OpenAI is putting ads in ChatGPT. It's amazing what getting desperate for cash will do.
The numbers are brutal. Only 3-5% of ChatGPT's 800 million users pay for a subscription, Deutsche Bank projects cumulative losses of $143 billion before they hit profitability, and they've committed $1.4 trillion to infrastructure over the coming years.
So, ads it is.
To be fair, they're taking this seriously. They've hired Fidji Simo from Meta (who built Facebook's News Feed ads), Kevin Weil from Instagram and Shivakumar Venkataraman from Google. They've appointed PHD as their media agency. These are people who know the advertising business.
The question is whether OpenAI will listen to them.
I started writing a cynical post about how they'll get it wrong due to the classic Silicon Valley exceptionalism problem. We have the audience. We have the data. Advertisers want both. How hard can it be?
I bet I'm right. I bet they'll miss or ignore all the things a sophisticated advertiser needs - the kind we had at Dentsu and the rest of the Big 5 holding groups. Independent measurement. Cross-platform attribution. MMM integration. Media Rating Council accreditation. Clean rooms. OpenAI's announcement says nothing about any of that. Another "trust me, bro" black box.
But then I realised why OpenAI might not bother to worry about them at launch...
Meta and Google don't make most of their money from sophisticated multi-million-dollar advertisers. They make it from the long tail - small businesses, SMEs, mum and pop shops who care not a jot about MMM or clean rooms. They just want to know: did it work? Did I get customers?
If OpenAI can crack self-serve and prove to small businesses that ChatGPT ads perform better than PPC or paid social, who cares about incrementality testing? That's where the real money is. Which makes what they've announced a bit underwhelming.
If they keep ads genuinely separate from the chat - which they've promised - they're essentially building a contextually relevant display ad product (yawn). A new channel with an interesting audience, perhaps, but it's hardly the second coming of AdWords... unless they create genuinely new formats and targeting options we haven't seen before. Otherwise they're just another ad platform competing in a crowded, commoditised space.
I wonder if the sophisticated advertisers even matter to them right now. I've got plenty of questions and not many answers.
Place your bets. I bet I'm eating these words in a few years!