June 9, many ad buyers say Alphabet’s Google and Microsoft are experimenting with artificial intelligence in their search engines by inserting ads with no option to opt-out or turn them off. This practice has already annoyed some brands and is likely to be boycotted by the advertising industry.
Because artificial intelligence can automatically generate responses to open-ended queries posed by users, Google and Microsoft are competing to transform their search engines with artificial intelligence technology. This process will disrupt the way advertisers reach consumers through search results ads. Research firm MAGNA estimates that the search advertising market will grow 10% this year to $286 billion (currently about RMB 2.04 trillion).
In February, Microsoft began releasing its artificial intelligence chatbot feature to Bing users. Microsoft said the company is testing the insertion of ads into the Bing search engine’s AI chatbot, which redirects some traditional search ads to AI-generated responses.
In an interview in May, Jerry Dischler, general manager of advertising at Google, said the technology company will also use existing search ads to experiment with how ads can be placed in AI search snapshots, a feature called Search Generative Experience (Search The early test feature, called Search Generative Experience, first went live last month. Google said ad buyers can’t opt out of the test at this time.
Both companies said they are in the early stages of testing the generative AI ad feature and are actively working with advertisers to get their feedback.
Ad buyers say some advertisers are wary of spending their marketing budgets on features that are only used by a small number of users. Advertisers also often want to control exactly where ads are displayed, and are concerned that their own brand ads will appear next to inappropriate or objectionable content.
Microsoft and Google said that existing safeguards in their search engines allow users to set keywords to prevent ads from appearing in the list of relevant search results. The feature is also available in artificial intelligence search engines.
The two companies have invested tens of billions of dollars in generative AI, including investments in other AI ventures. Microsoft, for example, has invested billions of dollars in ChatGPT developer OpenAI, and Google has invested $400 million in OpenAI competitor Anthropic. So it’s critical that they get real revenue from this technology.
Media agency Horizon Media has worked with brands such as insurer GEICO and Corona beer. Jason Lee, the company’s executive vice president of brand security, says testing new forms of ad placement without brand consent is a common concern among advertisers. Another ad buyer at a major agency also said the advertising industry would not universally endorse the practice.
In response, several large advertising clients have chosen not to work with Microsoft on ad placements for now, according to one ad buyer with knowledge of the situation. The person familiar with the matter also said that Wells Fargo continues to place some of its advertising budget in channels other than Microsoft.
In an interview, Lynne Kjolso, Microsoft’s vice president of global partners and retail media, said the company’s goal is to introduce new forms of Bing search advertising as “seamlessly” as possible without increasing advertiser workload.
Microsoft recently went live with hotel ads in its Bing chatbot, she said, and is working to introduce ads in other industries such as real estate.
Technology platforms are offering a growing number of artificial intelligence solutions. While these solutions can deliver better results for advertisers, they require them to relinquish some degree of control over their ads. The resulting concerns have exacerbated tensions between advertisers and tech platforms.
Samantha Aiken, head of paid search at marketing agency Code3 ((Samantha Aiken) said, “This is not the first time Google and Bing have expanded their networks while limiting advertiser control.”
Aiken cited Google’s Performance Max, a tool that uses artificial intelligence to automatically find the best placement for ads across multiple Google products, eliminating the need for advertisers to set up how they are placed. She said many in the industry see Google Performance Max as a “black box” because the algorithmic 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 exactly which search terms would trigger brand-specific ads to appear in the generative AI’s response results, or how those ads would compare with traditional search ads.
Two ad buyers said that while Microsoft representatives did acknowledge that customers would have such concerns, they did not indicate when they would be able to provide more transparent reporting.
One ad buyer said, “Advertisers can’t get reports directly to figure out how often ads appear in Bing chatbots.”
Kjorzo said that transparency reporting has been a top request from ad agencies and that the Microsoft product team is “prioritizing this issue.
She said, “We’re thinking about exactly what additional features and controls we need to provide to advertisers.” She added that the sales team is actively working with some brands to allay their concerns about ad placement. Two ad buyers from large advertising agencies said there is a big question about how search engines can prevent ads from appearing next to AI-responsive content that contains false information.
Kjorzo explained that Bing’s vast network of information can “underwrite” the large language model and actually reduce the risk of generating false information.
