Microsoft has been running ads in Copilot since late 2023—longer than any other major AI platform. Here's what the data actually shows and how to think about it.
How Copilot Ads Work
Ads appear below Copilot's organic response in an "ad block." Microsoft uses what they call "ad voice"—a brief explanation connecting the ad to the conversation. Example: "Based on your interest in video editing laptops, here are relevant options from our advertising partners."
Key mechanic: Copilot analyzes the entire conversation within a session, not just the last query. Someone asks "best laptops for video editing" then follows up with "which has the longest battery life"—Copilot understands both together and serves contextually relevant ads.
Ad formats eligible for Copilot:
- •Performance Max campaigns (primary)
- •Shopping ads
- •Multimedia ads
- •Responsive Search ads
- •Showroom ads (pilot only)
If you're running PMax on Microsoft, you're already in Copilot. No separate opt-in required.
The Performance Data
Microsoft's published numbers (November 2024 – May 2025):
| Metric | Copilot vs Traditional Search |
|---|---|
| CTR | +73% |
| Conversion rate | +16% |
| Customer journey length | -33% (fewer steps) |
| Ad relevance | +25% |
| Quick-back rate (multimedia) | -59% |
| Quick-back rate (RSAs) | -52% |
Case studies:
- •Samsung: 3x higher CTR, 143% YoY revenue increase, ROAS doubled during Black Friday 2024
- •Priceline: Scaled long-tail destination campaigns via API integration
Caveat: These are Microsoft's internal numbers. Independent verification is limited. But the directionality is consistent across multiple reported campaigns.
Why Copilot Ads Perform Differently
Three factors worth understanding:
1. Conversational context = richer intent signal
Traditional search captures a single query. Copilot captures a conversation. By the time someone asks 3-4 follow-up questions about a product category, you have much clearer intent than a single keyword match provides. The 33% shorter customer journey suggests users are converting faster because Copilot consolidates research that would normally span multiple sessions.
2. Fewer ads, higher quality bar
Copilot shows fewer ads than a traditional SERP. Fewer placements + higher relevance threshold = less competition but stricter qualification. Your ad needs to genuinely match conversational intent to serve.
3. User perception is different
42% of users reported Copilot ads had a "positive impact" on their experience. That's unusual for advertising. The ad voice mechanic—explaining why an ad is relevant—seems to reduce friction.
Auction Mechanics (Recently Clarified)
Microsoft clarified auction behavior in December 2025:
- •Exact match keywords get absolute priority over PMax when competing for the same placement
- •For everything else, Ad Rank determines the winner
- •In practice, exact match rarely serves in Copilot because conversational queries don't match keyword syntax
Implication: PMax dominates Copilot placements. If you want Copilot coverage, you need PMax campaigns. Traditional search campaigns will rarely serve there.
New Formats: Showroom Ads
Currently in pilot with select advertisers (Mercedes-Benz, others). Showroom ads create an interactive product experience within Copilot—users can ask questions, compare features, explore options, all inside the conversation.
Think of it as a conversational landing page. User asks about a product → enters Showroom → interacts with brand content + web reviews → converts. All without leaving Copilot. Not generally available yet, but worth watching.
What This Means for Budget Allocation
The scale question:
Bing has ~3% search market share vs Google's ~89%. But:
- •Microsoft Ads CPCs run 30-70% cheaper than Google
- •Copilot engagement is growing (DAU up significantly Nov 2024 – May 2025)
- •Voice input users grew 6x on mobile Copilot in that same period
- •1/3+ of Copilot users are 18-29 (younger, faster to convert)
The math: Lower volume × higher efficiency × better conversion rates can equal competitive ROAS.
Practical allocation: Don't shift budget from Google. Test incremental spend on Microsoft Copilot via PMax. If your category shows strong performance, scale there—but Google remains the volume play.
Optimization Checklist for Copilot
If you're running Microsoft PMax and want to maximize Copilot performance:
Campaign structure:
- •Create unique goals per campaign ("Request Quote" vs "Buy Now")
- •Multiple asset groups by audience, promotion, market
- •Use search themes reflecting how people actually ask questions
Audience signals:
- •Remarketing lists
- •Customer match
- •In-market audiences
- •LinkedIn profile targeting (Microsoft-specific advantage)
Bidding:
- •Max Conversions or Max Conversion Value for Copilot
- •Set realistic tCPA/tROAS—Copilot's conversion path is different than search
Creative:
- •Visual assets matter more in Copilot (fewer ads = more scrutiny)
- •Multimedia formats outperform text-only
- •Consider video—Microsoft launched Image Animation (Nov 2025) to turn statics into video
Bottom Line
Microsoft Copilot is the most mature AI advertising platform available. The performance data is real and consistent. If you're not running Microsoft PMax, this is a reason to start.
The strategic question isn't whether Copilot ads work—it's whether the volume is there for your category. Test, measure, compare to Google. For many advertisers, Microsoft is becoming the efficiency play while Google remains the scale play.
Conversational AI advertising is clearly the direction. Microsoft is 2 years ahead of the pack. Worth paying attention to.
