How will ChatGPT and Bing AI Affect Paid Search Advertising?

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Spending on paid search advertising in the United States is expected to surpass 100 billion dollars for the first time in 2023 (source). Amid this increase, Google and Bing have announced artificial intelligence products which are expected to shift the way we find and process information from the internet. 

How does paid search advertising work right now?

For advertisers on search engines right now, the process is simple. Advertisers create simple text ads and they show up in the results page as an option for users to click on. The advertiser pays the search engine whenever a user clicks on their ad. While there are many more factors that affect this process and settings that the advertiser can change to optimize their paid search campaign, the value proposition is simple. Pay the search engine and your ad will be placed on the search engine results page alongside all of the other results. 

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What are ChatGPT and Bard?

Bing AI and Google Bard are conversational AI tools which provide users with answers to any question they might have. The user can interact with these tools similarly to a search engine, but the results greatly differ. While a search engine provides a list of links where the answer could be found, the AI tools process the question and provide the answer. 

Search engines are powered by algorithms that attempt to provide the user with the best possible result. Over time, search engines have improved, including sometimes providing the answer to very basic questions above the list of links. These are called Featured Snippets on Google . The goal of these snippets is to give the user the answer they are looking for as quickly as possible. Only basic questions with a definitive answer are answered in this way. Bard is Google’s next step towards providing answers as quickly as possible. 

The other major benefit of AI search tools is that they are interactive and can provide more than simple information. You can ask them follow-up questions or ask them a question about a specific part of their answer. For example, I’ve asked Bard where the best place to eat is in Chapel Hill, NC. 

Bard responded with a list of 10 restaurants with a short description of each. This isn’t entirely dissimilar from the current SERP, although there isn’t a link to any of the places like there would be currently. However, on Bard the user can continue to interact. The user could ask a question about one of the places or even ask it to whittle the list down to the tool’s top option.

At this point, there are no links in Bard’s results. In Bing AI, when asked the same question, it provided a much shorter answer along with a link to a Tripadvisor list of restaurants:

“There are many great restaurants in Chapel Hill! Some of the top-rated restaurants according to TripAdvisor include Sunrise Biscuit Kitchen, Elements, Kipos Greek Taverna, Squid’s Restaurant and Oyster Bar, and Top of the Hill Restaurant & Brewery. What type of cuisine are you interested in?”

In both scenarios it is clear that further integration of these tools with search engines will greatly affect paid search advertising. 

As we try to understand and prepare for the shift in the industry, who better to ask than the programs themselves? We asked both models, “How will Bing AI and Google Bard change paid search advertising?” 

Bing AI responded with a short paragraph stating that “Microsoft has started discussing with ad agencies how it plans to make money from its revamped Bing search engine” and provided a link to a Reuters article discussing the changes.

Bard provided a much more detailed answer. It begins with this paragraph:

“The integration of AI-generated content into paid search advertising will have a significant impact on the industry. As users increasingly turn to AI-powered chatbots and virtual assistants for answers and information, it is likely that they will be less likely to click on paid search ads that do not provide the same level of immediate gratification.”

Whether these tools provide a short answer and a link to more information or a paragraph explanation, it’s hard to see how paid advertising will be as easily integrated as it is right now. It’s easy for a search engine to display 2-3 ads on a search engine results page when there are also 10 other organic results alongside them. If an AI tool only provides a few options or just one link, it will be harder to integrate. 

How are Microsoft and Bing planning to integrate advertising into their services?

Bing AI has already started to integrate links into some of its results. Sometimes, ads are weaved into the answers. 

So far, Bard does not have any advertising on it. One thought experiment is asking Bard itself how advertising could work on the platform::

“There are a few ways that Bard could have ads on it. One way is to display ads in the same way that Google Search displays ads. This would mean that ads would be displayed alongside the results of a search query. Another way to display ads on Bard is to integrate them into the conversation. For example, an ad could be displayed when a user asks a question about a product or service. Finally, Bard could also use native advertising, which is a type of advertising that is designed to blend in with the surrounding content. This could mean that an ad could be disguised as a blog post or a news article. 

It is still too early to say exactly how Bard will have ads on it. However, it is clear that Google is exploring a number of different options. Ultimately, the way that Bard has ads on it will need to be carefully considered in order to ensure that it does not interfere with the user experience. ”

To me, the ad shown in the Bing AI example is likely to be the most common format for ads on both Bing AI and Bard. This has the potential to work similarly to the current paid search ads on both of these search engines. Still, if this is the primary option for paid advertising on Bing, the performance from paid search ads could change dramatically. In the above example, the user has already found the answer they are looking for. They would only click on the ad if they wanted to read more about the answer. This would significantly reduce click-through rates. However, with fewer users only looking for simple answers, this could increase conversion rates. 

Another common form of advertising on these AI tools could be display ads, as Bard suggested above. If these ads are incorporated smoothly into the results, we could see higher performance than current Google or Bing display campaigns. As the tools work today, answers are provided as text blocks. Display ads could stick out and provide significant value in this environment. 

What should advertisers do about these changes?

Both tools have had serious issues since they were launched. One of their core abilities is providing the user with a quick, simple answer. But this concept hinges on the user trusting the answer that they get. At this point, these tools are just not intelligent enough. Many errors have been reported from these programs so far, including one that dropped Google’s market valuation by over 120 billion dollars.

As Bing AI and Google Bard improve, more and more users will begin to use them as their go-to place to find information on the internet. Advertisers should monitor this transition closely and stay up-to-date on the advertising options that these platforms will eventually roll out. If the advertising methods are well integrated with the revolutionary platforms, these tools could be great assets for advertisers in the near future.

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