Generative AI ushers in new era of personalized digital experiences

On October 2, 2024, Microsoft announced developments in its generative AI capabilities, specifically targeting enhanced audience engagement and advertising experiences. This announcement, made three days ago, marks a pivotal moment in the evolution of digital interaction and personalized content delivery.

Microsoft's latest advancements in generative AI technology are set to revolutionize how consumers interact with digital content and how advertisers reach their target audiences. The company reported a doubling in the number of conversations with Microsoft Copilot, its AI companion, compared to the previous year. Additionally, consumer journeys incorporating both Microsoft Copilot and traditional search have grown by 85% year-on-year, with mobile devices seeing an even more dramatic increase of over 2.5 times.

According to Microsoft, ads displayed on Copilot have demonstrated significantly higher engagement rates compared to traditional search advertising. Click-through rates for these ads are 69% stronger, while conversion rates show a 76% improvement for lower funnel ad types.

Microsoft is introducing a new phase in its Copilot experience, focusing on simplifying digital interactions while making them more personal. Key changes to the advertising experience in Copilot include:

1. A clearer delineation between organic and sponsored conversations
2. Introduction of ads in a manner complementing Copilot's streamlined layout
3. Implementation of an "ad voice" feature, which provides context for how ads relate to the ongoing conversation

These updates are scheduled to roll out this month on copilot.microsoft.com, with plans to expand to updated apps on Android and iOS, as well as Copilot experiences in Bing and Edge.

Expansion of AI-driven services

Microsoft's AI integration extends beyond Copilot to other services within its ecosystem:

• Bing: The search engine now incorporates generative search capabilities, using AI to dynamically generate curated, relevant answers rather than simply finding information.
• Microsoft Edge: The web browser is being enhanced with more personalized and visual AI-driven features.
• MSN: The news and information platform is set to become more cohesive and useful through AI integration.

The deployment of these AI-enhanced solutions across Bing began on October 1, 2024, with Microsoft actively exploring new ways for users to trigger Bing's generative search for informational queries.

Advancements in conversational advertising

Looking ahead, Microsoft is developing more immersive advertising experiences that will showcase product details interactively and inform users about deals from brands they follow. The company envisions a future where brands create their own AI copilots, referred to as "brand voice," enabling Copilot to bring these brand-specific AIs into conversations for product recommendations.

New AI Tools for advertisers

Microsoft is also empowering advertisers with new generative AI tools within its advertising platform. Two key new capabilities announced are:

1. Diagnostics: This feature allows Copilot to inspect campaign setup, assess account health, diagnose issues, and propose solutions through conversational engagement.
2. Performance Snapshot: Advertisers can use natural language to request account or campaign-specific performance overviews, including key insights, trends, and anomalies.

These features are set to begin piloting this month and will gradually roll out to all regions where Copilot in the Microsoft Advertising Platform is available.

Expanding access to AI advertising tools

Microsoft reported that Copilot in the Microsoft Advertising Platform is now available in 15 languages, including English, French, German, Italian, Japanese, Portuguese, Simplified Chinese, Spanish, Traditional Chinese, Dutch, Filipino, Korean, Russian, Thai, and Turkish.

Additionally, advertisers using Microsoft Advertising Editor and Microsoft Invest now have access to Copilot's asset recommendation and asset creation features for various ad types, including Performance Max, search, and Native ads.

Performance metrics and future plans

Microsoft shared some performance data for its AI-driven advertising solutions:

• Performance Max boosts Product ads impressions on Copilot by 5 times compared to traditional search.
• Click-through rates (CTR) for Performance Max ads on Copilot are 2 times higher than on traditional search.
• Similar improvements are observed across other Performance Max ad types, including Multimedia ads and Responsive Search ads.

Looking forward, Microsoft plans to develop more capabilities for video and image generation, including options to directly comprehend branding guidelines from advertisers. The company also intends to enable additional advanced campaign diagnostics and performance features across multiple campaign types.

Key Facts

• Announcement date: October 2, 2024
• Copilot conversations: Doubled year-on-year
• Consumer journeys including Copilot and traditional search: 85% growth year-on-year
• Mobile device growth for combined Copilot and search journeys: Over 2.5 times increase
• Click-through rates for Copilot ads: 69% stronger than traditional search
• Conversion rates for Copilot ads: 76% higher for lower funnel ad types
• Languages supported by Copilot in Microsoft Advertising Platform: 15
• Performance Max impact on Product ads impressions on Copilot: 5 times boost
• Performance Max impact on click-through rates on Copilot: 2 times improvement