Microsoft created quite the buzz in the ad tech industry last month with a revolutionary “new Bing” that harnesses generative AI to engage people in conversational search experiences. Using the power of ChatGPT, a large language model trained by OpenAI, people can now ask questions and chat with Bing to receive personalized results.

As more people use “new Bing,” the more its natural language processing capabilities will improve, allowing it to better understand user intent. Over time, this will result in Bing delivering even more advanced chat experiences beyond its current exceptional results. The platform will attract a growing and highly engaged audience, allowing advertisers to reach this audience with targeted and relevant ads.

So, the real question on marketers’ minds is: How can this new chat search engagement model enable better advertising outcomes?

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What will This Look Like in Practice?

To illustrate how Bing’s integration of ChatGPT could revolutionize advertising, let’s consider a scenario from the past and compare it to the present.

In the past, a consumer searching for an electric bicycle for their daily commute would use a search engine and receive a results page with a list of links. Unfortunately, these links were often a mixed bag.

They might include ads from companies that paid for top placement or organic links that were poorly built, auto-generated or made by website generation farms focused solely on SEO results. Consumers had the frustrating challenge of sifting through all those links to find the answers. Meanwhile, advertisers wasted ad dollars trying to target the right individual, thinking this was the pinnacle of innovation.

Now, let’s step into the future. Consumers searching for daily commuter bicycles can now open a chat window with new Bing. Within this chat experience, the consumer can refine their needs as the conversational AI produces more relevant answers. AI can even make recommendations based on other considerations such as distance, terrain, maintenance and more.

Through this conversation, the consumer builds trust in the results, and their experience is only enhanced when they see relevant and timely ads within the chat.

 As the ad offerings mature within platforms like Bing, the cost will likely increase. And it’s a worthy price to pay because the conversational nature of ‘chat’ allows customers to refine their needs to a more laser-focused outcome, making the advertising more effective.

That said, no matter how much information a consumer gives AI, these chat-based systems don’t actually know anything specific about the consumer. But marketers do.

To take full advantage of this AI evolution, marketers must tap into their first-party data, have the right tech infrastructure and have easy access to a new and innovative chat platform like Microsoft’s new Bing, powered by ChatGPT.

Combining AI-Powered Ads with First-Party Data

While chat-based technology is still new and untested, it opens the potential for platforms like ChatGPT to utilize first-party data in new and interesting ways, both in terms of how it generates responses and how it delivers complementary advertising within the chat.

New market innovative experiences like this have arrived just in time, as the industry’s reliance on third-party cookies to serve personalized ads is becoming obsolete as browsers like Google phase out third-party cookies due to privacy concerns and new regulations.

Advertisers increasingly need to tap into their unique and comprehensive customer dataset like purchase behavior, preferences and interests to better target ads to increase their revenue and customer experience. This intelligence is often built on a company’s AI infrastructure to determine appropriate customer segmentation or product recommendations within their customer data platform (CDP).

The convergence of AI-enabled first-party CDPs with AI-based chat and search functionality has the potential to allow companies to deliver highly targeted advertising experiences based on customer chat sessions that are then matched to specific audience segments based on the company’s customer data.

While Bing’s use of ChatGPT in advertisements hasn’t been fully revealed yet, there are some ways AI can be used in the industry that can enrich interactions with customers, including;

• Contextual Targeting: Companies can harness their first-party data to match customer queries with AI-powered chat experiences, leading to better targeted ads. As chat-based services like ChatGPT become more popular, people will have longer, more detailed conversations, and it’ll start drawing upon more relevant and compelling ads. With the help of AI, ads can also have more engaging messages and appropriate calls to action that closely align with the search, helping increase leads. For example, if someone is searching for family-friendly beaches in Hawaii, an AI-powered system can display ads for nearby family resorts, making it easier for them to plan the perfect vacation.
• Customer Segmentation: Intelligent CDPs can be used to build audience segments by analyzing customers’ interests, preferences and behaviors, creating distinct groups that are optimized for business outcomes, such as engagement, acquisition, conversion, loyalty and more. One effective way to organize and utilize this data is through a CDP, which functions as a central location for all a company’s first-party data, including purchase history, browsing behavior and demographic information. Unifying this data in a central repository makes it easier for marketers to get a clearer picture of what customers are interested in and how they behave. As a result, advertisers can use a 360-degree customer profile to make smarter decisions and create more personalized campaigns.

The future of AI and its integration into advertising is full of exciting possibilities. Combining first-party data and natural language interfaces, such as Bing’s integration of ChatGPT, can help companies achieve a level of personalization that hasn’t been seen before. But it’s also important to remember this new advancement in chat-based searching is only the beginning. We can expect many more exciting developments in AI and advertising for years to come.

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