How AI is Changing Consumer Behavior

Summary

At CES 2024 James Kotkin interviews Jen Crean, VP of Global Marketing and Operations at Microsoft Advertising, about the company’s evolution from search into a full ad-tech platform spanning Windows Start, Outlook, Xbox, retail media and a DSP. Crean highlights how generative AI is changing consumer behavior—longer, conversational queries—and how Microsoft is building new ad formats like conversational “compare-and-decide” ads that merge LLM-driven organic answers with sponsored comparisons. She discusses training marketers on prompts, the rapid mainstreaming of AI across media, Microsoft’s sustainability commitments (carbon-negative by 2030), and ongoing diversity and inclusion efforts across the business.

Takeaways

• 😀 Microsoft Advertising has evolved beyond search, now offering a full suite of advertising tools across various consumer assets, including Outlook, Xbox, and casual games.
• 😀 Microsoft's investments in generative AI are a major focus, with AI shaping the future of how consumers engage with search and advertising.
• 😀 Consumers' search behavior is changing, with longer, more detailed queries and a preference for conversational interactions rather than simple, direct searches.
• 😀 Microsoft is introducing 'Conversational Ads,' allowing for personalized ad experiences that adapt to users' unique search queries and decision-making processes.
• 😀 The 'Compare and Decide' ad format helps users make quick, informed decisions by offering personalized comparisons of products based on the context provided in their queries.
• 😀 Marketers need to adjust their approach to advertising by understanding the importance of detailed prompts and contextual relevance when working with AI tools like Microsoft Designer.
• 😀 AI is increasingly accessible to people who may not have traditionally been analysts, enabling broader access to analytical insights and more efficient decision-making.
• 😀 The future of AI involves seamless integration across all types of media—video, text, images—making AI a fundamental part of nearly every process.
• 😀 Microsoft is committed to sustainability, aiming to become carbon negative by 2030, and helping advertisers make environmentally conscious decisions.
• 😀 Diversity and inclusion remain a key focus for Microsoft, with efforts to represent global perspectives both internally and in their product development, particularly in generative AI.

Q & A

How has Microsoft Advertising evolved in recent years?

Microsoft Advertising has shifted from being a purely search-based business to offering a full suite of advertising solutions across various consumer assets, including unique platforms like Outlook, Xbox games, and the start experience in Windows. This evolution includes the acquisition of PromoteIQ and Xander, which have enhanced their retail media and DSP offerings.

What are some of the unique consumer assets that Microsoft Advertising is highlighting?

Microsoft Advertising highlights several unique consumer assets, such as ads in the Outlook Web App, Xbox casual games, and the Windows start experience. These platforms offer new opportunities for advertisers to reach consumers in distinctive, integrated ways.

What role does generative AI play in Microsoft's advertising strategy?

Generative AI is a central theme for Microsoft Advertising, driving changes in consumer behavior and enabling more personalized, conversational ad experiences. For instance, conversational ads, like 'compare and decide' ads, help users make faster decisions by providing contextually relevant comparisons based on their specific queries.

What are 'conversational ads' and how do they work?

Conversational ads are a new category of ads that integrate AI to deliver personalized, context-based ad experiences. For example, 'compare and decide' ads use generative AI to provide a dynamic table comparing product options, such as cameras or cars, based on the user’s unique input, like their hobbies or specific needs.

How have consumer behaviors changed in relation to search engines due to generative AI?

Consumers are now engaging with search engines in a more context-rich, conversational way. Instead of asking simple queries, they provide detailed descriptions, such as their use cases or specific needs, which leads to more personalized and accurate recommendations.

How is Microsoft Advertising helping marketers adapt to the new AI landscape?

Microsoft Advertising is helping marketers adapt by training them on the importance of prompt engineering. Marketers are taught to provide detailed, context-specific prompts to generative AI tools, which results in better creative content and more precise marketing strategies.

What is 'prompt engineering' and why is it important in the context of generative AI?

Prompt engineering refers to the art of crafting detailed and specific prompts to get the most relevant and accurate results from AI tools. It is crucial because the quality of the output from generative AI depends heavily on the input provided, making detailed, context-aware prompts essential for achieving high-quality content.

How does Microsoft ensure that generative AI remains aligned with diversity and inclusion goals?

Microsoft ensures that its generative AI models and products are built with diverse perspectives by actively incorporating diversity into the engineering process. They also follow systematic diversity and inclusion policies across the company and monitor the AI’s outputs to avoid biased results.

What are Microsoft's sustainability commitments and how do they impact advertising?

Microsoft is committed to becoming carbon negative by 2030. In terms of advertising, they focus on reducing emissions through Supply Path Optimization (SPO) and ensuring their consumer assets are low-emission. Microsoft also partners with sustainability-focused companies to promote more eco-friendly advertising solutions.

What predictions did Jen Krian make about the future of AI?

Jen Krian predicts that 2024 will be the year of AI everywhere, with AI becoming an integral part of all types of content creation, including text, video, and images. She envisions AI being mainstreamed across industries faster than any other technology in history.