Shopping is serious business for Microsoft’s AI team

Microsoft says retail is more poised to take advantage of AI than other verticals.

“I mean, certainly it applies everywhere,” Paul Longo, GM of AI in ads at Microsoft, said during a panel discussion on AI at CES in Las Vegas. “We’re seeing a lot in the shopping space, in retail, and I think that’s one that just pops.”

Longo said his mandate at Microsoft has been to monetize the AI assistant Copilot released last year: “When we launched Copilot, initially, we launched it with ads, and when we launched it with ads, we learned a lot.” Microsoft’s Copilot serves users search ads at the bottom of the conversation.

He said the company quickly found that Copilot coupled with Bing accelerated the consumer’s path to purchase.

“One of the really cool things that we learned that I think is applicable in the retail space is that the Copilot plus Bing usage shortened the consumer journey by about 30%,” Longo said. “What we saw is that there’s a complimentary nature between some of the lower funnel aspects of Bing and search. And then also more exploration and more upper funnel consumer engagement that happens in a chat experience and chat accelerates and squishes the funnel a bit faster.”

He added that retail is one of the “largest customer segments” for Microsoft advertising and will be key to the company’s success in this space: “We see tremendous growth and scale opportunities across our Microsoft platforms with shopping. So, taking our retail media assets and scaling them…We see retail and shopping as a core component of the future of our new AI experiences.”

Longo said one of the things Microsoft is doing to accelerate adoption with retailers and other advertisers is to bring retailers along on the journey to test, learn, and iterate. “And then as we grow, they could grow with us,” he said.

Microsoft is currently exploring some brand immersive experiences within Copilot to continue to further that purchase journey, Longo added.