Rimm Kaufman Group spotted a test where Bing was placing ads between the organic free search results.
The ads were not being tested above, below or on the side of the organic results. Instead, they were being tested between the organic free results. Just take a look at the picture from RKG below (click on it for a larger version) and see how hard it is to tell they are ads. See the little "ad" icon on the right, how it can easily be missed.
I received confirmation of the test at Search Engine Land, where Microsoft told me, "We're constantly testing and experimenting on Bing, and with that, we carefully measure user engagement and reaction to these changes. We have nothing further to share at this time."
That being said, Stefan Weitz, the Director of Search at Microsoft, commented on my Google + post on this saying:
To be clear -this is a flight for placement of algo driven ads lower in the page - not paid inclusion. We test stuff all the time - if the experience isn't good, it doesn't ship.
Yea, no one said it was paid inclusion but I did say this was the closest thing to paid inclusion I have seen in a long time. In October 2009, Yahoo finally decided to drop paid inclusion because of all the confusion it caused. Now, paid inclusion is actually a lot better, in my opinion, that sticking paid ads in the organic results. That being said, Stefan made it clear that this is just a test and if the market says no - it likely won't be rolled out.
Of course, PPC managers and management companies would love to see this. It would drive their clicks and conversions up drastically. But would you ever see such an implementation from Bing? I am not sure, I hope not. It just blends the unbiased, unpaid for, search results with the paid search results too much.