Microsoft’s Bing to challenge Google’s search engine dominance with generative AI Ads.

As the software giant attempts to challenge Google’s hegemony, Microsoft has begun talking with advertising firms about how it intends to monetize its updated Bing search engine.

An advertising professional who talked about the private meeting on the condition of anonymity said that Microsoft demonstrated the new Bing and stated its intention to permit paid links within search result answers.

The world has recently been enthralled with generative AI, which can create creative responses in a human voice in response to open-ended queries or requests. A day apart from one another last week, Alphabet’s Google and Microsoft both unveiled new generative AI chatbots. These bots, which have not yet been made generally available to consumers, will be able to gather information from the internet for sophisticated search queries.

Early search results and discussions with Google’s chatbot Bard and Microsoft’s Bing have demonstrated their unexpected nature. On the day that it made a promotional film for Bard that showed the chatbot providing false information, Alphabet saw a $100 billion decline in its market value.

Microsoft anticipates that the Bing AI chatbot’s more human responses will increase the number of people using its search function and, consequently, the number of advertisers. In comparison to conventional search ads, advertisements within the Bing chatbot might also appear with more prominence on the page.

According to the ad executive and advertisements viewed this week, Microsoft is already testing ads in an early version of the Bing chatbot, which is accessible to a small number of people.

According to the company, it is incorporating traditional search ads—in which businesses pay to have their websites or products show up on search results for terms related to their industry—into the responses provided by the Bing chatbot.

Microsoft declined to provide more information on its plans in detail.

Microsoft is also preparing a different type of chatbot ad that will be targeted toward advertisers in particular industries. According to the ad executive, hotel advertising may appear when a user queries the new AI-powered Bing, “What are the greatest hotels in Mexico?” as an example.

Ads might be prevented from being pushed farther down the page below the Bing chatbot by integrating them within the chatbot, which can be enlarged to fill the top of the search results page.

According to a letter sent to clients last week and accessed by reporters, Omnicom, a significant advertising agency that represents companies like AT&T and Unilever, warned clients that if chatbots dominated search pages without any advertisements, search ads may experience a short-term decline in income.

Microsoft may make money from the new Bing, which has millions of people online for access. The business said last week that every percentage point of market share it increases in the market for search advertising could generate an additional $2 billion in ad revenue.

According to one estimate from web analytics company StatCounter, the market share of Microsoft’s Edge web browser, which uses the Bing search engine, is less than 5% globally.

During a separate meeting with Microsoft representatives, Michael Cohen, senior vice president of performance media at media agency Horizon Media, saw a demo of Bing. He reported that the business said links at the bottom of Bing’s AI-generated search results might be spots for advertisements.

Cohen added that the company “seems set on starting off quickly with integrated paid ads,” adding that Microsoft had said more details about the plan might be released in early March.

Last week, when a reporter asked the new AI-enhanced version of Bing how much automobile air filters cost, Bing also displayed adverts for filters offered by the auto parts retailer Parts Geek.

If Parts Geek was aware that its advertisements were running in the new Bing chatbot, they did not answer right away when contacted.

When questioned about the Parts Geek advertisements, Microsoft stated that the potential of the new AI technology in advertising is still being explored and that it intends to collaborate with its partners and the advertising business.

Cohen and the ad executive claimed that despite the early tests, Microsoft has not given a timeframe for when marketers will be able to directly buy advertisements within the chatbot.

According to Omnicom’s letter to clients, conversational AI will eventually take over as the primary method of online consumer search.

The announcements from (Microsoft and Google) “signal the largest transformation to search in 20 years,” according to Omnicom.