When ChatGPT ads launched, they stumbled a bit. Much of that had to do with limited options (no performance-based formats), and exorbitant rates ($60 CPMs and $200K minimum spend). It has since addressed those concerns and silenced critics with a $1 billion ad revenue run rate after 200 days.
But one thing may have a greater impact than lowering its ad rates and expanding its available ad formats: lowering adoption friction. And the biggest way that will happen is by integrating ChatGPT campaign creation and management into popular ad managers and ad-tech dashboards.
This brings ChatGPT to where advertisers live, which is a key step to lessen the learning curve and make the new program less intimidating. This is especially the case for tech-challenged SMBs that shy away from anything new… and the scarce time it takes to learn it. In other words, ChatGPT needs channels.
This is already happening, and its doing so in two directions. Ad platforms opportunistically integrate ChatGPT ads to beef up their offerings (pull). ChatGPT also partners with ad platforms to gain channels to open up its market (push). Both directions include SMB-focused channels (just like TikTok is doing).
Testing the Waters
In that second category of ad platform integrations, ChatGPT recently scored a big win: Amazon. A partnership between the two players lets users of Amazon’s ad platform buy and manage ChatGPT ads. This includes standard ChatGPT ad units, such as sponsored results in Chatbot answers.
Specifically, Amazon’s platform now includes the ability to launch ChatGPT campaigns, in addition to a growing set of vehicles inside and outside of Amazon. This is meant to boost one-stop-shop appeal in Amazon’s ad platform and generate incremental affiliate revenue for the campaigns it facilitates.
Amazon’s motivations were further signaled in its comments around the deal. It described conversational ad formats like ChatGPT as the “fastest-growing engagement opportunity” in eCommerce. This deviates from its previous position when barring AI engines from training on its domain.
What does that change of tune signify? Our theory is that Amazon has seen the light. It has an opportunity to integrate conversational AI to cultivate buying intent and help users find products. So its ChatGPT deal could be a way of testing the waters before launching is own AI shopping play.
Common Enemy
Stepping back, this is a fitting partnership – not just for standard reasons where the channel (Amazon) gains options for its advertisers, while the platform (ChatGPT) broadens its market. Those factors are evident, but we also have two challengers to ad-world incumbents, and a common enemy: Google.
ChatGPT’s challenge to Google is clear in that AI-engine ads are closest in orientation to the traditional paid search model. Moreover, Google is increasingly competing directly with ChatGPT in its constellation of AI-engine mechanisms that are colonizing its SERPs – from overviews to AI Mode to Intelligent agents.
As for Amazon, it’s the poster child of duopoly killers. It continues to ratchet up ad dollars and is only scratching the surface given that it’s the largest first-party ad network on the planet. And it benefits from high commercial intent – even higher than Google – under its roof. It’s an ad-world sleeping giant.
Beyond the above reasons, Amazon and OpenAI have momentum on their sides (see OpenAI ad revenue run rate). And in a classic challenger position, they have ample headroom and are at high-growth risk-taking stages of their ad revenue lifecycle. We’ll see if this ends up being a lethal combination.
