Microsoft launches ads on ChatGPT-powered Bing search

Queries in Bing Chat are on average three times longer than traditional search queries – opening up more data for brand advertisers. But will it get ‘first mover advantage’ over Google in the AI ad space race?

Microsoft has announced a new ad solution in the recent AI-powered Bing, with ads appearing within user’s AI chatbot conversations on the platform. 

The ‘ads for chat API’ tool lets publishers, apps and online services customise user’s experience with ads through paid ads on Bing. 

Under the new scheme, advertisers using Microsoft Advertising will show up in chats based on the same outcome-based metrics that serve ads to other Microsoft assets such as search and video games. 

Image source: Microsoft

Half a billion chats and 33 million daily users 

Microsoft is in a unique position to explore ‘chat’ advertising in the new era of search. The new Bing was the first major, free, advertising-funded consumer service to incorporate advanced large language models via its extended partnership with Open AI and its ChatGPT platform.

Kya Sainsbury-Carter, Corporate Vice President, Microsoft Advertising, said: “Since we launched the all-new AI-powered Bing back in February, we have received strong and positive product feedback as people have engaged in over a half a billion chats, helping Bing exceed 100 million daily active users. While the industry-shifting power of generative AI is indisputable, it’s important to reflect on how its value gets distributed across the entire ecosystem. 

“Advertising is a key business model to fuel innovation on a free and open web, and supporting other companies is core to our mission to empower people and organizations to achieve more. Today, we are pleased to announce an ads solution to help online services, apps, and publishers monetise chat so they can innovate in their own engaging experiences.”

Overall, Bing has over 100 million daily active users, and Microsoft sees about a third of those using chat daily. Bing Chat has engaged in over half a billion chats since going live in February. And 15% of users use this chat to generate new content.

Microsoft said the queries in Bing Chat are on average three times longer than traditional search queries, adding more context and more opportunity for chat ads to be more relevant than in traditional search. 

The move follows another upgrade to Bing Chat earlier this month that introduced more visual components along with new chat history, exporting and sharing features. 

New SEO and paid search opportunities… without shaking up the supply chain?

Sainsbury-Carter encouraged “experimentation” in AI chat ads while promising not to shake up the ad supply chain for advertisers.

“We are ready to engage to discuss chat experiences, whether they need both algorithmic organic results and ads monetisation or ads monetisation only,” she said. “We are excited about the conversations that are already underway with those who reached out to us seeking our technical leadership and strong advertising demand.”

She said the company is “actively engaging in conversations and collecting feedback from our partners to learn and evolve the offerings”.

Addressing brand safety and privacy concerns, previously covered by PMW, Sainsbury-Carter said: “We recognise that each publisher, app and online service has unique needs, depending on factors like the primary device their audience uses or how their users engage with content. 

“We are also sitting down with advertisers to seek their input and help to shape the future of this experience. Together, we can build the next wave of the web in a way that benefits publishers, apps and online services, consumers, and advertisers.”

“Making the ‘800-pound gorilla’ in search show us it can still dance”

Christos Stavropoulos, Head of Product Strategy at BrightBid, said: “Microsoft and OpenAI’s fresh approach to search has caused Google to take notice and react. In under three months, Bing has amassed over 100 million daily active users after its announcement of ChatGPT’s integration, and now, with the introduction of ads into its AI-driven search engine, it's making the ‘800-pound gorilla’ in search show us it can still dance. 

“Ads have long been Google's bread and butter, contributing a staggering $224.47 billion to its annual revenue last year. But with new search engines offering greater intent, better understanding of user needs and a multimodal search experience, advertisers can place more effective ads and generate better conversions. Even closer to home, we’ve now seen ChatGPT recommend BrightBid to users seeking help with Google Ad optimisation.

“It’s an exciting time for paid search advertising and we are definitely going to witness a song and dance in the Search industry like never before. I personally cannot wait to see what the healthy competition brings.”