Advertising is a logical monetization path for AI search. Like traditional search, user intent is spelled out… but even more so, given nuanced natural-language queries. This is the idea behind OpenAI’s new ad program. And though it’s experiencing early friction, it’s quickly muscling past it.
Backing up for those unfamiliar, what’s OpenAI’s ad program? The company has begun rolling out sponsored content in ChatGPT answers that resemble search ads. These include contextually-matched sponsored links, product sliders/carousels, and other evolving formats (see our breakdown here).
As for all that early friction, there was some backlash following the program’s rollout as the terms were viewed as advertiser-unfriendly. This list of grievances included a lack of performance-based options that were limited to CPM-based ads – and steep ones at that, with CPM rates around $60.
Speaking of steep prices, the minimum campaign spend at the program’s onset was $200,000, which made it cost-prohibitive for most advertisers. Many saw this as a greedy move that started the program on the wrong foot. However, as we predicted, things have improved quickly since then.
Dashboard Proximity
So what were those improvements? The $200 campaign commitment was quickly lowered to $50,000 and then eliminated altogether. And those eye-popping $60 CPMs have likewise dropped dramatically, while OpenAI is beginning to offer performance-based options (more on that in a bit).
Altogether, OpenAI has already addressed the biggest objections to its ad program. But it doesn’t end there. One factor that continues to develop in the background is easier onboarding for advertisers. OpenAI has partnered with Criteo, Smartly, StackAdapt, and several others for ad manager programs.
Working with these well-established ad tech players means ChatGPT ads can have dashboard proximity to other ad formats and can thus be added to the media mix for any advertiser. And beyond these direct partnerships with OpenAI, a third-party ecosystem of ad tech players will come out of the woodwork.
The result of all of these opportunistic moves will be that ChatGPT ads will be brought to advertisers on a silver platter. Joining economic improvements to the program, this will make ChatGPT ads easier to manage. From there, we predict an influx of advertisers – starting with brands, then eventually SMBs.
Conversational Intent
Speaking of SMBs, the biggest update to OpenAI’s ad program came more recently with the launch of its first-party self-serve ad tool. Beginning to roll out to advertisers in the U.S. as we speak, it creates a dashboard for managing ChatGPT ad campaigns that looks and feels like familiar ad managers.
In addition to ad placement and management, OpenAI’s new tool includes analytics. This makes ChatGPT ads more competitive with today’s standards in online measurement, which was previously missing. Similarly, OpenAI has begun to finally offer performance-based options as noted.
The latter will take form in cost-per-click options, which could be a direct shot at Google. But at the same time, this move to CPC could raise complications. AI search’s answers-based paradigm makes zero-click search – an already growing phenomenon in traditional search – go into hyperdrive.
So building an ad program around a misaligned user action is questionable. In fairness, OpenAI has to balance demand for familiar metrics with those that capture ChatGPT’s conversational intent. That could be a cost-per-action variant that develops as the program itself does. We’ll be watching closely for that.
