ChatGPT Ads Gets "Underwhelming" Performance Review

Sam Altman once called the combination of ads and AI "uniquely unsettling." OpenAI is now building a sprawling advertising business at what NewStreet Research analyst Dan Salmon calls an unprecedented pace. The company said last month it was on pace to hit $1 billion in annualised ad revenue, seven months after launching its first ad tests with US-based ChatGPT users in February. The business is now live in more than 50 countries.

The rollout has been fast and messy. OpenAI initially charged some large brands around $60 per 1,000 views regardless of whether users clicked, a pricing model far removed from the performance-based standards brands expect from digital advertising. Rates have since fallen significantly following a move to auction-based pricing. Early on, OpenAI also limited the number of ads shown to monitor the impact on user experience, which meant some brands couldn't spend their allocated budgets and paused participation while the product stabilised.

The back-end infrastructure has struggled to keep pace. Tamara Rosenthal, head of marketing at Taskrabbit, discovered thousands of dollars in unfamiliar charges on her company credit card. "I'm being hacked by OpenAI," she recalled telling her accounting department. Her team explained they had begun testing ads.

Rocket CMO Jonathan Mildenhall described his company's results as "underwhelming," saying he saw no material impact from testing and wants better targeting and a smoother transition between chat content and ads before increasing spend.

The advertiser logic is straightforward even amid the friction. ChatGPT has more than one billion weekly active users and chatbot queries tend to be more detailed than conventional search, which Hungryroot CMO Adam Weber says makes more personalised ads possible. "Even though there's been hiccups, brands can't afford to not test and learn here," said Spencer Lian-Thornton of marketing firm Mindgruve. "Ignoring this today is like saying buying stuff online will never catch on."

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