Microsoft is introducing new Ads for Chat APIs that allow publishers, apps, and service providers to choose the ad format they believe will best support their native chat experience. The tool can serve ads on both Microsoft-owned chat services like Bing, powered by artificial intelligence, and on external platforms.
The rollout of APIs is another sign that the tech company wants to establish itself as a leader in the chat category that has lain dormant for years, but with the integration of generative AI software that can create more lifelike conversations. I got a second wind. Microsoft gained an early lead in this space thanks to its partnership with ChatGPT developer OpenAI, sparking renewed interest in the Bing search engine and Edge browser.
The API announcement is just the latest in a steady trickle of news as the availability of tech-enhanced products widens and AI-powered Bing moved from limited edition to open preview last week. Like previous developments related to betting on AI, Microsoft’s chat API is positioned as a way to ensure that third parties such as publishers don’t lose out on what is becoming a lucrative field. increase.
Kya Sainsbury-Carter, corporate vice president of advertising at Microsoft, said at a roundtable with reporters last week. The executive, who has been with Microsoft for 17 years, took over in March after Rob Wilk stepped away from his Snap.
Sainsbury-Carter said:
budding business
Microsoft is building more AI-centric advertising products as its rivals, including Google, are under tremendous pressure to innovate after being caught off guard by the rapid emergence of the technology. Bing now has about 100 million daily active users, and these days, many are drawn to the possibilities of AI. Since AI-powered Bing went live in his February, consumers have participated in his 500 million chats, with about a third of users using chats daily.
Microsoft’s advertising business is still relatively small, generating about $18 billion in revenue last year across platforms such as Bing, LinkedIn, and retail media networks. Meanwhile, Google’s search segment generated over $40 billion in revenue in the first quarter of 2023 alone. But Microsoft has no qualms about touting its high AI ambitions.
“What may look disjointed is definitely not disjointed. We are building together what we see as the new monetization engine for the web,” said Sainsbury-Carter.
“When we think about this industry, and the world at large, this moment with AI is our career moment,” the executive added. “We are looking at something as big as the internet and the cloud.”
AI-powered Bing has served ads in limited capacity since its debut. Messages are displayed in a visual vertical format that Microsoft is working to enhance when the user hovers over the text. The company is currently in the process of rolling out hotel ads and is preparing other category-specific services such as travel and real estate. After just a few months of testing, Sainsbury Carter showed positive results without revealing details about its performance.
“We haven’t seen a lot of ads in chat yet. We are definitely in learning mode. But where they are, we find consumers receptive and engaging. increase.
AI-powered Bing isn’t just for high usage, it’s also changing search habits, potentially appealing to advertisers and publishers investing in their own chat capabilities. Searches posed as questions are more popular, as are those focused on superlatives. Also, the average query length is three times longer than his in traditional search.
“More [the query] We need to be able to address it from a monetization perspective,” said Sainsbury-Carter. “It’s the nature and context of the conversation that drives advertising.”
Of these findings, Sainsbury-Carter said the most “strong” finding for advertisers is that searches across the purchase journey are increasing, but overall time in that journey is decreasing. I pointed out that there is a possibility that
“Essentially, it consists of more information flow, which reduces mean time to purchase,” said the executive. “This is a very strong result and we can expect significant improvements in our campaigns.”
The next step in advertising
Microsoft has met with brands and agencies to hear what they would like to see next in terms of products. A more visually rich and immersive experience is just some of the ideas that came to mind. For now, Microsoft’s focus is on getting the basics right, but the Chat API ad also indicates that they want to bring new products to market quickly.
“Obviously, this is still a very learning moment and will continue for some time,” said Sainsbury-Carter. “But partners and publishers in the ecosystem are saying, ‘Let’s learn together. Let’s not wait until things are perfect.'”
According to executives, the move to open preview will create more advertising opportunities as more people join AI-powered Bing. Asked about whether more ads could impact user experience, Sainsbury-Carter suggested that’s a good question.
“Ad load increases are actually based on commercially relevant queries,” said Sainsbury-Carter. “As they grow, we expect that to happen as their usage increases, and there will be more opportunities to place ads.
