Shulou(Shulou.com)11/24 Report--

February 9 news, with Microsoft's release of the new Bing supported by ChatGPT, and Google's follow-up release of Bard, the AI search war in the technology field has officially begun. For Microsoft, the move represents a huge increase in revenue.

Microsoft launched the new Bing not only to attract Google search users, but also to steal its advertisers. In the digital advertising market worth about $500 billion, search advertising is so profitable that Microsoft can benefit enough from it, even if it does little to weaken Google's dominance. Even increasing its share of search users by a few percentage points could increase its revenue by billions of dollars.

"for every 1 percentage point increase in search advertising market share, our advertising business is expected to increase revenue by $2 billion," Philippe Ockenden, Microsoft's senior vice president for finance, said on a conference call with analysts.

Bing is already the largest part of Microsoft's advertising business, which also includes Xbox, MSN, Xandr, an advertising technology business, and a recent ad sales agreement with Netflix. Microsoft said on a conference call that its advertising department has generated $18 billion in revenue and made a profit in the past 12 months. Revenue has almost doubled from $10 billion in the previous fiscal year.

Adding AI support to Bing and Edge will improve the search experience and drive more users, which in turn will attract more advertisers, Okendon said.

Microsoft also believes it will be able to charge higher fees for ads on the new Bing because AI technology will help create more personalized search results. According to marketing company Wordstream 2021, the average price of Google ads is 33 per cent higher than that of Bing in terms of per-click cost.

"while users may see fewer ads, they are more valuable to advertisers," Okendan said on a conference call. "

It remains to be seen what advertising will look like in the chatbot interface. At present, search advertising is launched through keyword-driven advertising auctions. For example, when users type "housing insurance", "Paris hotel" or "jeans", the relevant companies will spend money to top the list of search advertising results.

"I really think we're going to figure out what advertising is," Kevin Scott, Microsoft's chief technology officer, said in an interview. He hinted that the actual form of advertising may still be in the making.

Andy Goodwin, head of paid search in the UK at BrainLabs, the digital advertising company, said it was unclear how advertisers would target users who were encouraged to enter longer, more conversational questions. "the cash cow of search advertisers is a short-tailed, transactional term," Goodwin said. "

New forms of advertising aside, the hype surrounding ChatGPT and New Bing may prompt people to use Microsoft's search engine more, and advertisers often follow people's eyes. "this is the opportunity for market share change," Goodwin said. "

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