OpenAI Asks ChatGPT Advertisers for $20k in Committments

Well, this is something.

According to reports, OpenAI is informing advertisers who are interested in placing their promotions within ChatGPT responses that they’ll be required to commit at least $200k in spending up front to even be considered for the initial live launch.

Which is ambitious to say the least.

OpenAI announced an upcoming beta trial of ads in ChatGPT responses last month, while it also published examples of the types of promotions that it will initially be looking to incorporate into ChatGPT replies.

As you can see in these examples, for a query about Mexican recipes, ChatGPT may include a promoted post at the bottom of the reply which highlights possible accompaniments you may want to consider from a brand partner. On a travel query, ChatGPT might include a promotion for accommodation options in the region you’re looking at.

Will those promotions be effective?

Well, having your brand name present in ChatGPT responses could be of value, while there’s definitely interest in ChatGPT ads, given the rising amount of search queries that are being fed into the app.

There’s also some evidence to suggest that referral traffic from ChatGPT converts at a higher rate, so ensuring that your brand is at least present in related queries could be of value.

But there are a lot of ifs, and not a lot of definitive answers on how exactly AI referrals convert at this stage.

For example, SparkToro co-founder Rand Fishkin recently published the results of his own tests which underlined the inconsistency of AI responses to the same or similar queries. That would mean that AI presence, which is a data point that various SEO/AI visibility apps now offer, may not be the best indicator of relevant mentions, because the variance between responses could mean that even if you are being mentioned in a lot of queries, there could be many more that you’re not.

There’s also a question around the value of supplementary mentions like this, as opposed to having your brand noted within the AI response itself.

Will people click on these paid ads, or are they more likely to just ask ChatGPT for more info on accommodation options, and the best-priced deals for such?

I guess, the comparison here would be Google Ads, and whether people are more likely to tap on those first promoted results, or scroll down to the ranked SERP, which may be more indicative of what you want, based on Google’s display methodology. And that really depends on the query. If you’re looking for a certain brand or business, but you can’t recall the name, no doubt those Google ads are a winner, but if you want the best result, a lot of people will probably just ignore the promoted results.

Is that how it will work in ChatGPT as well?

Surely, if the ChatGPT response mentions your brand within its answer, that’s of more value than a supplemental mention. But then again, presence and awareness are also valuable, and maybe having your brand lingering around related queries will also prove beneficial.

But I’ll bet that ChatGPT ads will reduce the conversion rate of ChatGPT referrals.

ChatGPT referrals, as noted, currently see high conversion rates, which search experts attribute to these chats leading to more specific results, which then means more qualified, focused website visitors.

Google has noted the same, explaining that:

“With AI Overviews, people are searching more and asking new questions that are often longer and more complex.”

That then leads to people clicking through to pages that they’re more likely to convert on, but if people are tapping on paid promotions instead, that accuracy will decrease.

Is that better for ChatGPT as a product?

Maybe not, but OpenAI also has to make money, because it’s already outlined billions, even trillions in spending that it needs to maximize its AI ambitions.

In order to pay off that kind of outlay, and become a profitable business, it’s going to need a heap of products, and a heap of customers. OpenAI projected a $20 billion revenue result for 2025, which is nowhere near close to what it will need to maintain a viable business.

Can OpenAI make enough money from its offerings to back up its required spending?

I don’t know, but with the AI enthusiasm starting to flatten, these are the questions that are going to get asked of all AI projects, and of all of them, OpenAI has the least resources to lean on to reinforce its business.