Snap partners with Microsoft on ads in its ‘My AI’ chatbot feature

Snapchat has a new advertising partner in Microsoft for the ads it’s inserting into its AI product, My AI, an AI chatbot introduced earlier this year to the wider Snapchat user base. The company in May said it would begin testing Sponsored Links in My AI — link suggestions that are paired with the user’s conversation with the AI helper.

For example, if a user asked My AI where to have dinner, the chatbot could reply with a link sponsored by a local restaurant or food delivery app, Snap explained. Or if the user wanted suggestions for a weekend trip, My AI could return a link from an airline or hotel. It also could recommend where to buy a product the user was inquiring about from a local retailer.

Now, Snap and Microsoft will be partnering on these link suggestions, Microsoft announced at its advertiser event last week. Powered by Microsoft Advertising’s Ads for Chat API, Snap’s Sponsored Links will connect the user with relevant partners related to their conversation, while also allowing advertisers to reach customers at the moment they have an interest in their offering, Snap explains. The feature will be available to Microsoft Advertising’s clients in the U.S. and other select markets.

Turning AI chatbot conversations into a new ads landscape is an idea that’s not unique to Snap. Almost immediately after launching its own AI chat experience, Bing Chat, Microsoft began experimenting with inserting ads into the chat from its over 7,500 Microsoft Start partner brands in a test to see if it could drive more traffic to the publisher’s website from chatbot users. Soon thereafter, Google also began to experiment with ads that appeared in its AI chatbot in Search in the U.S., also known as its Search Generative Experience (SGE). For instance, if you were searching for a new bike on Google, you may be shown a series of products that match your interest.

Snap’s ads would work similarly to those provided by Bing and Google, as they’re also in the form of Sponsored Links related to the conversation.

Microsoft’s Ads for Chat API, also introduced in May, is built on the same technology used in Bing but allows third-party partners to control and customize the experience. That means partners have the ability to choose the ad formats they believe are best for their audience and integrate them in a way that feels native to their own experiences. Because the product is so new, early adopters will also have a say in shaping the API’s future as Microsoft is actively soliciting feedback from those who are using the service in their own apps and services, like Snap.

The ads partnership is another big win for Microsoft’s ads business, which has found itself in the position of powering ads for other tech companies who have wanted to opt for a non-Google partner. Last year, for example, Netflix went with Microsoft to power its new ad-supported tier, in order to work with a company that didn’t have a direct competitor in streaming. As for My AI ads, the deal could potentially see Snapchat becoming a place where younger Gen Z users search for products and services by way of AI chats, in lieu of using a search engine like Google.

Snap says the Sponsored Links feature remains in “an early experimental phase to ensure we design thoughtful, useful experiences for our community. The company suggested it’s also working with a variety of other partners to enhance My AI in the future.