ChatGPT is testing ads: Will early movers be rewarded?

It’s official, ads are entering the chat. At a reported $60 CPM, will brands be priced out, or will they recognise the chance to capture high purchase intent?

Last week, ChatGPT officially started their much anticipated testing of ads (in Free and Go tiers for logged-in adult users).

This is a watershed moment for OpenAI in its monetisation strategy as it breaks from its resistance to in-product advertising.

The AI company published its ads principles last month, with all the noises you’d expect about ‘mission alignment’, ‘answer independence’, privacy, control and, crucially, prioritising “user trust and user experience over revenue”.

It’s this last point that sums up the challenge for Open AI. How do they design an ads experience that doesn’t undercut the perceived objectivity of its all-knowing chatbot?

Will conversational AI change the advertising playbook?

These new ad placements are expected to be contextual, appearing beneath responses and clearly labelled as sponsored. So, they’ll be somewhat familiar in appearance to users. But make no mistake, this could signal a huge change in how brands interact with customers, and how those customers find potential products and services.

For years, digital advertising models focused on keywords, clicks and heavy targeting. But now, conversational AI has flipped the playbook. Marketers know they have to truly understand their customer entry points by getting right to the heart of customer context, motivation and trust. And they have to learn to cope with the very real prospect of limited visibility.

A golden opportunity to be first to market, if the CPM makes sense?

If brands can adapt quickly, history tells us there’s an advantage to be gained for early movers. Imagine buying Google Ads in 2001.

But at a reported $60 CPM and $200k buy-in, is the ChatGPT barrier-to-entry too high for most? For context, a $60 CPM is approximately 3-4 times more expensive than other mainstream ad platforms.

There’s also that big question around privacy. Users can turn personalisation off, which points to an ad system built on strict privacy boundaries (meaning ads will rely only on the context of the conversation). Open AI has written about “guardrails to prevent narrow ads targeting” and stated that advertisers won’t have access to personal details or conversations.

The question is whether marketers can disentangle buyer intent from less commercial, informational searches. And of course, how ChatGPT avoids blurring the lines between the two.

What does all this mean for brands?

Well, at the moment, it’s a challenging conversation for CMOs: on one hand, you have the huge opportunity to be first to market, however, for now you’ll be reporting on views and impressions, rather than revenue and CAC.

Our take: as marketers, you have to keep an eye on where the attention is flowing. Search behaviour is shifting away from Google, with many younger customers going direct to LLMs for answers (and products). It’s entirely possible a $60 CPM could be viewed as a steal, given that purchase-intent is remarkably high in LLMs. E.g. “best size 10 running shoes, mid-distance runner, road running”.

As Open AI writes, “we see an opportunity for advertising in ChatGPT to be uniquely valuable for people… connecting people to new products and services that fit naturally with what they’re trying to do.”

CTI Digital offers GEO services and paid media campaign management.