Who uses ChatGPT really matters
OpenAI has opened up the beta version of OpenAI ads, which are shown to users in ChatGPT. I tried out the ad product as an advertiser while two questions ran through my mind.
The first question—‘how am I reaching people?’—is straightforward for OpenAI to address. ChatGPT will iterate on different ad formats, recommendations, call-outs and creative ways to serve the ads through a huge range of tests. From an advertiser perspective, it’s not too much of a leap to imagine that OpenAI will improve this considerably and have some clean examples for advertisers to get grounded on. While the improvements might be slow, the distance to travel for OpenAI isn’t overly long. Advertisers expect there to be a learning period for the platform.
The bigger question that lingered—‘who am I reaching?’—is much more problematic for OpenAI. For an advertising business, the audience is a major factor for the profitability of the ads. The audience needs to be understandable and coherent to the advertiser and that’s where the underlying weaknesses are exposed for ChatGPT.
The other advertising platforms have clear audiences. Advertisers know who is on Facebook/Instagram because they can see people in their networks who are on those platforms. Likewise with X/Twitter. If you want to reach preteens and teens, Snap is a place to go as an advertiser.
Google benefited from an immediately clear answer to how it was reaching people back in 2000 when it rolled out ads. Google offered clear, repeatable placement. Yahoo was a bigger player at the time and had banner ads, so Google’s links seemed enlightened for high-intent searches. More significantly, advertisers knew that they were paying to reach some of the savviest web browsers at the time, who valued the page rankings and quality of the Google results page over the legacy search players.
Google didn’t have ‘Snapchat is for preteens and teens’ level clarity on demographics and target audience at the start of its ad rollouts—that doesn’t mean that OpenAI can get away with a similar muddiness. The indexing quality of Google’s competitors at the time wasn’t comparable, so there was real product daylight to bucket Google’s audience into a tech-forward crowd with double-digit market share. People who used Google early on appreciated the ease and convenience of great search.