Microsoft Shoots Its Shot: AI-Powered Search and The New Bing

Was it only November 30th that ChatGPT launched and took the entire world by storm? Whether you were trying to get the AI chatbot to solve all of your marketing troubles, worried that it was the harbinger of a Terminator-esque war on humanity, or just asking it to rewrite Hamlet as an episode of Seinfeld, it was tough to escape.   

Source: Vox

On February 6th, Google, caught in a reactive position by the stratospheric popularity of ChatGPT, announced the eventual launch and integration into search of its own conversational AI, Bard. But details were scarce and all they were willing to promise was that it was coming “soon.”

The powers-that-be at Microsoft realized that this was their big chance to take a shot at capturing market share. So the very next day, February 7th, Microsoft revealed that it was taking the much-ballyhooed next step and integrating AI-based results into Bing Search Engine and Edge browser search results. 

Right now, only a select group of users has access to what Microsoft is calling “The New Bing,” and speculation is running as rampant as the waitlist to try it out: could Bing, a search engine seemingly destined for an eternity in a distant second place, have a real shot at disrupting Google’s dominance? How smart is this thing? And what does it mean for the billions of dollars of ad revenue at play?

So we put together a crack team of search experts and digital wizards to sort it all out for you. Let’s start with the basics.

What’s changing about Microsoft Bing?

“The New Bing” will feature a box on the right-hand side of the SERP that delivers conversational AI-generated results. Think of it as an enhanced ChatGPT experience that includes annotations to source sites and real-time results (ChatGPT only includes reliable data through 2021 and no sources). Bing will also prompt additional questions and suggest answers while searching.

If you haven’t already joined the waitlist, you can sign up for it here.

The stated goal of this new update is to better answer complex queries where modern search engines fail. The updated Microsoft tools use a more powerful version of the conversational AI behind OpenAI’s ChatGPT. Long story short: this new language model, rumored to be GPT-4, is faster, more accurate, and more capable. 

The integration is made possible by Microsoft’s proprietary model, dubbed Prometheus, which wraps Microsoft technology around OpenAI models to provide more relevant answers, annotate sources, and deliver up-to-date results while providing a safer user experience. 

But the changes don’t end with Bing. Microsoft Edge, the default browser on Windows devices, will have two new functionalities: chat and compose. Chat is a conversational experience: users can ask questions/provide inputs and Edge will provide answers to questions or summarize information on complex topics. Compose lets users prompt Edge to generate actual content for them, like an email or a LinkedIn post. 

For Microsoft, search represents the first phase of a much broader evolution. Microsoft CEO Satya Nadella believes that AI technology integration will affect “pretty much every software category” and could eventually change the web as we know it. 

What does this ChatGPT integration mean for the future of search?

Microsoft has high hopes for the integration of AI technology into Edge and Bing; this upgrade is supposed to deliver a superior user experience, drive more engagement on Microsoft properties, improve advertiser value and campaign results, and increase advertiser spend.

We believe that this union of AI and search will change the way users think about search and how users interact with the web at large—look no further than Google’s rush to market with Bard. The new Bing is undeniably exciting, but right now we see it as a test run that will help marketers understand the power of new AI in the context of search results. It’ll also give all of us an idea of what AI integration with Google will look like. 

Initially, it’s likely a Bing SERP integrating AI-generated results will lean heavier toward organic content. As users start to test the technology, we’ll probably see more longer-tail research-focused queries.

Much of the new Bing traffic will likely be around “fun” queries as users start to play with the tool. Brands may not see any impact on core brand keywords or low-funnel non-brand search, but upper-funnel keywords and shopping campaigns could see more traffic from users playing around.

The long-term future is harder to predict. The SERP balance may continue to favor organic content, especially if the new AI-powered box remains on the right-hand rail of the SERP where paid ads often appear. Once Prometheus integrates paid ads into its content, this balance may begin to shift back toward paid results.

One major outstanding question is how users will react to ads in chat AI-generated results. At first, they’ll likely be skeptical or even turned off, especially if early iterations are ad-free. But that hasn’t stopped Google or Microsoft from scaling ads across the SERP in the 25-year history of search. As long as the results are relevant and the experience is seamless, users will, well, get used to it. 

How should marketers prepare for AI-driven changes to paid and organic search?

Organic representation in AI-based search results will require high quantity and quality relevance signals. The importance of digital PR, in addition to E-E-A-T onsite content, will grow as companies set their sights on brand representation in AI-generated results in addition to domain rankings.

These updated AI-backed tools and integrations mean users can ask more questions and refine their asks in real-time. Bing and Edge will use the context of the full chat to provide relevant answers and details. 

As for what this means for paid search, once the AI-based results are available to a larger group of users we expect the percentage of results served will likely shift toward organic. Advertisers may see a decline in non-brand search as more searches become zero-click. This could potentially be offset by a corresponding increase in direct and branded traffic if your links are successfully represented in AI-generated results.

Source: Search Engine Land

Right now, it doesn’t appear that ads are integrated into Prometheus results, but we anticipate integration occurring sooner rather than later (it might not be in Q1, but we’d be surprised if there isn’t integration prior to Q4).

There’s also no telling how AI data will be reported in analytics platforms like Google Analytics. Organic impressions are not currently reported in analytics platforms, and we don’t anticipate that changing.

Any clicks on links in AI-generated content should be treated the same as if a user had clicked on a link organically, but with a special parameter. There could also be fewer “clicks through to site” and decreasing CTR as queries are answered on the SERP without requiring a website visit, similar to existing zero-click results.

We won’t fully understand the impact on advertiser value, campaign results, and spend until Microsoft rolls out paid integration for the new features. What you can expect in the coming weeks is an increase in total traffic on Bing as curious users go to Bing instead of Google. 

Will AI turn the tide in a battle between Google and Microsoft?

Bing is in the disruptor position in the face of Google’s overall dominance as a search engine, so an update of this magnitude has put a fire under Google to push more and faster innovation. More innovation and more options in the market is ultimately good for advertisers, brands, and consumers.

Source: Statista

Microsoft will almost certainly claw some search market share from Google in the immediate future. They’re incentivizing users to change their defaults to Bing and Edge to move up the waitlist for access to the new features, so most of those gains could be temporary.

But that is by no means a sure thing.

A lot depends on both the timing and quality of Google’s Bard integration with search, which we have only seen in a demo environment. Early reviews of Microsoft’s offering from multiple sources are glowing; the review of the new Bing in The New York Times ends with an admission that must have sent shivers down the spine of Google’s leadership: the writer is changing their default search engine to Bing.

This is Microsoft’s big chance to take a piece out of Google’s pie, and they’re eager not to waste it. It’s too soon to call it, but it is entirely possible that a long-term shift is in motion that will result in Bing capturing a significant number of users from Google and retaining them long-term.

“After I turn in this column, I’m going to do something I thought I’d never do: I’m switching my desktop computer’s default search engine to Bing. And Google, my default source of information for my entire adult life, is going to have to fight to get me back.”

Stronger market penetration from Microsoft in search may also lead to a boost in both acquisition and retention for Office and Outlook. If Edge emerges as a more respected browser, it would not only fuel Bing adoption but could also fuel additional hardware sales.

This is the first time in a long time we’ve seen Microsoft act as a first-mover in the search landscape, and we’re excited to see what both tech giants bring to the table in response.

But keep an eye on the market share jockeying between Google and Microsoft. That could influence when ad integration goes live on both platforms. If Microsoft is gaining market share, they could potentially focus on the integration and quality of AI results, delaying monetization.

AI incurs high computing costs, which is less of a concern for companies like Microsoft that own their own computer power. But scaled AI without monetization could drive short-term losses without a long-term ROI guarantee for Microsoft even if they do steal market share against Google.  

The full implications of AI integration into search for advertisers are massive but might be slow to actually come to fruition. It’s an exciting space and new developments are emerging on a daily basis. We’ll be keeping a close eye on any changes—so stay tuned for more updates.

Search isn’t the only thing that’s changing fast; make sure your business stays ahead of the data privacy curve with our full guide to State of the Data 2023: The Path to Profitability Requires Privacy Compliance.

Rachel Bucey, Simon Poulton, Serena Peterson, Deanna Cullen, Allison Tesnar, Alex Hurley, Christine Schrader, and Grayson Gilcrease contributed to this report.