Ad buyers told Reuters that Alphabet’s Google and Microsoft are injecting advertising into AI tests without giving users the chance to opt out of participation, a move that has already infuriated several brands and runs the danger of drawing further criticism from the industry.

The two digital behemoths are competing to upgrade their search engines with AI that can generate text responses to open-ended searches. Through that method, advertisers will no longer be able to contact consumers through ads on search results, a market that research group MAGNA predicts will increase by 10% to $286 billion this year.

By moving certain conventional search advertisements and putting them inside the AI responses, Microsoft is testing ads in the Bing AI chatbot, which started rolling out to users in February.

Jerry Dischler, Google’s general manager of advertising, stated in a May interview that the tech company would also use current search ads to experiment with ad placements within the AI search snapshots, an early-test feature known as Search Generative Experience that first became accessible last month. According to Google, marketers cannot yet opt out of the test.

Both businesses claimed they are actively collaborating with advertisers and seeking their input as they try generative AI elements in commercials.

According to ad buyers, some advertisers are hesitant to spend their marketing money on features that are only accessible to a certain group of customers. In general, advertisers are concerned about having control over where their advertising display online and avoid having their ads show next to offensive or improper content.

Both Microsoft and Google stated that the guardrails already in place for their search engines—including lists of terms to avoid—would also apply to their AI search functions.

The two businesses have invested enormous sums of money on generative AI, thus it is critical to make money from the technology. Other AI businesses have benefited from investments, such as Microsoft’s multibillion-dollar bet on OpenAI, the company behind the well-known ChatGPT, and Google’s $400 million investment in Anthropic, an OpenAI rival.

According to Jason Lee, executive vice president of brand safety at Horizon Media, a media company that has worked with brands like beer brand Corona and insurance GEICO, testing new ad spots without obtaining permission from companies is a problematic practise for advertisers. The practise is not seen as conventional in the industry, according to another ad buyer at a significant advertising agency.

According to an ad buyer familiar with the situation, some sizable advertisers temporarily stopped spending money on Microsoft ads in reaction. The individual continued, “Among them, Wells Fargo (WFC.N) continues to keep some of its advertising budget away from Microsoft.”

In response to a request for comment, Wells Fargo remained silent.

Microsoft’s vice president of worldwide partner and retail media, Lynne Kjolso, stated in an interview that the company sought to make the introduction of the new Bing ad formats as “seamless” as possible for advertisers without adding to their workload.

According to her, Microsoft just introduced hotel ads in the Bing chatbot and is trying to add ads for other sectors, like real estate.

As internet platforms increasingly offer AI solutions that could provide better outcomes for advertising but necessitate a certain amount of control loss on their part, the worries from advertisers also contribute to a broader tension.

“This is not the first time that Google and Bing have expanded their networks while restricting control for advertisers,” said Samantha Aiken, a paid search supervisor at marketing agency Code3.

She cited Google’s Performance Max as an example of how many in the sector view the tool as an analytical “black box,” as the algorithmic models used to determine where to serve ads are kept a secret. Performance Max uses AI to automatically find the best ad placements across various Google products rather than requiring advertisers to set up separate ad campaigns.

Three ad buyers expressed concern about Microsoft’s lack of transparency reporting, or reports that can demonstrate which search phrases caused a brand’s advertisements to appear in generative AI experiences, or how the advertisements performed in comparison to conventional search advertisements.

Two of the ad buyers claimed that while Microsoft representatives have been open to their concerns, they have not given a timeframe for when greater transparency reporting will be made accessible.

“Advertisers can’t just go in and pull the report to see how often they’re showing (in the Bing chatbot),” said one of the ad buyers, who requested anonymity to discuss private conversations with a business partner.

Kjolso claimed that advertising agencies’ top desire for transparency reports was being addressed by Microsoft’s product teams, who were “working on it with priority.”

“We are absolutely thinking through what additional levers and controls we need to be able to provide to advertisers,” she said, adding that sales teams were actively working with some brands to allay any concerns about where their ads are appearing.

There are concerns about how the search giants would prevent ads from showing up on AI responses that contain “hallucinations” or incorrect information, according to two media buyers from large advertising firms.

According to Kjolso, Bing’s Web data can serve as a “grounding” mechanism for large-language models and actually lower the chance of hallucinations.

(Adapted from Reuters.com)