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Microsoft is introducing its new AI-powered search engine Bing and has started discussing with ad agencies on how to monetize it to compete with Google’s search engine. The company recently showed off a demo of the new Bing to a major ad agency and revealed plans to allow paid links within responses to search results.
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Microsoft is banking on the generative AI technology that can produce original answers in a human voice in response to open-ended questions or requests. The company expects that the more human-like responses from the Bing AI chatbot will generate more users for its search function and, therefore, more advertisers.
Microsoft is testing ads in its early version of the Bing chatbot, which is available to a limited number of users. The company is taking traditional search ads and inserting them into responses generated by the Bing chatbot. Microsoft is also planning another ad format within the chatbot that will be geared toward advertisers in specific industries. For example, when a user asks the new AI-powered Bing “what are the best hotels in Mexico?”, hotel ads could pop up.
Integrating ads into the Bing chatbot, which can be expanded to fill the top of the search page, could help ensure that ads are not pushed further down the page below the chatbot. Omnicom, a major ad group that works with brands like AT&T and Unilever, has told clients that search ads could generate lower revenue in the short term if the chatbots take up the top of search pages without including any ads.
The new Bing has a waitlist of millions of people for access, making it a potentially lucrative opportunity for Microsoft. The company said that every percentage point of market share it gains in the search advertising market could bring in another $2 billion of ad revenue. Microsoft’s Edge web browser, which uses the Bing search engine, has a market share under 5% worldwide.
In the long term, conversational AI is likely to become the dominant way consumers search on the internet, Omnicom said in its letter to clients. Microsoft and Google’s announcements signal the biggest change to search in 20 years.
While Microsoft is testing ads in its early version of Bing chatbot, the company has not provided a timeline for when brands will be able to directly purchase ads within the chatbot. The potential of the new AI technology in advertising is only beginning to be explored, and Microsoft aims to work with its partners and the ad industry.