Among the many spinning plates in the AI world, one development gaining ample attention is OpenAI’s move into advertising. What has it done so far? Where is it going next? And what’s driving it? This is the topic of a recent BIA podcast episode (summary and full episode below).
As you may have heard, OpenAI is rolling out ads as part of a broader revenue diversification play as its IPO road show approaches. This is both surprising (given Sam Altman’s past comments on the evils of ads) and unsurprising (given advertising’s logical place in AI search).
That last part – the unsurprising part – is because AI-engine users reveal their intent with every question they ask. So just like traditional search and its reliance on user intent to target high-value ads, this is a logical and expected direction for ChatGPT and other AI engines.
Speaking of search, the ad units ChatGPT has rolled out so far resemble search ads in lots of ways. That includes a sponsored recommendation box that sits below organic answers (sound familiar?), contextual Links within AI answers, and an image carousel for product-based queries.
But though these formats are familiar to brand marketers, OpenAI’s ad program hasn’t been met with open arms. As we discuss in the latest episode, OpenAI has put up barriers to entry, such as a 200K minimum spend, $60 CPMs, and no performance-based options.
That was the case out of the gate, but much of this has evolved already, due to the pace of change in the AI world. There are rumors of lowered minimum spend and CPMs; and OpenAI’s openness to performance-based advertising, such as tracking pixels and CPC models.
On top of these first-party developments, a third-party ecosystem of ad-tech players will come out of the woodwork to build ad managers and ChatGPT ad stacks. This land grab has already begun, with tools that do things like convert AdWords campaigns to ChatGPT campaigns
But even with these developments, there are still question marks that swirl around OpenAI’s ad program… and ad monetization in AI in general. Does it erode trust in a new medium that is already plagued by trust issues? And what should marketers and media execs do next?
We tackle these and other questions in the latest episode of BIA’s Leading Local Podcast. Listen here or watch the full episode below and subscribe here.
