Captivating and relevant: How conversational AI is changing advertising

Generative AI is at the epicenter of a major shift in advertising. Formerly a buzzword, AI is now the backbone of high-performing campaigns. AI-generated content, campaign optimization, and specialized agents give advertisers a competitive advantage, delivering measurable improvements in engagement, efficiency, and ROI.

Here's what you need to know about generative AI-powered advertising and how to create delightful, relevant, and engaging customer experiences. 

The impact of generative AI-powered ads and campaign tools

AI is transforming every layer of advertising for brands and consumers alike. From optimizing campaigns in real time using a deep understanding of search intent to generating creative ad copy that resonates at a personal level, generative AI tools help advertisers meet consumers where they are in their digital lives. 

The tools are easy to use, simplifying key aspects of advertising campaigns that used to take hours each week. The result is an end-to-end system that’s more agile, more accurate, and far more aligned with consumers’ needs.

The results speak for themselves: AI-powered ads deliver 25% higher relevance compared to traditional search,¹ and Copilot ad conversions have increased by 1.3x across all ad types since the November 2024 relaunch.²

Users are getting more comfortable with AI-generated ads. In fact, 40% of users say well-placed AI-powered ads enhance their online experience.³

For advertisers, the message is clear: It’s time to move beyond experimentation and step into execution.

Upskilling to get more from generative AI

Executing the full potential of generative AI starts with clearly describing what you want to create in natural language—also known as prompting. Whether you're generating variations of ad copy or fine-tuning the details of an image, effective prompting is the key to using AI’s creative power while staying authentic.

Better prompting leads to better campaigns, and marketers who practice it are already seeing a surge in output. A significant 85% of marketers using generative AI say it’s improved their productivity across content and ad creation. Explore different skills, from specialized prompting for to how inclusive prompting can sharpen copywriting, image and video creation to how inclusive prompting can sharpen copywriting.

AI-generated creative: Smarter, faster, and bolder

Historically, campaign development was a slow climb with dozens of tiny steps to manage. Now, it’s a sprint fueled by AI. From strategic ideation to asset creation to performance testing, generative AI cuts your time to market while also boosting creativity. 

What kind of results are brands generating with AI tools like Copilot in Microsoft Advertising Platform? Brands are cutting their time to market by using AI to generate ad copy variations and test creative instantly. They are launching ads in multiple languages using AI-powered localization, eliminating traditional translation delays. The use cases for generative AI are as diverse as the marketers leveraging it. 

Features like Copilot in Microsoft Advertising Platform’s “Try a Different Tone” offer fast, real-world applications. With this tool, marketers can generate multiple versions of messaging and test them in seconds.

The benefits aren’t just about speed, either. AI tools also make it easier for cross-functional teams to collaborate, expanding creative input without slowing down production. The result? More relevant campaigns and more confident marketers. 

Addressing consumer trust and privacy

As with any new technology, concerns about AI in advertising persist. Advertisers can build trust by being ready to meet issues like data privacy head-on.

Hoping customers overlook or accept the use of generative AI isn’t a sustainable strategy. Transparency and ethics aren’t just best practices—they’re brand-building opportunities. By clearly communicating how AI is used, what data is collected, and how it benefits people, you can help demystify AI and build trust by bringing customers into the process. 

Some guidelines for AI transparency to consider include: 

• Clearly disclosing when AI is part of the ad experience 

• Maintaining human oversight to ensure tone, accuracy, and brand fit 

• Publishing clear data policies that address privacy, usage, and customer benefit 

Curious about how to build greater transparency around your use of AI? Check out the Microsoft Responsible AI Principles for examples and inspiration. 

New search behavior and evolving advertising strategies

Agents and conversational AI are also changing how consumers find information and interact with brands. For advertisers, that can have profound implications. With the rise of conversational AI search formats, search engine traffic is shifting, creating new opportunities. It’s also time to elevate and potentially shift your existing strategies to meet customers where they’re active today and where they're going in the coming years.

eMarketer notes that in the age of AI-powered advertising, premium destinations, creator platforms, and top-tier sites will continue to grow in value with shifts in ad inventory. Brands that understand which ecosystems their audiences trust—and create content that both captivates and integrates—will gain a powerful edge over the competition. 

What advertisers can do right now

"To know what you're going to draw, you have to begin drawing." - Pablo Picasso 

When it comes to AI, every marketer should be "drawing" today. Here’s how to act now and build campaigns that deliver: 

• Start small and experiment. Choose one campaign or creative task to automate, such as ad copy variants or specific visuals. See the difference in speed and performance. 

• Use AI for ideation. Generate multiple versions of your ad copy, images, videos, and CTAs using tools like Copilot in Microsoft Advertising Platform. 

• Explore new formats. Generative AI makes new formats, such as video, more accessible to advertisers of all sizes and campaigns with different budgets. Explore how generative AI can help you expand into video ads or diversify your ad inventory. 

• Track diagnostics. Monitor real-time insights to fine-tune creative and optimize conversion paths. 

• Improve targeting. Tap into Microsoft’s ecosystem and AI-driven audience signals for better reach and ROI. 

• Blend creativity with automation. Generative AI allows your team to bring their creativity to life, even without copywriting or graphic design skills and training. Explore how generative tools can make any creative vision a reality faster with simple natural language prompts. 

• Prompting gets better with practice. The more your team uses AI tools, the more intuitive and impactful the results will be. Encourage them to experiment with prompting and invest in training to yield powerful results. 

Future-proof your ad campaigns with conversational AI

Being a leader in the AI-advertising world starts with taking action. 

Embrace AI now for stronger engagement, faster campaign turnarounds, and higher ROI. If you’re ready to bring smarter, more relevant, and more impactful campaigns to life, don’t wait. Download A marketer's guide to chatbots and agents: from generative AI to ROI to explore how Microsoft Advertising’s AI solutions can support your goals today. 

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