw more users and will also help Microsoft gain more understanding from advertising. Microsoft has already gleaned that with the new Bing, people ask for more information when buying a product in a shorter time frame than traditional search, meaning the AI-powered tool may provide advertisers more information about people and convert them to buyers faster, Sainsbury-Carter said.

“That’s a super powerful outcome that we would expect to show great campaign improvement,” she said.

Levy said this finding is believable, cutting down on the choice paralysis that comes with traditional search by giving people fewer options in chat could help them make faster purchases. But for all the bells and whistles, Bing still needs to prove it has the results to capture ad dollars, Levy says.

“It’s making us think about Microsoft more than we did in the past,” he said, adding, “In these complicated economic times no one is going to commit budget if they don’t know what’s going to happen.”