Snapchat Partners with Microsoft to Enhance AI Chatbot with Sponsored Links

Snapchat has forged a valuable advertising alliance with tech giant Microsoft to integrate sponsored content into its AI-driven product, My AI. Launched earlier this year, My AI is an AI chatbot that caters to Snapchat's extensive user base. In a bid to monetize this innovative tool, Snap announced in May its intention to introduce Sponsored Links into My AI, seamlessly integrating relevant ads into user conversations.

The concept is straightforward: when a user interacts with My AI, seeking recommendations or information, the chatbot will respond with sponsored links that align with the conversation. For instance, if a user asks for dining suggestions, My AI may offer a sponsored link to a local restaurant or food delivery app. Similarly, inquiries about weekend getaways could lead to airline or hotel links, and product queries might generate links to local retailers.

Microsoft recently revealed its collaboration with Snap to bolster these sponsored link suggestions. This partnership utilizes Microsoft Advertising's Ads for Chat API, enabling Snap to enhance user interactions by connecting them with pertinent partners related to their conversation topics. Moreover, advertisers can now tap into the precise moment when users express interest in their offerings, a strategic advantage for increasing engagement.

Snap's Sponsored Links feature, powered by Microsoft, will initially roll out to Microsoft Advertising's clients in the United States and select global markets.

This endeavor to transform AI chatbot conversations into an advertising landscape is not unique to Snap. Microsoft introduced ads to its AI chat experience, Bing Chat, shortly after its launch. The aim was to gauge whether ads could effectively drive traffic to publisher websites through chatbot interactions. Similarly, Google has experimented with ads within its AI chatbot, Search Generative Experience (SGE), providing users with product suggestions that align with their search queries.

Snap's Sponsored Links operate in a similar fashion to Bing and Google's offerings, featuring links that are contextually relevant to ongoing conversations.

Microsoft's Ads for Chat API, unveiled in May, leverages technology similar to Bing but empowers third-party partners to personalize the ad experience. This flexibility enables partners to select ad formats that resonate best with their audiences and seamlessly integrate them into their platforms. As this product is still in its early stages, early adopters will play a vital role in shaping the API's future. Microsoft actively seeks feedback from those who incorporate the service into their apps and services, including Snap.

This strategic partnership marks another significant win for Microsoft's advertising division, which has positioned itself as a go-to solution for tech companies seeking alternatives to Google's advertising services. Notably, last year, Netflix opted to collaborate with Microsoft to power its new ad-supported tier, citing the absence of direct competition in the streaming arena.

As for My AI ads, this collaboration could position Snapchat as a destination for younger Gen Z users to discover products and services through AI-driven chats, potentially diverting them from traditional search engines like Google.

Snap emphasizes that the Sponsored Links feature is in its early experimental phase, aimed at crafting thoughtful and user-friendly experiences for its community. The company is also actively exploring additional partnerships to further enhance My AI in the future.