An agency executive who has communicated with OpenAI employees and serves ChatGPT advertisers revealed that OpenAI plans to adopt a pay-per-click model for some ChatGPT ads instead of just billing based on impressions. The executive said that at the same time, OpenAI also plans to launch ads designed to guide users to complete specific actions, such as promoting purchases or downloading applications, but the specific launch time has not yet been determined. These moves reflect OpenAI's efforts to make ChatGPT more attractive to marketers in order to achieve ambitious growth goals and challenge Meta and Google.
OpenAI officially launched advertising in ChatGPT in early February. As of now, it only provides aggregate data such as impressions, clicks, and placement costs to early advertisers. In contrast, digital advertising giants Meta and Google provide more detailed information, including ad demographics and whether the ads led to conversions to purchases.
Marketers said that it is currently difficult to judge the effectiveness of ChatGPT’s early advertising. Before OpenAI launches more complete tracking and measurement tools, they will most likely only maintain small-scale experimental advertising. The pay-per-click model allows advertisers to pay only when users interact with ads, while conversion-targeted advertising campaigns can help advertisers optimize delivery costs for behaviors such as purchases.
Ben Kahan, head of programmatic business at marketing agency Brainlabs, said: "Many clients who have the budget to test new platforms are waiting and watching and are cautious because they think they can't get the performance measurement data they want from the platform."
Two people who operate ChatGPT ads on behalf of the company revealed that OpenAI began testing ads for users in the United States who logged in to the free and low-cost versions of ChatGPT in early February, and the current promotion progress is relatively slow. Due to the insufficient frequency of ad display and failure to exhaust the initial advertising budget promised by advertisers, the company has extended the pilot period for the first batch of advertisers until the end of March.
The actual selling price of some OpenAI advertisements was also lower than initially expected. The company had previously set a cost per thousand impressions (CPM) of up to $60, which is comparable to the price of high-end advertising such as streaming TV. However, a media buyer who serves many early ChatGPT advertisers said that the actual cost per thousand impressions paid by some customers is only US$15 to US$25, which most likely reflects the low competition in advertising inventory.
An OpenAI spokesperson said that the company is exploring multiple options to determine which models can create real value for users and advertisers, and will continue to iterate and optimize.
OpenAI disclosed to investors in the first quarter that it expects advertising revenue to reach $2.4 billion this year and is expected to increase to $11 billion in 2027. If it can achieve its target next year, its scale will far exceed that of established advertising platforms such as Snap and Pinterest. OpenAI stated in a blog post at the end of March that within six weeks of the launch of the advertising pilot, annual recurring revenue (ARR) exceeded US$100 million, but did not explain the specific calculation method of this indicator.
In recent weeks, OpenAI employees have stated to marketers that they will improve the competitiveness of ChatGPT's advertising business and narrow the gap with digital advertising giants.
The above-mentioned agency executive who communicated with OpenAI employees said that OpenAI has informed some advertisers that it will launch a delivery model based on advertising clicks in the next few days, in parallel with the existing billing based on exposure model.
In addition, OpenAI has also discussed launching ads that are more focused on guiding user actions in the near future, but the speed of implementation of such functions is unclear. This business expansion also requires OpenAI to develop or cooperate to build tools to more accurately track users’ behavior after viewing ads, such as whether to complete a purchase.
Two people who work on behalf of advertising operators revealed that in recent weeks OpenAI has opened a self-service advertising management platform to some advertisers, replacing the previous manual operation model that relied on spreadsheets and phone calls. At the same time, OpenAI also cooperates with external companies, including advertising technology company Criteo, to sell advertising on its behalf.
Jay Amin, chief solutions officer of marketing agency Jellyfish, said that in order to expand its advertising business, OpenAI has begun to sign contracts with some advertisers on a monthly basis, requiring a monthly investment commitment of between US$30,000 and US$50,000. This is a change from the early cooperation model - OpenAI previously required advertisers to prepay at least US$200,000 in advertising budgets before the first quarter.
Existing shortcomings still need to be resolved
ChatGPT advertisers still believe that the platform has many areas for improvement. First, advertisers have limited control over where their ads appear. Agency executives said that currently OpenAI does not accurately match ads with specific searches or user types within ChatGPT, but only requires advertisers to provide broad keywords to guide ad placement.
However, since each reply on ChatGPT is unique, even if the reply content involves keywords marked by the advertiser, it is difficult for the advertiser to ensure that the advertisement will be displayed under the specific prompt words. Alison Scacioti, senior director of digital investments at Jellyfish, said: "This is not really a keyword targeting strategy, and each user's prompt words are different."
For marketers like Kahan, the uncertainty that brand ads may appear next to various responses also deters them.
He said: "There may be thousands of ways to answer the same question. At present, the brand safety management and control tools we can use are extremely limited. Brand safety is very important. We attach great importance to this demand of our customers and hope that all links can be foolproof."
In addition, currently ChatGPT ads only include short titles and small images, and the display format is also simpler than digital ads on other platforms.
Jellyfish's Amin said: "The current advertising format is quite traditional. It is expected that this type of format will be iteratively upgraded quickly. On the one hand, it has to keep up with the mainstream advertising formats on other platforms such as video. On the other hand, there is also room for innovation - why can't they create breakthrough formats that are completely different from other platforms?"