Microsoft is picking up ad spend by improving search, social, and video features, as well as improving ad targeting and measurement. The company is also inserting itself into the rapidly growing retail media market. In the last few weeks, Microsoft has announced a slew of updates that will help it expand its business.
- Microsoft’s share of total US digital ad spend is growing and will hit 4.1% in 2025, a total of $13.23 billion, according to our forecast.
- That’s up from 3.7% this year, or a total of $9.79 billion.
- This year Microsoft’s ad revenues will increase 8.9% YoY. Next year growth will increase to 16.6% YoY.
- Market expansion: Audience Ads expanded to 58 more markets, making it available to 187 markets globally.
- Ad placements: Microsoft introduced new ad placements within its Casual Games and Microsoft 365 platforms. The company is also introducing connected TV (CTV) and video ads.
- Bidding and targeting: Maximize Conversions and Target CPA are both in pilot. They will allow for automated bidding and improved targeting. Predictive Targeting is now available, which powers ad placement through AI.
Programmatic ad spending now accounts for about 9 in 10 digital display ad dollars in the US, according to our forecast. Microsoft is boosting its programmatic potential and pushing the use of AI along the way to keep advertisers happy as they deal with the challenges of signal loss related to Apple’s AppTrackingTransparency and Google’s deprecation of third-party cookies.
Clicks on ads within Bing Chat are 1.8 times higher than clicks on ads in traditional search, according to Kya Sainsbury-Carter, corporate vice president of Microsoft Advertising, as reported by Search Engine Round Table.
- Microsoft’s US search ad revenues will grow 9.0% YoY this year, and growth will balloon to 17.5% in 2024 and 18.3% in 2025, according to our forecast.
- Increased traffic to the new Bing and a first-mover advantage in monetizing generative AI search responses will help Microsoft boost its search share.