AdExchanger Talks: AI In Ads – And Ads In AI
Host: Allison Schiff
Guest: Paul Longo, General Manager for AI in Ads at Microsoft Advertising
Release Date: August 5, 2025
Introduction
In the latest episode of AdExchanger Talks, host Allison Schiff welcomes Paul Longo, General Manager for AI in Ads at Microsoft Advertising. The conversation delves deep into the evolving landscape of artificial intelligence (AI) in advertising, exploring both the integration of AI into ad technologies and how advertising itself is influencing AI development.
A Glimpse into Paul Longo’s World
Personal Insights and Screenwriting Passion
Paul Longo opens up about his lesser-known passion for screenwriting, sharing a personal story that adds a unique dimension to his professional persona.
Paul Longo [02:14]:
"I am a screenwriter. I'd say more of a hobbyist. Several screenplays that have been optioned and my fun fact is that I did have a screenplay produced on the Hallmark channel..."
He humorously recounts how his mother-in-law inspired the title of his produced screenplay, Cold Meddling Mom, highlighting the balance between his creative pursuits and his leadership role in AI advertising.
AI in Advertising: Defining the Role
Understanding "AI in Ads"
Allison probes the multifaceted title of Paul’s role, prompting him to clarify the scope of his responsibilities at Microsoft.
Allison Schiff [06:31]:
"So, basically, what is your job?"
Paul Longo [06:31]:
"It's the title that brings up a thousand questions... We didn't have dedicated teams that were just fully working on AI. So unpacking what AI and ads means..."
Paul explains that his role encompasses both the creation of advertising experiences within conversational AI environments and empowering advertisers through AI-enhanced tools. This dual focus ensures AI not only integrates seamlessly into ad technologies but also elevates the capabilities of advertisers using Microsoft’s platforms.
Conversational AI and Advertisements
Integrating Ads into Copilot
A significant portion of the discussion centers on Microsoft's Copilot—a conversational AI assistant—and its role in advertising.
Paul Longo [09:00]:
"Copilot, as an AI assistant, knows users at a more personal level and we're figuring out, well, how to advertise, how do ads fit into that experience?"
Paul outlines Microsoft's strategy to incorporate ads into Copilot in a way that maintains user trust and relevance. Ads are designed to be highly pertinent, clearly labeled, and distinct from organic content, ensuring they enhance rather than disrupt the user experience.
Performance Enhancements
The integration of ads with Copilot has shown promising results:
Paul Longo [11:00]:
"When we look at Bing searches and conversion rates, performance alone versus Bing plus ads and Copilot, we see that consumer journeys are happening 30% faster."
This efficiency is likened to moving from a traditional funnel to a tunnel, where conversational interactions accelerate the decision-making process.
Brand Showroom Launch
Microsoft has introduced a Brand Showroom, inviting brands like Mercedes to engage within the conversational AI environment, allowing for immersive and interactive ad experiences.
Paul Longo [11:45]:
"Mercedes was actually able to bring them in with their images, their copy, their tone, and to be part of that conversation in an ad experience."
AI-Augmented Ad Creative
Quality and Evolution of AI-Generated Ads
Allison raises concerns about the quality of AI-generated ad creatives, prompting Paul to discuss the current state and future potential.
Paul Longo [15:16]:
"These tools are all about human enablement and enabling creativity versus replacing... AI could be a great equalizer for small to medium-sized businesses."
Paul emphasizes that while AI can enhance efficiency by generating additional images and providing creative suggestions, the strategic and creative aspects of campaign development remain human-centric. He acknowledges the ongoing improvement in AI’s creative capabilities, citing examples like the impressive Kelshi ad created using Google's VO3 text-to-video generator.
Paul Longo [17:16]:
"AI is a year gone, moving from promise to practice and we need the Coca Cola is out there like practicing and testing..."
Impact of AI on the Workforce
Jobs and AI Integration
Addressing concerns about AI replacing jobs, Paul draws parallels with previous technology waves, highlighting both the fears and opportunities AI presents.
Paul Longo [19:57]:
"There are certain jobs that will evolve because of AI, but I think there's going to be new jobs that are created as well."
He references the creation of new roles in digital retail as an example of how AI can lead to job growth, despite initial fears of automation. Paul anticipates a nuanced shift where AI assists rather than outright replaces human roles, especially in creative and strategic functions.
Microsoft’s Ad Tech Future
Shutting Down Xander DSP
A pivotal topic is Microsoft's decision to shut down the Xander DSP by March 2026, transitioning to a chatbot-style ad buying product powered by Copilot.
Allison Schiff [23:48]:
"What is Microsoft's vision for the future of advertising?"
Paul Longo [23:48]:
"We're moving towards an agentic future where brands have their own agents interacting with consumers in a UI-less environment..."
Paul explains that the new direction focuses on an agentic Internet, where AI agents facilitate interactions between brands and consumers, streamlining the ad buying process through conversational interfaces. This shift aligns with Microsoft's broader strategy to integrate AI deeply into their advertising ecosystem.
Future of Supply-Side Platforms (SSP)
Allison inquires about the future of supply-side platforms (SSP) in this new framework.
Paul Longo [26:19]:
"We're thinking through what that looks like... How demand from AI assistants interacts with agentic supply."
Paul acknowledges the need for evolving SSPs to accommodate the dynamic interactions between AI-driven demand and supply, indicating ongoing development in this area.
Interoperability and Ecosystem Integration
Fostering Cross-Platform Integration
Allison touches on the challenge of interoperability among major ad ecosystems, such as Google Ads and Meta Ads.
Paul Longo [37:17]:
"We're a big proponent of the open Internet... In the future, interoperability in an agentic future will be crucial."
Paul underscores the importance of interoperable AI agents to ensure seamless interactions across different platforms, advocating for open standards that allow brands and consumers to engage with multiple AI assistants effortlessly.
Audience Interaction and Future Questions
AI-Assisted Question Generation
Towards the end of the episode, Allison shares an amusing interaction with AI, where she used Copilot to generate a question for Paul.
Allison Schiff [38:19]:
"Here's what it said verbatim... 'If you could redesign the digital advertising ecosystem from scratch, what would you change first?'"
Paul reflects on the value of AI in reshaping professional roles and emphasizes the centrality of AI in future advertising ecosystems.
Paul Longo [41:07]:
"If I had to recreate, I would put AI at the core. How would we reshape the ecosystem with AI at the center?"
Closing Remarks
Allison expresses her enthusiasm to watch Paul’s produced screenplay, Cold Meddling Mom, adding a personal touch to the episode’s conclusion.
Allison Schiff [41:18]:
"My main takeaway is that I need to go watch Meddling Mom tonight and I'm going to track it down. Can't wait."
Paul reciprocates the encouragement, highlighting the blend of his creative and professional endeavors.
Paul Longo [41:35]:
"Thank you, Allison."
Key Takeaways
- Dual Role of AI in Ads: Microsoft's approach involves both integrating ads into conversational AI environments like Copilot and enhancing advertiser tools with AI-driven functionalities.
- Conversational Ads: Ads within AI assistants prioritize relevance and user trust, leading to faster consumer journeys and more interactive brand experiences.
- AI as an Enabler: AI augments creativity and efficiency in ad creation, democratizing high-quality ad production for businesses of all sizes.
- Workforce Evolution: While AI will transform certain job roles, it is also expected to create new opportunities, following historical technology adoption patterns.
- Agentic Future: Microsoft envisions an internet where AI agents mediate interactions between brands and consumers, streamlining ad buying through conversational interfaces.
- Interoperability Importance: Ensuring AI agents can operate seamlessly across different platforms is crucial for a cohesive advertising ecosystem.
This episode of AdExchanger Talks offers a comprehensive exploration of how AI is transforming the advertising landscape, both from the perspective of technological integration and its broader implications on creative processes and workforce dynamics. Paul Longo provides valuable insights into Microsoft's strategic direction, emphasizing the symbiotic relationship between AI advancements and advertising innovations.