Tech giants Google and Microsoft have incorporated ads into their AI experiments, drawing criticism from ad buyers who claim there is no option to opt-out. The companies are striving to enhance their search engines using artificial intelligence to generate written responses to open-ended queries. This transformation will disrupt the way advertisers connect with consumers through search result ads, with the market projected to reach $286 billion this year. Microsoft has commenced testing ads in the Bing AI chatbot, while Google is utilizing existing search ads to explore ad placements within AI search snapshots. Currently, advertisers are unable to opt out of these tests. Both companies have acknowledged that they are in the early stages of testing ads in generative AI features and are actively collaborating with advertisers to gather their input and feedback.
Ad buyers have expressed concerns about allocating their marketing budgets to features that are only accessible to a limited user base. These advertisers typically prioritize having control over the placement of their ads to ensure they do not appear alongside inappropriate or unsuitable content. Microsoft and Google have reassured advertisers that the existing safeguards on their search engines, including blocked keyword lists, will also be applicable to their AI search features. Given the substantial investments made by both companies in generative AI, it is imperative for them to generate revenue from this technology. This has led to investments in other AI companies, such as Microsoft’s significant investment in OpenAI, the creator of the widely used ChatGPT, and Google’s $400 million stake in Anthropic, a competitor of OpenAI.
According to Jason Lee, the executive vice president of brand safety at Horizon Media, a media agency that has collaborated with brands like GEICO and Corona beer, the practice of testing new ad placements without obtaining consent from brands is a matter of concern for advertisers. Another ad buyer from a major agency also expressed that this practice is not considered standard in the industry.
In response to this, several large advertisers temporarily halted their ad spending on Microsoft, as confirmed by an ad buyer familiar with the situation. Among them, Wells Fargo has chosen to allocate a portion of its ad budget away from Microsoft.
Wells Fargo did not provide a comment when requested.
During an interview, Lynne Kjolso, the vice president of global partner and retail media at Microsoft, stated that the company’s objective is to ensure the introduction of new Bing ad formats is as seamless as possible for advertisers, without burdening them with additional work. Microsoft recently launched hotel ads within the Bing chatbot and is actively working to introduce ads for other industries, such as real estate.
Advertisers are expressing concerns about the increasing tension surrounding tech platforms offering AI solutions that have the potential to deliver better results. However, these solutions often require advertisers to relinquish some level of control over their ads.
Samantha Aiken, a paid search supervisor at marketing agency Code3, stated that this is not the first instance of Google and Bing expanding their networks while limiting control for advertisers.
For instance, Google’s Performance Max, a tool that utilizes AI to automatically determine the best ad placements across various Google products, is perceived by many in the industry as an analytical “black box.” Aiken explained that the algorithmic models used by Performance Max do not provide transparency regarding how they determine the placement of ads.
Three ad buyers have expressed concerns regarding Microsoft’s lack of transparency reporting. They would like to see reports that disclose the search terms that trigger a brand’s ads to appear in generative AI experiences, as well as a comparison of performance between these ads and traditional search ads.
While Microsoft representatives have acknowledged these concerns, they have not provided a specific timeline for the availability of more transparency reporting, according to two of the ad buyers.
According to an ad buyer, advertisers currently do not have the ability to retrieve a report showing the frequency of their ads appearing in the Bing chatbot.
Lynne Kjolso, Microsoft’s vice president of global partner and retail media, acknowledged that transparency reports have been a significant request from ad agencies. She stated that Microsoft’s product teams are prioritizing the development of these reports.
Kjolso emphasized that Microsoft is actively considering additional tools and controls to provide advertisers with more options. She also mentioned that sales teams are working closely with certain brands to address any concerns regarding ad placement.
Two media buyers from major ad agencies raised concerns about how search giants like Microsoft and Bing would prevent ads from appearing alongside AI responses that contain false information or “hallucinations.”
Kjolso explained that Bing’s web information can serve as a grounding mechanism for large-language models, helping to mitigate the risk of false information or hallucinations.
