How to Make ChatGPT Ads Not Suck

**Nathaniel Whittemore** (0:00)
Today on the AI Daily Brief, we are talking about OpenAI's announcement that ads are, as they were always inevitably going to, coming to ChatGPT. The question is, can they make them not suck? And I think I have a few ideas for how they could achieve that. The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI.
All right, friends, quick announcements before we dive in. First of all, thank you to today's sponsors, KPMG, ZenCoder and SuperIntelligent. To get an ad-free version of the show, go to patreon.com/aidailybrief, or you can subscribe on our podcasts. To learn about sponsoring the show or really anything else related to the show, go to aidailybrief.ai. It's there you can find links to sponsorship, to information about speaking engagements, or the wide variety of projects that we have going on at any given time, such as our AI New Year's Resolution or the upcoming AI DB Intel. Now, let's talk about advertising in ChatGPT. On Friday afternoon, the official OpenAI account tweeted, In the coming weeks, we plan to start testing ads in ChatGPT free and go tiers. We're sharing our principles early on how we'll approach ads, guided by putting user trust and transparency first as we work to make AI accessible to everyone. What matters most? Responses in ChatGPT will not be influenced by ads. Ads are always separate and clearly labeled. Your conversations are private from advertisers, plus pro, business and enterprise tiers will not have ads. They also show an example of someone asking about simple but authentic Mexican ideas for their dinner party, which led to a hot sauce, which led to a Harvest Groceries ad focused on hot sauce. Now, in their announcement post, they really focus on the fact that advertising is their way to make sure that access to hyper-intelligent AI assistance remains available to everyone. They write, AI is reaching a point where everyone can have a personal super assistant that helps them learn and do almost anything. Who gets access to that level of intelligence will shape whether AI expands opportunity or reinforces the same divides. So then they say, in the long run, ads are what's going to make OpenAI able to continue to provide lots and lots of otherwise free users with high quality service. They expand a little bit what they say about their ads principles from the tweet. Some of them are repeated like answer independence and conversational privacy, but they also articulate a principle of mission alignment. Our mission, they write, is to ensure AGI benefits all of humanity. Our pursuit of advertising is always in support of that mission and making AI more accessible. Alongside that, another principle they articulate is long-term value. We do not optimize for time spent in ChatGPT. We prioritize user trust and user experience over revenue. They also hint that despite their examples being extremely simple display ads taking advantage of the high intent of ChatGPT users, maybe they'll think about more creative strategies in the future. They write, given what AI can do, we're excited to develop new experiences over time that people find more helpful and relevant than any other ads. Conversational interfaces create possibilities for people to go beyond static messages and links. For example, they say, soon you might see an ad and be able to directly ask the questions you need to make a purchase decision. They also note, ads can also be transformative for small businesses and emerging brands trying to compete. AI tools level the playing field even further, allowing anyone to create high-quality experiences that help people discover options they might have never found otherwise. So, basically, overall, they're saying, user trust is paramount. We're not trying to turn into the next meta that absorbs all your time. Hopefully we can get creative with new types of ad units. But ultimately, this is necessary to provide everyone equal access to high-quality artificial intelligence. In his reshare of the OpenAI post, Sam Altman chose to focus on reinforcing the message that ChatGPT ads will not influence the answers that ChatGPT gives you, as well as data privacy, i.e. that advertisers don't get conversational data. CEO of Applications, Fiji Simo, also focused on that. Most importantly, she writes in her tweet, ads will not influence the answers ChatGPT gives you. So let's talk about responses. For some, this was an inevitable and perhaps necessary evil. Anonymous poster Signal actually responded to Sam's post, calling it a necessary evil, and then went into a little bit more detail in their own post. They write, let's talk about ads because ads inside ChatGPT will be insane. Meta made about $58 per user in 2025 purely from ads. Now imagine OpenAI hits a billion free users. If they monetize at just 9% of Meta's ARPU, that's $5 billion in incremental revenue. 18% gets you $10 billion. Full parity is $57 billion a year from ads alone. Can AI companies ever match or exceed social media ARPU? Likely, AI sits closer to intent than feeds ever did. Ads in a feed monetize attention. Ads in an AI convo monetize decisions. It'll take time, but if AI becomes the default interface for thinking, searching, buying and choosing, social media ARPU may end up looking like a floor, not a ceiling. Given that they have many, many Facebook veterans, it looks very likely that OpenAI has the potential to build one of the greatest ad businesses of all time. OpenAI is essentially building Facebook 2.0, and all of the old Facebook peeps are doing it. Tanmay writes, My thoughts on OpenAI ads. I think it will be a game changer in online advertising. ChatGPT is affiliate marketing on steroids. It grows to know you personally and, given context, will tell you exactly what to buy, and if you buy, OpenAI gets a cut. Shared memory across chats will only bolster this. The level of personalization will be unmatched and unlike anything seen in online advertising before. When this rolls out to all users, OpenAI revenue will go ballistic. Now one note showing that these folks might have the right of it. In early studies, it seems very clear and consistent that ChatGPT users have much higher intent compared to Google searchers. One study, for example, found that ChatGPT traffic converted at 16% as opposed to Google Organics 1.76%, a 9x difference in the conversion rate. I've seen many, many other studies, and while that one is on the high end, they all show ChatGPT being higher intent by a meaningful factor than traditional Google search. This makes sense intuitively. If you're asking questions about something in ChatGPT, you're probably doing a more conscientious form of research than just idly Googling something. The problem, of course, is that the communication around this has not been good. Metis Jason Yim wrote, In May 2024, Sam Altman said, Ads plus AI is uniquely unsettling to me and called advertising a last resort. Today, ChatGPT is getting ads. OpenAI is burning through cash at an insane rate. So now the company that positioned itself as the ethical AI alternative to big tech is building an ad platform to monetize its 700 million weekly users. And Sam Altman's new take? I love Instagram ads. You can't make this up. Nate Haake writes, So we are all in agreement now that the whole AGI and AI abundance narratives were total scams, right? Benjamin DeKraker wrote, Remember just last month, OpenAI implied that people were lying about seeing test ads in ChatGPT and that ads were just silly rumors? They were 100% working on ads at the time. Now, interestingly, Ben Thompson from Stratechury argues that OpenAI should have already put ads in GPT. In a recent interview on TBBN, he said, They could have launched the world's crappiest ads in 2023 By today, in 2026, the ads would be good. They'd be making money and people wouldn't rebel against it. Now they're going to have to launch ads and they're going to suck. And people are going to be like, this sucks, I'll just go to Gemini. Now this reflects something that I said back when they launched the Sora app. To anyone launching the numbers, it has been completely inevitable that at some point ChatGPT was going to have to be an ad-supported model. It's only something like 5% of users that are converting to paid, and you just can't have 95% of users who are using ChatGPT as much as they are and not have an ad-based model. It was just completely inevitable, and anyone who has been around any business for any amount of time has known that it is inevitable, which made it so absolutely patronizing when they pretended that they weren't going to do ads. Remember, all of the hubbub around the Sora app was people being frustrated that OpenAI was just turning into another attention hog. The communication around advertising at the time was still, oh, no decisions have been made, yada, yada, yada. So either one, the decision had been made and they were lying, or at least not communicating truthfully, or B, they were in some sort of state of naïve denial that in the last couple of months they finally got themselves out of. Neither case is particularly reassuring. And you can already see the challenge to trust. Certainly the thing that people are most concerned about is the way that it impacts the quality of results. Sam McRoberts captures the sentiment of about a million different tweets when he says, How can we trust this? Ads will not influence the answers ChatGPT gives you. Ads result in an inevitable conflict of interest. Just look at how Google boiled the frog over time. Jason Yum's post goes farther in describing this phenomenon. Referring to the new mockups that ChatGPT shared, he says, The current mockups show Google shopping style ads sitting at the bottom of the screen, clearly separated and not integrated into the actual response. OpenAI is being careful testing the waters. But here's what history tells us. Google search ads started the same way. Now, they're nearly indistinguishable, just a tiny sponsored label. The playbook is always the same. Introduce ads as separate and non-intrusive, wait for users to get used to them, slowly integrate ads deeper into the core experience. Give it 18 months and ChatGPT will be recommending products mid-conversation. Based on what you've told me, you might like this. With a tiny sponsored tag, you'll barely notice. Now I have a different thought on that, as you'll see in a minute, but that is the concern that people have. Other concerns that people have is that even as we're trying to get better memory, this increases the cost of our services having memory. Jen Zhu writes, OpenAI launching ads within ChatGPT is the exact reason why I don't want my AI tools knowing about me or remembering my preferences. Yes, ads are annoying, but integrated in ChatGPT, the depth of manipulation could mess you up without noticing. Augusta Lebron thinks that this could threaten recruiting. Leave zero-sum quant finance and come build the machine god. They're going to have a rude awakening when it turns out they have to work on ads, ads, and more ads to pay for it all. To the extent that there are positives, it's around either A. The idea that advertiser pressure could keep ChatGPT within normative boundaries. Business Insider correspondent Katie Natopoulos writes, Here's the upside to ads on ChatGPT. Yes, ads are annoying, but being subjected to advertiser pressure has a normalizing effect. A tech company has to maintain a bare minimum morality or advertisers flee. But still, overall, most of the responses are somewhere between cynical, skeptical, or outright mad.