Microsoft on the future of advertising and conversational AI

Microsoft is reviewing different ways to implement conversational AI within the Microsoft advertising platform, Kya Sainsbury-Carter, corporate vice president of Microsoft advertising, told Greg Finn yesterday at SMX Advanced.

That’s one thing we learned yesterday from the keynote, which explored how conversational AI might radically change search marketing.

From higher CTRs to increased ROIs to conversational AI making an appearance in ads for the first time, Bing Chat has been specifically designed to tackle universal problems experienced with traditional search, according to Sainsbury-Carter.

Here’s a recap of the wide-ranging SMX Advanced keynote interview.

Tackling traditional search issues

The new Bing, unveiled in February, was designed to succeed where traditional search results can sometimes fail.

• “The universal problem with traditional search is that billions of searches fall short of the mark. It can be hard at times to find the information that people are seeking, and so we launched Bing Chat to bring better search results and answers to complex questions,” Sainsbury-Carter said.

Microsoft has worked on solving historic search issues by combining the power of large language models like open AIs with its own search index.

• “This is to ensure we’re delivering results that are current, that are cited and, as I said, that are conversational,” Sainsbury-Carter said.

The new Bing for advertisers: ‘so far, so good’

While it may be early days, Microsoft has confirmed that there have already been more than half a billion Bing Chat conversations since its launch, with more than 70% thumbs up for the answers it serves.

In addition, people have created more than 200 million pictures with Bing Image Creator.

Early data indicates great news for advertisers too, as Microsoft’s conversational AI is driving a higher click-through rate than traditional search, which is subsequently leading to increased conversions.

• “It’s because the user journey is shortened, so there is a faster path to conversions. So far, so good, would be the summary here,” Sainsbury-Carter said.

Sainsbury-Carter did not reveal any specific numbers. But she did reveal that increased CTR applies to both search results and ads, which is promising news for search marketers.

In more good news for advertisers: Microsoft is working on more opportunities for advertisers to further boost user engagement, which could again result in an uplift in conversions.

Conversational AI comes to Microsoft Ads

Sainsbury-Carter stressed that the company was committed to investing in integrating chat AI, noting that Bing Chat is “stronger than ever”. She added:

• “We’re doing a lot of work to understand how we can use Chat to drive internal efficiencies to make sure our people are working on the highest valued, most complex work. So you know there’s the platform aspect of it and there’s the internal aspect of it – both of which we think are very meaningful.”

From keywords to topics

Microsoft has suggested that advertisers can expect traditional keyword targeting to shift towards a topic-centric approach with conversational AI. Explaining the change, Sainsbury-Carter said:

• “If I’m trying to find a dress for a wedding in Chicago in July and I type in a traditional search query, I’m likely to get results for dresses for weddings – and for Chicago. But if I put that same query into Chat, Chat can put together something that says, OK, it’s hot and humid in July in that part of the country and therefore show me a sleeveless flowy dress and a lightweight fabric.
• “What’s happening is we’re expanding our understanding of intent…rather than just matching answers to keywords and so it definitely turns the idea of keyword bids on its head. We think this offers a tremendous opportunity for ads to match the conversation better and will lead to better ROI.”

Rethinking traditional ads

Sainsbury-Carter explained that Microsoft is taking a new approach when it comes to ads, the user experience and ROI scenarios:

• “We’re being more thoughtful about monetization within the experience. So, for example, in Chat mode, when you see sources cited, those citations will be a mix of algorithmic results, like you would see in traditional search, as well as some ad placements.”

Visual ads

Visual ads are another major newer feature that should be of interest to marketers, according to visual ads.

• “The ads we’re running in the new Bing Chat experience include both text ads that appear upon hover, and then more visual ads served in line with the conversation, such as a multimedia vertical pr product ad.”

Microsoft is making visual ads a huge priority and has already been trialing this feature for hotel ads. Next, it’s planning to roll out this experience for travel and real estate verticals.

Although the spotlight is currently on conversational AI, Sainsbury-Carter said this isn’t the end of traditional search:

• “Traditional search isn’t going away and there are good reasons to continue using it. That’s why we’re also focusing on delivering more visual and immersive experiences, as well as new vertical ad experience that you can’t find on any other platform.”

Ads quality over quantity

Bing Chat launched with ads and the plan is to ensure that they remain an integrated part of the chat experience – just as they are with traditional search. However, Microsoft is focusing on improving the ad experience by making sure that ads served are relevant and meet user intent.

• “It’s less about how many people are seeing the ads and more about the questions people are asking the new Bing, and how we respond to those queries. That’s how we’re thinking about it – not so much about numbers but in terms of matching queries,” added Sainsbury-Carter.

Huge opportunities for small businesses

Conversational AI is resulting in people running queries 3x the length seen on average in traditional search, meaning that they are giving more details. This extra information is helping bots to better understand user intent and so they are able to serve more detailed responses.

• “We do see a big opportunity here for small businesses. They need that extra details because they’re not looking to cover the entire world…so that opportunity to get more detailed is key.”

Small local businesses looking to improve their SERP rankings have also been advised to ensure they have Bing maps on their website. “It’s not required for ads,” said Sainsbury-Carter. “But it does help!”

Driving traffic to news publishers

Microsoft has introduced a chat API, which is going to be made available to news publishers that want to implement chatbot technology in their websites.

Whether publishers source their AI chat experiences from Microsoft or not, Microsoft Advertising can help them to monetize their services by serving relevant ads designed specifically for the chat experience.

• “This solution gives publishers and app companies flexibility and control over the user experience – because nobody knows their audience better than they do,” added Sainsbury-Carter. “They can choose the ad formats they believe are best for their audience and integrate that in a way that feels most natural to their native experience. We’re super excited about bringing that out into the market more broadly.”

Dig deeper: Microsoft’s vision for a prosperous content ecosystem in a generative AI world

Bing Chat isn’t perfect – but Microsoft is learning ‘very quickly’

Sainsbury-Carter acknowledged that safety and privacy concerns have been a huge talking point for search marketers. She stressed that addressing these issues has been a priority for Microsoft.

She pointed out that Bing Chat has been designed in partnership with AI experts and is in line with Microsoft’s Responsible AI Principles.

• “We made sure we were leveraging the expertise of Microsoft to ensure that we weren’t reinventing the wheel with this. And we are continuing to learn lessons from real world experiences and real world testing,” Sainsbury-Carter said.

Microsoft has taken many steps to prevent the abuse of its technology, such as limiting the number of sequential chats per session and limiting the total number of chats per day.

However, while Bing Chat has been developed to Microsoft’s highest standards, Carter admitted that they are expecting teething issues.

• “We didn’t bring the product out and say it’s perfect or that you should use it in every instantiation of every interaction and it is going to be perfect. We are learning, but we’re learning very quickly so that we can continue to evolve our approach.”