We’re entering a new era of advertising. How will ads on LLMs change the game for advertisers, what does it mean for consumers, and how is OpenAI’s competition against Google shaping up?   

We recently saw a huge announcement we’d all been expecting for quite some time: OpenAI finally kicked off the process of bringing advertising to ChatGPT. Starting with a test on US users, ads will be displayed on ChatGPT’s free and Go tiers. 

Although we hadn’t known exactly when it would happen, we knew it had to be soon. It was only a matter of time. OpenAI completed its shift to become a for-profit company around three months ago, and with its scale, it stands to make an absolute fortune. 

A new world of opportunities for advertisers…

Ads on ChatGPT will be based on the context of what users are asking for at a given moment, similar to the contextual advertising on many platforms, instead of being tied to everything a user has ever asked. Advertisers will have control over their ads, from which ad creatives will be shown, to defining broad targeting settings such as general location or demographics. 

It’s the next progression of contextual advertising. Yet, LLMs are so much more than a traditional search engine, meaning there will be a lot for advertisers to rethink. Brands will need to engage users in the flow of conversation, rather than trying to take their attention away from the information a user is focused on. 

With dynamic product suggestions embedded directly into interactions, brands will want to create ads which react to the intent behind a query. The aim will be natural placement within answers, being relevant instead of interruptive. 

However, that will also be a challenge for advertisers. They want control over the environment on which they are displaying ads, and that’s near enough impossible to guarantee on a chatbot. Advertisers need to keep in mind that the answers given by ChatGPT will influence what ads get shown. 

Plus, users aren’t used to being displayed ads on the service, so the first experiences of seeing them there will likely be perceived as a disturbance, unless executed very effectively. 

There appear to be barriers in terms of the cost, too. OpenAI’s opening asking price is USD$60 CPM (£44.69), AdAge reports. Information is also circulating that ads will be charged on a pay-per-view model, not a click-based one, which is likely not what advertisers want to hear. 

…but what about consumers?

When it announced the move, OpenAI guaranteed “ChatGPT’s responses are driven by what’s objectively useful, never by advertising”. Its ads principles also assured: “Ads do not influence the answers ChatGPT gives you. Answers are optimized based on what's most helpful to you. Ads are always separate and clearly labeled.” 

It’s outlined clearly: advertising will not influence the answers ChatGPT generates for us. But will all users trust that? Considering its business model is built on being a source people (mostly) trust, does this take away from its credibility?

Even if the platform’s ecosystem is designed so that ads do not influence responses given to users, will that always be the case? After all, it wasn’t long ago that OpenAI CEO Sam Altman was outspoken about his aversion to ads, and of their introduction to the chatbot.  

In a fireside interview with Harvard Business School in late 2024, Altman stated, “I kind of think of ads as a last resort for us, for a business model.” He even said that he felt ads “somewhat fundamentally misalign a user’s incentives with the company providing the service”. 

On a personal note, he also commented: “Ads plus AI is sort of, uniquely unsettling to me. When I think of GPT writing me a response, if I had to go figure out exactly how much was who paying here to influence what I’m being shown, I don’t think I would like that.” 

OpenAI’s battle against Google 

OpenAI versus Google: the battle between both giants rages on. While OpenAI prepares its flagship product for ads, Google is already way ahead in the ads game, and that’s where one of its advantages lies. Advertisers know Google, they’re already familiar with advertising across its ecosystem. ChatGPT brings about new opportunities for advertisers, but those opportunities also carry risk. 

In a big e-commerce move, Google also recently introduced personalised shopping ads to its AI tools, monetising yet another part of its business. Now, advertisers will be able to present exclusive offers to shoppers who are intending to buy an item through Google’s AI mode, powered by its Gemini model. 

From an advertiser standpoint, some might think it’s easiest to just stick to Google (and wherever else spend is already being directed), at least for the moment. 

From a consumer standpoint, it’s uncertain how much ads will affect users. With ads thrown into the mix on ChatGPT, could more consumers just opt to use Google’s AI Overviews/AI mode instead?