Microsoft Advertising introduces Chat API for publishers

Today, Microsoft Advertising announced a new API for publishers, apps and online services to deliver ads through chat. The new Chat API will allow sites and apps to customize their chat experience, choose ad formats that work best for them and incorporate relevant ads for their audiences.

This comes on the heels of new visual features and capabilities for Bing Chat users Microsoft announced last week. Users will see more visual components in Bing Chat and find it easier to use on a regular basis as part of their Edge experience with new chat history, exporting and sharing features.

Overall, Bing has over 100 million daily active users, and Microsoft sees about a third of those users using chat daily. Bing Chat has engaged in over half a billion chats since going live in February. And 15% of users use this chat to generate new content.

Why we care. A more robust chat experience with video provides more context for ads. Microsoft is reaching out to publishers and other partners with the API in order to build this next wave of chat experiences together.

Dig deeper: ChatGPT: A marketer’s guide

What to expect. The new chat API allows publishers to build their own chat experiences on sites and apps serving ads either from Microsoft or other companies.

Microsoft is encouraging experimentation while promising not to shake up the ad supply chain for advertisers. Advertisers using Microsoft Advertising will show up in chats based on the same outcomes-based metrics that serve those ads to other Microsoft assets like search and video games. 

“From what we hear, advertisers don’t want to be disrupted right now,” said Kya Sainsbury-Carter, corporate vice president, Microsoft Advertising. “Marketers are tired, they have less resources, they’ve had a crazy three years of pandemic and war and economy. People aren’t looking for wild disruption, but rather evolution and transformation that helps them move their businesses forward in a way that they have the resources to actually execute on — and this is a perfect instantiation of that type of transformation.”

Monetizing chat experiences. The new API gives publishers who build chat into their site or app an opportunity to monetize using the learnings from Microsoft Advertising on how to serve relevant ads in the chat.

“Our goal is really to focus with [publishers] on the monetization piece and to be the expert there, and for them to bring to the table what’s going to be best for their audiences and create the best overall experiences,” said Sainsbury-Carter.

Verticals for new Bing. In February, Microsoft launched the new Bing, which added chat to search. Microsoft is slowly serving ads in these chats, vertical by vertical, so they aren’t disruptive.  

They’re currently introducing hotel ads. Next, they’ll focus on verticals like travel and real estate.

“Integrating [ads] into chat and into the conversation flow when you’re specifically asking about these things is pretty powerful,” Sainsbury-Carter said. “We’re also very focused on just getting the basics right. As you can imagine with new technology, we’re paying close attention to overall optimization in the ads experience and really finetuning the marketplace to ensure we’re showing the right, relevant ads relative to this much deeper context that we are able to gain through the conversational mode.”

Context is king. Microsoft has kept the ad load low in chat thus far, but consumer response has been promising.

“What we’re seeing is that consumers are receptive to and engaging with ads,” said Sainsbury-Carter.

Queries in Bing Chat are on average three times longer than traditional search queries. There’s a lot more context, and, with that, the opportunity for chat ads to be more relevant than in traditional search. 

“If you do a long query in traditional search, any search engine is going to pick just a couple of words and look for those keywords and serve you something it thinks you’re asking for,” Sainsbury-Carter explained. “With the longer conversational period [in chat], there’s more to go on, but it’s really the context that you want to go on. So as long as we’re able to deliver ads that are relevant, you would expect that engagement will be there.”