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Microsoft Launches AI-Powered Chat Ads API to Transform Advertising Landscape

Microsoft introduces a chat ads API, enabling seamless ad integration in native chat experiences. This AI-powered tool aims to revolutionize web monetization.

Microsoft is taking a bold step forward in AI-powered advertising with the introduction of its new chat ads API. This innovative solution enables publishers, apps, and service providers to choose ad formats that seamlessly integrate with their native chat experiences. The tool is designed to serve ads on both Microsoft-owned chat platforms, like AI-driven Bing, as well as third-party platforms.

The unveiling of the chat ads API highlights Microsoft's commitment to positioning itself as a leader in the previously stagnant chat category, which has been reinvigorated by the incorporation of generative AI software that generates more realistic conversations. Microsoft has established an early advantage in the sector and sparked renewed interest in its Bing search engine and Edge browser, thanks to a partnership with ChatGPT developer OpenAI.

As AI-powered Bing transitions from a limited to open preview, the API announcement is the latest development in Microsoft's AI initiatives. The chat API is strategically positioned to assure third parties, such as publishers, that they won't miss out on the potential windfall of this burgeoning field.

Kya Sainsbury-Carter, Microsoft Advertising's Corporate Vice President, emphasized the importance of monetization through chat investments during a recent roundtable discussion with reporters. Sainsbury-Carter, a 17-year Microsoft veteran, took on the role in March after Rob Wilk's departure for Snap.

Microsoft's venture into AI-centered ad products comes as competitors, including Google, face increasing pressure to innovate in response to the rapid emergence of AI technology. Bing currently boasts approximately 100 million daily active users, many of whom are drawn to the platform by AI's potential. Since the launch of AI-powered Bing in February, users have engaged in half a billion chats, with about one-third of users participating in chats daily.

Though Microsoft's advertising business is relatively small, generating around $18 billion in revenue last year across platforms such as Bing, LinkedIn, and its retail media network, the tech giant is not hesitant to share its ambitious AI vision. Sainsbury-Carter stated, "We are trying to bring together and build what we think about as a new monetization engine for the web."