Will AI chatbot advertising disrupt adland? | Analysis | Campaign Asia
With the rapid rise in popularity of chatbots like ChatGPT and Perplexity, Campaign explores the impact of an advertising model, and competition with major players like Google and Meta.
OpenAI's Potential Move into Advertising
With over 250 million weekly active users on ChatGPT alone, OpenAI has a substantial audience that could attract advertisers. Amid rising operational costs, which are projected to exceed US$5 billion annually, reports suggest that OpenAI is exploring advertising as a potential revenue stream.
The company has recently made notable hires with advertising backgrounds. This includes appointing its first chief marketing officer as well as hiring Shivakumar Venkataraman, formerly the head of Google’s search advertising team, as OpenAI's vice president.
Yet, despite these hires, OpenAI's chief financial officer, Sarah Friar, stated that the company currently has "no active plans to pursue advertising”. Instead, it is focusing on core products like ChatGPT, Sora, Dall-e, and API services, which it believes offer significant revenue opportunities for the time being.
Challenges and Opportunities in AI Chatbot Advertising
"Introducing ads could distract from OpenAI’s primary objectives rather than provide significant long-term benefits," says Manolis Perrakis, innovation director at We Are Social Singapore. "Chatbots fundamentally differ from social media channels, and advertising in these novel environments can only be viable if it integrates seamlessly and avoids disrupting the user experience."
Unlike traditional social media platforms, where ads seamlessly blend into users' often passive scrolling experience, AI chatbots engage users in more direct, personalised conversations, where ads could either enhance or disrupt the user experience.
"On the one hand, the targeted nature of AI-generated content allows for more tailored and high-attention ads, potentially boosting relevance and engagement," says Sebastian Diaz, head of media innovation at Bench Media.
"The most effective ad formats in chatbot environments will likely be those that blend seamlessly into conversations. Think sponsored suggestions, natural product recommendations, or dynamic, context-aware offers based on the user's queries. These ads would need to feel like helpful, personalised advice rather than hard sells,” he says.
No Ordinary Advertising Channel
Open AI rival Perplexity has already launched a variety of AI-powered ads, focusing on placements that integrate with its search results. These include sponsored follow-up questions, side-positioned paid media, video ads and branded explanatory text.
Like Perplexity, search engines offer a unique and potentially more effective avenue for reaching target audiences.
Kellyn Coetzee, Kinesso Australia’s national head of AI and insights, predicts that AI chatbots won't just be another advertising channel; they will be the next evolution of search.
Potential for Disruption
Looking forward, is AI chatbot advertising likely to become a dominant form of digital marketing, with potential to eat into ad revenues from social platforms such as Facebook, Instagram, and TikTok?
"Currently, OpenAI’s products are more aligned with search and productivity tools, making it unlikely that advertising within these products will substantially impact the revenues of social media platforms," says Perrakis.
Jordan Heathfield, VP of connections & brand experience at Assembly APAC, believes advertising within AI assistants presents a transformative opportunity to redefine how brands connect with consumers.
Conclusion
Overall, while AI chatbot advertising has potential, it’s perhaps too early to suggest it will become a dominant force in digital marketing. The real power may lie in how chatbot advertising integrates with and enhances other digital marketing channels, creating a more holistic and responsive marketing ecosystem.
