How Microsoft Will Incorporate Ads into Conversational AI

How Microsoft Will Incorporate Ads into Conversational AI

by Héctor Ariza Microsoft

How will search engines such as Google Search and Microsoft Bing generate advertising revenue via conversational AI? This question has been hotly debated ever since Google and Microsoft launched their own conversational chatbots in their search engines. After all, conversational AI tools succeed by giving searchers concise responses instead of links to other sites. Google’s ad model depends on people staying engaged on Google Search clicking on links. Microsoft’s ad business, though nowhere near the size of Google’s, also depends on clicks and engagement.

Microsoft recently provided some guidance on this question. According to Kya Sainsbury-Carter, corporate vice president of Microsoft Advertising, the method of purchasing advertisements on Bing remains unchanged from its inception. However, a new feature now allows ads to be integrated into interactions with an AI chatbot. Advertisers will not be required to request for their ads to be included in the chat format, and they won’t be notified if their ads were displayed in this manner when they get performance reports.

She noted that whenever the AI chatbot provides a response, it includes a reference that can be viewed by hovering over the response. This citation may occasionally contain an advertisement link. Furthermore, image-based ads can be displayed following the chatbot’s reply. Companies aren’t required to create new content that replicates the style of a chatbot response. Rather, all text advertisements and other creative resources uploaded on Bing will be displayed in the new chat formats.

Here is an example courtesy of Microsoft:

Microsoft Bing

Bing has expanded to 100 million+ daily active users, according to the company, with one third of them utilizing the AI chat feature every day. Since February and the roll-out of its AI-driven search, daily downloads of the Bing mobile app have quadrupled. Microsoft recently moved its AI-chat product from limited preview to open preview (thus eliminating the waitlist for trial). This should expand the product’s user base.

Microsoft also noted that:

  • The advertising products within Microsoft’s AI chat will function based on the same auction principles as Bing search auctions, indicating that advertisers may not necessarily experience an increase in cost per click.
  • Advertisers have told Microsoft they favor visually engaging, immersive advertising experiences, increased automation for real-time ad placement optimization, and formats that support shoppable experiences, such as visual comparison designs or shop-the-look formats. In fact, Microsoft intends to make chat more visually appealing.
  • With the updated Bing, users request more product information within a shorter duration compared to conventional search. This implies that the AI-driven tool could offer advertisers more insights about users and expedite their transformation into buyers.

These developments are intriguing. We recommend that advertisers be open to the way conversational AI is evolving. At the same time, advertisers:

  • Need to challenge Microsoft on issues such as accuracy of conversational AI and bias. It’s essential that users trust conversational AI in order for these tools to be adopted.
  • Should have control over ad placements and whether they choose to show ads in the chat. How can an advertiser judge success of an ad placement when it’s unclear whether an ad shows up in chat?
  • Deserve visibility into how the ad performs specifically when showed in the chat. Google (and Bing) have been reducing advertisers’ visibility into search queries, placements, and ad performance in general.

Contact True Interactive

At True Interactive, we advocate on behalf of our clients. We are monitoring these developments closely and assessing how to incorporate conversational AI. Contact us to learn how we can help you succeed in all forms of digital advertising.

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Google and Microsoft Go All-In with AI-Powered Search

Google and Microsoft Go All-In with AI-Powered Search

by Mark Smith Bing Google Microsoft

On our blog, we speculated that Google would launch its own conversational AI assistant for search as a response to the popularity of ChatGPT. Well, within hours, we had our answer, and then some: not only did Google launch a new conversational AI tool for search — so did Microsoft.

What Google Announced

On February 6, Sundar Pichai, CEO of Google and its parent company Alphabet, announced the launch of Bard, which he characterized as an experimental conversational AI service. Importantly, though, Pichai was careful to qualify how Google is moving forward. Instead of dropping the tool publicly as OpenAI did, Google is making Bard available to a team of “trusted testers” before making the tool publicly available “in coming weeks.”

This is a big difference in approach from OpenAI. Essentially Pichai was signaling, “We’re Google. We’re not going to risk our brand’s reputation by rushing something to the market until it’s ready.” By contrast, OpenAI made it clear that the company was going to crowdsource feedback from the public and make ChatGPT better – the “get to the market fast with an imperfect solution and make it better” approach that typifies Silicon Valley start-ups.

Google left start-up mode a long, long time ago.

According to Search Engine Land, the “trusted testers” vetting Bard are a demographically and geographically diverse group of people external to Google — an important consideration clearly designed to mitigate against bias – and bias is a problem that has vexed ChatGPT.

Bard is going to function as ChatGPT does now: synthesizing information to provide more complete, contextual responses to queries the way voice search has always promised to do. In Pichai’s words:

Bard can be an outlet for creativity, and a launchpad for curiosity, helping you to explain new discoveries from NASA’s James Webb Space Telescope to a 9-year-old, or learn more about the best strikers in football right now, and then get drills to build your skills . . . When people think of Google, they often think of turning to us for quick factual answers, like “how many keys does a piano have?” But increasingly, people are turning to Google for deeper insights and understanding — like, “is the piano or guitar easier to learn, and how much practice does each need?” Learning about a topic like this can take a lot of effort to figure out what you really need to know, and people often want to explore a diverse range of opinions or perspective.

And, he added that Bard will be incorporated into Google Search soon. Here’s a screen shot of how the interface might look, courtesy of Google:

This is quite an announcement, to be sure. As we blogged, it was known that Google had been developing conversational AI technology for quite some time – but the company was not ready to take it public. However, as a result, OpenAI was enjoying all the glory and credit for ChatGPT’s remarkable conversational abilities. On top of that, Microsoft invested billions of dollars into OpenAI and was reportedly incorporating ChatGPT into Bing Search.

Microsoft Drops an AI Bomb

And, speaking of Microsoft: on February 7, the company confirmed that indeed conversational AI was coming to Bing Search — not based on ChatGPT exactly, but a more powerful form of the tool. Microsoft shared a new version Bing, powered by an upgraded version of the same AI technology that underpins chatbot ChatGPT. The company is launching the product alongside an upgraded version of its Edge browser. This means that that the two will provide a new experience for browsing the web and finding information online.

The “new Bing” (in Microsoft’s words) offers a chat function, where users can ask questions and receive answers from the latest version AI language model built by OpenAI. Users can also create itineraries for trips. So, for example, you can ask it to “Plan a five-day trip to Mexico.” It’s available in preview mode at Bing.com.

Following the announcement, Yusuf Mehdi, Microsoft Corporate Vice President & Consumer Chief Marketing Officer, shared more detail on the Microsoft blog. Among other things, he elaborated on how Bing’s chat functionality can help with ideation, whether writing content or planning something:

There are times when you need more than an answer – you need inspiration. The new Bing can generate the content to help you. It can help you write an email, create a 5-day itinerary for a dream vacation to Hawaii, with links to book your travel and accommodations, prep for a job interview or create a quiz for trivia night. The new Bing also cites all its sources, so you’re able to see links to the web content it references.

Here is a depiction of the experience from the post:

He also elaborated on how the Edge browser is being improved with AI, via chat and compose. With the Edge Sidebar, you can ask for a summary of a lengthy financial report to get the key takeaways – and then use the chat function to ask for a comparison to a competing company’s financials and automatically put it in a table. You can also ask Edge to help you compose content, such as a LinkedIn post, by giving it a few prompts to get you started. After that, you can ask it to help you update the tone, format and length of the post. Edge can understand the web page you’re on and adapts accordingly.

As we learn more about Microsoft’s announcement, we’ll share more.

Many questions remain, such as:

  • Whether a conversational AI will actually improve the search experience given nagging problems with providing wrong answers and biased information. As The Verge noted, “AI language systems like ChatGPT have a well-documented propensity for presenting false information as fact.”
  • How Google and Microsoft will incorporate conversational AI into Search without harming their core advertising business. As noted, conversational AI tools flourish by giving searchers concise responses instead of links to other sites. Google’s ad model depends on people staying engaged on Google Search clicking on links. Microsoft’s ad business, though nowhere near the size of Google’s, also depends on clicks and engagement.

For now, we suggest that businesses watch the developments closely and experiment with conversational AI. No doubt Google and Microsoft will provide more context on how the interplay with their ads will work. At True Interactive, we are staying in close contact with Google and Microsoft and will report developments as we learn about them.

Don’t change your ad strategy. We’re in early days.

Contact True Interactive

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Netflix Chooses Microsoft As Its Ad Tech Partner

Netflix Chooses Microsoft As Its Ad Tech Partner

by Tim Colucci Advertising Microsoft

Netflix continues to roll out its previously announced plan to provide an ad-supported subscription tier. The streaming company has chosen Microsoft to be its global advertising technology and sales partner. This means Microsoft will supply technology to facilitate the placement of video ads on Netflix. All ads served on Netflix will be available exclusively through Microsoft’s platforms.

In a statement, Netflix Chief Operating Officer and Chief Product Officer Greg Peters said:

In April we announced that we will introduce a new lower priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard and premium plans. Today we are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner.

Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering. More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members.

It’s very early days and we have much to work through. But our long term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We’re excited to work with Microsoft as we bring this new service to life.

The news comes weeks after Microsoft completed its acquisition of the Xandr ad-tech unit from AT&T, which had been involved in programmatic advertising. Xandr provides a data-enabled technology platform with tools that help power a diverse ecosystem connecting marketers and media owners through first-party, data-led advertising solutions across its network. The Wall Street Journal reported that the acquisition gave Microsoft the technology necessary to become a contender for the Netflix deal. The Wall Street Journal also noted that in pitching itself as a contender against rivals suchas Google, Microsoft “stressed one word: agnostic. Microsoft emphasized that it won’t compete in streaming with Netflix, the person said. Comcast’s NBCUniversal operates the Peacock streaming service while Google owns YouTube.”

It was widely known that Netflix would seek an ad tech partner to support its nascent ad-supported tier. The company, facing declining membership and sagging stock price, is under pressure to compensate for lost revenue by adopting ads. Rivals such as Disney+ are set to launch an ad-supported option, too.

But Microsoft is a surprising choice as a partner. Microsoft has not, historically, been known for video ads. Having said that, going with Microsoft likely means that Netflix will launch its ad-based platform as a reservation buy when it goes into beta, but that would be short-term. Long-term, I think this means that Netflix, as well as Microsoft, is looking to open up Netflix advertising in the same way that Google does on YouTube/YouTube TV.

That would mean that after Microsoft works out the kinks through reservation buys, the company would open up placements for all advertisers, regardless of budget, to run video ads on Netflix. Reservation buys would continue for any advertiser, but anytime those placements are not bought, they would go up for auction. I foresee, though, that big series like Stranger Things, The Crown, and The Witcher will require large reservation busy since demand will be high. The same goes for movies.

Disney+ recently announced that the cheaper D+ offering would have ads as well, but those would be done through The Trade Desk. TTD is a popular DSP (demand side platform), but typically they require a reasonably sized budget in order to run campaigns.

With the Netflix/Microsoft deal, it opens up “TV commercials” for the everyday advertiser.

Contact True Interactive

True Interactive can help you navigate the connected TV landscape. Our services range from media strategy and planning to automated performance reporting. Learn more about our services here, and contact us to learn more.

Is the Microsoft Multimedia Ads Format for You?

Is the Microsoft Multimedia Ads Format for You?

by Morgan Reilly Advertising Bing Microsoft

Microsoft Advertising recently launched a beta version of a new ad format, Multimedia Ads, that seeks to make ads in search results more visually appealing. This could be a useful format for lifestyle brands (especially smaller ones) that rely on the power of images to make their products. It’s also important that Microsoft Advertising clients pay close attention to how Microsoft is rolling out the feature.

What Is the Multimedia Ads Format?

The Multimedia Ads format consists of image-rich ads that appear on search results pages. With this ad format, Microsoft uses machine learning to suggest to advertisers the optimal combination of their own images, body, copy, and headlines for searches occurring on Bing. If you lack visual assets, Microsoft will auto-create them. (This is an approach similar to Google’s.) As reported in Search Engine Land,

The recommendations will use AI to speed up the launch of Multimedia Ads for your brand. If you’re not interested, you’ll have seven days to apply or dismiss recommendations. If you don’t choose either, they’ll be automatically applied. “You can also opt out of the auto-apply functionality at the account level,” according to the announcement blog.

Here’s how Microsoft explains auto-apply on its campaigns dashboard:

Multimedia Ads scree

Considerations to Keep in Mind about Multimedia Ads

Now, this ad format could be appealing to a business that lacks the time and resources to create a campaign – say, a small mom-and-pop business. And the visual format could be really appealing for brands in industries such as travel and hospitality, where images are even more important. Multimedia Ads gives such a business the means to vary their ads so long as the business does not mind giving up control to Microsoft’s AI engine to do all the heavy lifting. But as Search Engine Land notes, “The auto-recommendations mean advertisers will have to be on the lookout to make sure any tests or ads they’re launching don’t end up going in a direction they don’t want.”

In other words, the feature could create more work for a business.

Here are some caveats we have noticed as well:

It’s important that Microsoft clients check their campaigns dashboards. We have discovered instances where Microsoft activated the ad format automatically for a given campaign. It’s up to the Microsoft Advertising client to proactively uncheck the “auto-apply recommendations” features boxes (see the bottom of the image below – and note that we unchecked auto-apply recommendations):

Multimedia Ads campaign screen

In fairness, we should note that Google has also used the approach of automatically applying features to its advertising products, thus putting the burden on the client to disable a feature.

You might not like the images that Microsoft suggests. Microsoft might suggest generic and uncompelling stock images with its AI. We much prefer manually uploading our own images, where we have more control over their quality.

You might not like the ad copy that Microsoft suggests. Microsoft’s AI engine draws from past copy of yours to create new copy. But what worked for a previous ad might not apply to the one you want to run. If you carefully manage the tone of your ad copy, then the AI-generated recommendations might not be for you.

The format could make it more difficult for you to do A/B testing, as well.

Bottom line:

  • Multimedia Ads is a step in the right direction because Microsoft Advertising is dialing up the power of images during the visual age.
  • Microsoft still has work to do with the quality of the images its AI engine suggests.
  • Microsoft Advertising clients should review their campaign dashboards and uncheck the “auto-apply recommendations” options if you are not ready to use the ad format.
  • Whether you use the ad format’s AI features depends on how much control you want to hand over to Microsoft Advertising.
  • Consider using the feature but without the AI-generated recommendations.

Contact True Interactive

To make online advertising, including Microsoft Advertising, succeed for you, contact True Interactive. We help clients across multiple industries succeed online.

Photo by Afif Kusuma on Unsplash

Why Microsoft Wants to Buy TikTok

Why Microsoft Wants to Buy TikTok

by Taylor Hart Microsoft

A couple of months ago, I mentioned on our blog that dark clouds were on the horizon for TikTok because of lingering concerns over the app’s security. Those dark clouds are here. On July 31, President Trump said he planned to ban the app in the United States because the U.S. government is concerned that TikTok poses a national security risk. TikTok’s detractors say that the popular app, owned by China-based Bytedance, could have personal data from its American users fall into the hands of the Communist Chinese government – a form of foreign espionage. But just as the issue reaching a crisis point, on August 2, Microsoft confirmed a rumor that it intends to buy the U.S. operations of TikTok. President Trump gave Microsoft and TikTok until September 15 to work out a deal, which would pave the way for TikTok to have a future in the United States. The drama is intriguing especially to the many businesses that have a presence on TikTok either through organic content or advertising. In addition, TikTok stakeholders are asking: What does Microsoft get out of buying TikTok and taking on the headaches of securing user data? Here are two reasons why:

1 TikTok Gives Microsoft a Social Media Card to Play Against Big Tech

Google has YouTube. Facebook has Instagram (and many other cash cows). But Microsoft lacks a go-to social app on which to build an advertising business. And this is a major drawback especially in 2020 as social media usage surges. Facebook’s recent quarterly earnings announcement underscored this reality: with people turning online for safer ways to pass the time during the COVID-19 pandemic, Facebook’s monthly average users across all its apps has risen to 3 billion. Microsoft is missing out on a consumer-focused social app. True, Microsoft owns LinkedIn, but LinkedIn is not a business-to-consumer ad powerhouse. TikTok gives Microsoft an instant platform.

Granted, TikTok is still in the early stages of earning revenue from advertising and in-app purchases. And the app shows promise as well as challenges. According to the Financial Times, one 24-hour TikTok campaign ran by Guess logged a CTR of 16% compared to a 4% average. Kroger, which ran a #TransformUrDorm challenge, attracted close to 477 million views across hundreds of videos over the course of approximately one week. But in November 2019, The Verge said TikTok ads were the Wild West. Self-serve ads on the platform deliver CPM of $10 (compared negatively to Instagram’s $8).

TikTok has plenty of room to grow, and Microsoft sees the potential. If TikTok were fully developed as an advertising powerhouse, it’s possible the U.S. assets would have been too expensive to buy – so now is the right time to make a deal.

It’s all about Gen Z

Microsoft has been trying to build a presence with the surging Gen Z population for the past few years, and with good reason: Gen Z is set to overtake Millennials as the largest age cohort in the United States. Thus far, Microsoft has relied on gaming to connect with Gen Z, as witnessed by its development of Xbox, a Gen Z favorite. TikTok gives Microsoft another powerful way to connect with Gen Z: 60 percent of TikTok users are Gen Zers. TikTok also gives Microsoft a way to cross-promote Gen Z friendly products such as Xbox. As The Verge notes:

Microsoft could take advantage of that direct access to TikTok users with ads for Surface, Xbox, and other products, or even as another base for its game-streaming ambitions. Google is planning to leverage YouTube to integrate its Stadia streaming service, and TikTok would give Microsoft a response with xCloud game streaming. Microsoft had been planning to use Mixer for Xbox game streaming, but the service never gained enough traction, and the company was forced to strike a deal with Facebook for xCloud integration instead. It’s not hard to imagine watching a Call of Duty video on TikTok and then being able to click and instantly play the game as it streams to your phone via Microsoft’s xCloud service.

Microsoft, in addition, could reap the benefits of revenue gained when businesses tap into TikTok to advertise to Gen Z, as well – something that businesses might be reluctant to do while TikTok’s future remains in limbo.

What’s Next?

In addition to giving Microsoft and TikTok a deadline of September 15 to work out a deal, President Trump has said the U.S. government should get a financial cut of the transaction, which complicates an already tricky process. Microsoft is taking on a risk with this political hot potato, to be sure. The company has put its reputation on the line by stating that it will “ensure that all private data of TikTok’s American users is transferred to and remains in the United States.” But there is also potentially strong reward for Microsoft. With an American owner, TikTok may become a more attractive place for American businesses to build their brands with advertising and other forms of activity that would enrich Microsoft’s bottom line.

Meanwhile, as if to underline TikTok’s importance, Instagram launched on August 5 a feature, Instagram Reels, that competes directly with TikTok. Instagram Reels benefits from Instagram’s cachet and Facebook’s muscle. The pressure is on for Microsoft to land the TikTok deal.

To learn more about TikTok, check out this treasure trove of statistics.

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Advertiser Q&A: Microsoft Digital Marketing Center

Advertiser Q&A: Microsoft Digital Marketing Center

by Mark Smith Advertising Microsoft

Microsoft has been in the news lately. The tech company has expanded its Microsoft Digital Marketing Center, which provides small-to-medium-sized businesses (SMBs) with a central site on which they can manage, online, both advertising campaigns and organic content. Read on to learn more about the Microsoft Digital Marketing Center and what it might offer your brand.

What is the Microsoft Digital Marketing Center?

The Microsoft Digital Marketing Center is a product from the company’s experimental project lab, Microsoft Garage. When it came onto the scene in October 2019, it empowered SMBs to use one interface to manage digital campaigns across multiple networks, from Microsoft to Google and Facebook, Instagram, and Twitter. In late June 2020, Microsoft announced a major expansion of the product, with additional features such as:

  • Social management inbox, which serves as a central hub for managing likes, direct messages, and replies on platforms such as Facebook, Instagram, and Twitter.
  • Image ad suggestion, which allows brands to easily create their own effective image ads by choosing from suggested ads.
  • Improved tools for ads, such as a field for an extra headline. The benefit? Advertisers can include more information in their ads and subsequently enhance location targeting.
  • The ability to appeal disapproved ads from Bing and Facebook.
  • A new home page experience that combines social and ad metrics into one user-friendly dashboard view.
  • Twitter support, which is now enabled.

Who is the target audience?

SMBs are the target market. SMBs have captured even more attention during the COVID-19 pandemic. As McKinsey points out, SMBs face an even tougher road to economic recovery. They need all the help they can get.

Who are Microsoft Digital Marketing Center’s competitors?

Microsoft Digital Marketing Center is competing with platforms such as:

  • HubSpot, which is already positioned as a one-stop shop for SMBs. Though Microsoft Digital Marketing Center doesn’t have all the CRM features of a HubSpot, it brings its own advantages to the table. (It’s currently free, for one thing.)
  • Google, to some degree. As Search Engine Land explains, “Similar to Google Smart campaigns, which aim to simplify campaign set up and management for SMBs, Digital Marketing Center uses Microsoft AI to power ad keyword and audience targeting and bidding.”

But Digital Marketing Center gives customers more autonomy. Advertisers can build their own ads. They can also use automated ad copy or modify auto-suggestions.

Why did Microsoft launch this product?

Microsoft probably launched Digital Marketing Center to gain a toehold with the market of small-to-medium-sized businesses, which have more aggressively embraced digital advertising to acquire customers amid the spread of COVID-19. And as noted above, they are not alone in their efforts to win the hearts of this group.

What should I do next?

If you are interested in trialing the Digital Marketing Center, start here. The beta is open to U.S. businesses only at this point.

Is there a “gotcha”?

As with many free products, be aware that you get what you pay for. Digital Marketing Center is totally self-service: you’ll be on your own in managing this tool. In short, it invites self-sufficiency! Also, just because it’s free now doesn’t mean the features will remain free.

Contact True Interactive

Do you want to learn more about the Digital Marketing Center and what it might offer your business? Contact us. We can help.

Photo by bruce mars on Unsplash