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In Short:

Disclosure of ads on Microsoft’s Copilot AI search tool has been criticized for lack of clarity. Users have encountered sponsored links without obvious labels, potentially misleading consumers. Despite Microsoft’s claims of labeling all ads, some users have found sponsored content seamlessly integrated with organic recommendations. Advertisers are being pushed to invest in AI search advertising, as Microsoft and Google continue to develop and test new ad formats within AI-generated search results.


Disclosure of ads in Copilot raises concerns

Microsoft’s Copilot is under scrutiny for its ad disclosure practices. While Microsoft claims all ads are labeled, some experts believe that certain sponsored links are not adequately disclosed.

Unlabeled Sponsored Links

Last week, Marcus Pratt from Mediasmith searched for garden hose reels on Copilot. The recommendations provided were based on an article from Spruce, linking to Amazon products. Clicking on the reels redirected him to giraffetools.com, with indications of being a sponsored link only visible upon hovering over it. Despite this, no “Ad” label was prominent. Spruce and Giraffe Tools did not respond to requests for comment.

In another search, Copilot suggested a Nike Pegasus running shoe, but the link led to On, with a small “Ad” label. Pratt finds this blending of organic recommendations and sponsored listings confusing for consumers and potentially frustrating for brands. Nike, On, and Women’s Health did not provide comments on the matter.

Microsoft’s Response

According to Microsoft’s Sainsbury-Carter, ad experiences on Copilot may vary as the company continues to test and gather feedback.

Integration of AI in Advertisements

As tech giants like Microsoft and Google incorporate AI into search advertising, the landscape is evolving significantly. While Google faces criticism for AI-generated content gaffes, Microsoft is ahead in displaying and disclosing ads in its AI platforms.

Microsoft claims that users engage more with ads on Copilot compared to traditional search results. The company shared positive data on user interaction with Copilot ads, emphasizing their integration rather than intrusion. Multimedia ads on Copilot have also shown higher engagement rates.

Opted-In to AI Advertising

Advertisers are compelled to invest in AI search advertising as Microsoft and Google leverage existing ad campaigns to populate ad slots in Copilot and Overviews. Until further data is collected on effectiveness, Copilot will showcase various ad formats, drawing content from advertisers for text, images, links, or multimedia widgets.

Microsoft aims to streamline the ad experience for advertisers without requiring a complete overhaul of their campaigns. The company believes that over time, as AI advertising evolves, adjustments may be necessary to align with changing trends.

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