Microsoft, Google strategy to test AI search ads irks some brands

Alphabet’s Google and Microsoft are inserting ads into AI experiments without providing an option to opt out of participation, an approach that has already rankled some brands and risks further pushback from the industry, ad buyers told Reuters.
The two tech giants are racing to revamp their search engines with artificial intelligence that can produce written responses to open-ended queries. That process will upend how advertisers reach consumers through ads on search results, a market that is estimated to grow 10% to $286 billion this year, according to research firm MAGNA.
Microsoft is testing ads in the Bing AI chatbot, which began rolling out to users in February, by relocating some traditional search ads and inserting them into the AI responses, the company said.

In a May interview, Google’s general manager of ads, Jerry Dischler, said the tech company would also use existing search ads to experiment with ad placements within the AI search snapshots, an early-test feature called Search Generative Experience that first became available last month. Google said advertisers are currently not able to opt out of the test.

Both companies said they are in the early stages of testing ads in generative AI features and were actively working with advertisers and soliciting their feedback.

Some advertisers are wary of their marketing budgets being spent on features that are available to a limited number of users, ad buyers said. Advertisers typically also want to have control over where their ads appear online and are cautious about appearing next to inappropriate or unsuitable content.

Microsoft and Google said existing guard rails on their search engines, including lists of blocked keywords to prevent ads from appearing on those queries, would also apply to their AI search features.

The two companies have poured billions into generative AI, making it crucial to derive revenue from the technology. That has included investments in other AI companies, such as Microsoft’s multibillion-dollar bet on OpenAI, creator of the popular ChatGPT, and Google’s $400 million stake in Anthropic, an OpenAI competitor.