Google, Microsoft test AI search advertising strategy but are boycotted by brands

According to news on June 9, many advertising buyers said that Alphabet’s Google and Microsoft have inserted advertisements in the process of experimenting with artificial intelligence in their own search engines, and they have not yet been able to withdraw or Closed option. The approach has angered some brands and threatens to be boycotted by the advertising industry.

Google and Microsoft are competing to use artificial intelligence technology to transform their search engines because artificial intelligence can automatically generate responses to open-ended query questions posed by users. This process will disrupt the way advertisers reach consumers through search results ads. Research firm MAGNA estimates the search advertising market will grow 10% this year to $286 billion.

In February this year, Microsoft began releasing artificial intelligence chatbot functions to Bing users. Microsoft said it is testing inserting ads into its Bing search engine's artificial intelligence chatbot, redirecting some traditional search ads to AI-generated responses.

In an interview in May, Google Advertising General Manager Jerry Dischler said that the technology company will also use existing search ads to experiment with how to use artificial intelligence to search for ads. Ads are served in snapshots, an early beta feature called Search Generative Experience that first went live last month. Google said ad buyers currently cannot opt ​​out of the test.

Both companies said they are in the early stages of testing generative AI advertising capabilities and are actively working with advertisers to solicit their feedback.

Ad buyers say some advertisers are wary of spending marketing budgets on features that only a handful of users use. Advertisers also often want to have control over where their ads appear and are concerned about their own brand ads appearing next to inappropriate or objectionable content.

Microsoft and Google said that existing protection measures in their search engines allow users to set keywords to prevent ads from appearing in relevant search results lists. This feature is also available in artificial intelligence search engines.

The two companies have invested tens of billions of dollars in the field of generative artificial intelligence, including investments in other artificial intelligence companies. For example, Microsoft invested billions of dollars in OpenAI, the developer of ChatGPT, and Google invested $400 million in OpenAI's competitor Anthropic. So it's crucial that they make real money from this technology.

Media agency Horizon Media has worked with brands including insurance company GEICO and Corona beer. Jason Lee, the company's executive vice president of brand safety, said testing new forms of advertising without the brand's consent is a common concern among advertisers. Another ad buyer at a major agency also said the industry would not universally endorse the practice.

In response, a number of major advertising clients have chosen to temporarily stop advertising with Microsoft, according to an ad buyer familiar with the matter. Wells Fargo continues to direct some of its advertising budget to channels other than Microsoft, the person added.

In an interview, Lynne Kjolso, Microsoft's vice president of global partners and retail media, said the company's goal is to maximize the number of ads without increasing the workload of advertisers. Possible "seamless" introduction of new forms of Bing search ads.

She said that Microsoft recently launched hotel ads in the Bing chatbot and is working to introduce ads from other industries such as real estate.

Technology platforms are providing more and more artificial intelligence solutions. While these options can produce better results for advertisers, they require them to give up some control over their ads. The resulting concerns have heightened tensions between advertisers and technology platforms.

Samantha Aiken, director of paid search at marketing agency Code3, said: “This is not the first time Google and Bing have expanded their networks while limiting advertisers’ control.”

Aiken takes Google's Performance Max as an example. This is a tool that uses artificial intelligence to automatically find the best ad placements across multiple Google products, eliminating the need for advertisers to set how to place ads themselves. She said many in the industry view Google Performance Max as a "black box" because the algorithm model doesn't explain how it decides where to place ads.

Three ad buyers said they were concerned that Microsoft also lacked transparency in reporting on which search terms triggered specific brand ads to appear in the generative AI response results, or whether those ads were related to How effective traditional search advertising compares.

Two ad buyers said that although Microsoft representatives acknowledged that customers would have this concern, they did not indicate when more transparency reporting would be provided.

One ad buyer said: "Advertisers can't directly get the report to find out how often their ads appear in the Bing chatbot."

Kyorso said that the transparency report has been a top request from ad agencies, and Microsoft product teams are "prioritizing this issue."

“We are thinking about what additional features and controls we need to provide to advertisers,” she said, adding that the sales team is actively working with some brands to reassure them about ad placement. How search engines prevent ads from appearing next to AI-responsive content containing false information is a big problem, two ad buyers from major ad agencies said.

Kyorso explained that Bing’s massive network information can “cover” large language models, which can actually reduce the risk of generating false information.

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