Microsoft Is Ready To Present Ads In Bing's Generative AI Search Engine To Compete With Google

JAKARTA - Microsoft is considering ways to monetize its newly revitalized search engine Bing with generative artificial intelligence (AI). Microsoft hopes that AI-powered Bing can compete with Google's dominance in the search engine market.

In a meeting with advertising agencies this week, Microsoft showed a demo of the new Bing and said it plans to allow paid links in response to search results. The existence of generative AI, which can produce original answers in the human voice in response to open-ended questions or requests, has recently received great attention.

Recently, Alphabet-owned Microsoft and Google announced a new generative AI chatbot on the same day. These chatbots are still not widely available to users and can synthesize content on the web for complex search queries.

Initial search results and conversations with Bing and a Google chatbot called Bard show they can be unpredictable. Alphabet lost $100 billion in market value on the day it released a promotional video for Bard showing the chatbot providing inaccurate information.

Microsoft hopes that a more humane response from the Bing AI chatbot will attract more users to its search function and therefore attract more advertisers. Ads within the Bing chatbot may also enjoy more attention on the page compared to traditional search ads.

Microsoft is already testing ads in an early version of the Bing chatbot which is available to a limited number of users, according to advertising and advertising executives seen by Reuters this week. The company says it is taking traditional search advertising, where brands pay to have their website or product appear in search results for keywords related to their business, and inserting it into the response generated by the Bing chatbot, according to advertising executives.

Microsoft is also planning other ad formats within the chatbot that will target advertisers in certain industries. For example, when a user asks the new Bing AI "what is the best hotel in Mexico?", a hotel ad may appear, according to an advertising executive.

Integration of ads into the Bing chatbot, which can expand to fill the top of the search page, can help ensure that ads are not pushed further down the page below the chatbot.

Omnicom, a large advertising group that works with brands such as AT&T and Unilever, has advised clients that search ads may result in lower revenue in the short term if the chatbot takes up the top of search pages without including any ads.

The new Bing, which has a waiting list of millions of people for access, is a potentially lucrative opportunity for Microsoft. The company said in an investor and press presentation last week that any percentage of market share it gains in the search advertising market could generate an additional US$2 billion in advertising revenue. According to one estimate from web analytics company StatCounter, the Microsoft Edge web browser, which uses the Bing search engine, has a market share of under 5% worldwide.

Michael Cohen, executive vice president of performance media at agency Horizon Media, who received the Bing demo during a separate meeting with Microsoft representatives, said the company demonstrated that links at the bottom of Bing's AI-generated search responses could become ad spots.

"They seem determined to get started with integrated paid advertising right away," Cohen said. He added that Microsoft said more information about the strategy could come in early March.

This week, when a Reuters reporter asked the price of a car air filter for a new version of Bing's AI-equipped car, Bing included an advertisement for the filter being sold by auto parts website Parts Geek.

Parts Geek did not immediately respond to questions about whether they were aware of their ads appearing in the new Bing chatbot.

Microsoft, when asked about the Parts Geek ad, said the potential of new AI technologies in advertising was just beginning to be explored and aimed to work with advertising partners and the industry.

"Despite initial testing, Microsoft has not yet provided a timeline for when brands will be able to purchase ads directly within the chatbot," said Cohen and advertising executives.

According to Omnicom in its letter to clients, in the long term, conversational AI will likely become the dominant way for consumers to search the internet.

"It's not an exaggeration to say that the (Microsoft and Google) announcements mark the biggest change in search in 20 years," said Omnicom.