Google to Test Ads in Generative AI Search Results

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The new search results will appear alongside regular ads and will be labeled as such. Users can turn the feature on or off.

This is the latest move in a heated artificial intelligence (AI) race to reinvent the Internet and is likely to have profound implications for the online advertising market. The technology advances rapidly and can create conversationally written responses to queries, synthesize information online, and surface relevant websites. It also can generate and deliver ad placements, altering how advertisers reach consumers via search engines, a market estimated by research firm MAGNA to be worth $286 billion this year.

Alphabet Inc’s Google will begin experimenting with advertising within search results powered by generative AI, the tech giant announced on Tuesday. It is a significant step in the company’s quest to fend off rival Microsoft in the lucrative search ads market, which makes up more than 60% of Alphabet’s overall revenue.

Until now, the Mountain View, Calif., company has kept AI in the background of its products. In contrast, others like OpenAI’s ChatGPT and Microsoft’s Bing have used generative AI to transform consumer chatbots into powerful, conversational tools. But a significant shift in search trends may force Google to accelerate the pace of its AI updates.

Generative AI uses machine learning to learn and improve over time, allowing it to provide more sophisticated answers. As a result, it can be more human-like than traditional search engine results. For example, a user who asks an AI-powered search tool for a chocolate chip cookie recipe can expect to receive one rather than a list of websites that include the term “cookie.” The same is true with other types of questions.

In addition to improving the quality of its results, the technology is meant to speed up the process of finding relevant information. In a test last year, an AI-powered version of Google Search could answer nearly all questions, even ones that have never been searched.

But there are limits to how far this AI will go. For example, when asked about a sensitive topic, such as suicide, it will not engage. And for searches about health and finance, it will rely on experts to provide guidance instead of its algorithm, the company says.

It’s a risky strategy for the world’s most popular search engine. If the AI results start eroding trust, as in some cases with other bots such as ChatGPT and Microsoft’s Bing, it could cost Google search users clicks. And without clicks, ad revenues are unlikely to increase.

The Motley Fool owns shares of Alphabet, Apple, and Microsoft. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anthony Di Pizio owns shares of Alphabet and Apple. The Motley Fool has no position in any of the stocks mentioned. Motley Fool Disclosure Policy

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