So OpenAI finally announced they will have ads. This was the biggest non-news of the week since almost everyone knew it was going to happen. Interestingly announced on a slow news Friday after CES and NRF. Any company wanting to announce anything new in advertising would have done it at one of those two events.

It may indicate their nervousness about turning a platform which may be one of the few sources of unbiased information into a bullhorn for brands.

While the details are scant, it is clear their approach is different and again not surprisingly melds ads with conversations both in determining when and what ads appear as well as making the ads themselves conversational.

This marks a new era of “AI Media” coming on the heels of Commerce Media. Commerce Media though it has grown in leaps and bounds did not put much of a dent on search or social media. AI media likely will. The key difference between Commerce Media and AI media is that a sizable amount of Commerce Media was and will increasingly be run “offsite” of which a very large part of the inventory either belongs to or passes through Google or Meta’s hands. AI media on the other hand is a walled garden, entirely owned by the AI platforms and so it is will not add to the wallets of Google and Meta (they each have their own AI platforms so that may blunt any impact of OpenAI’s gain of ad dollars.

As ad destinations go, ChatGPT is very attractive to brands for several reasons:

  • ChatGPT has very significant shopper intent signals. This holiday season Adobe reported some very strong stats related to consumers use of AI for shopping and significantly better conversions for shopping journeys that originated in AI platforms. See the report summary.
  • Discovery is a key value AI platforms are adding, allowing consumers to do their research outside retail sites and then decide on who to buy from. Current eCommerce experiences on retailer sites leaves much to be desired, the sites have too many competing SKUs, search is not very effective at finding what a consumer may be looking for, product information is minimal
  • The ads are conversational, allowing for even more discovery by the consumer but this time with the brand that may serve to increase conversions as the consumer has an opportunity to narrow down their choice, ask questions of the brand etc.

Based on what I am hearing from our customers, there is a significant amount of pent up demand, some brands complained that OpenAI does not even return calls requesting information on ads. It must be great to be the new king of media!