Amazon pilots ad services in ChatGPT: What marketers need to know

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Dive Brief:

• Amazon advertisers will be able to extend their campaigns into conversational experiences on ChatGPT as part of a new partnership between the e-commerce giant and the chatbot’s developer OpenAI, according to news shared with Marketing Dive.  
• Delta Vacations, the airline’s vacation packages provider, is among a select group of U.S. brands piloting the integration. ChatGPT Ads inventory will be available through Amazon’s demand-side platform, an Amazon spokesperson said over email.
• Amazon sees conversational ads as one of the fastest-growing channels for brands to engage new and existing customers. OpenAI has quickly scaled ChatGPT’s ads business, which launched earlier this year and recently hit an important revenue milestone.

Dive Insight:

The OpenAI tie-up provides Amazon a bridge into one of the most popular AI programs — a channel that is increasingly intersecting with the world of advertising and informing more consumer decision-making. For OpenAI, the pact may open a floodgate of new entrants to its ads business at a critical moment. Amazon operates the third-largest digital advertising platform and neared $70 billion in ads revenue last year.

ChatGPT Ads will be bought via Amazon DSP and are offered as a managed service, meaning Amazon’s team will help set up and optimize campaigns. Inventory will be available on both a cost-per-click and cost-per-mille, or cost per thousand impressions, basis. The pilot is limited to the U.S. at launch. 

OpenAI will control all ad delivery decisions through its own systems, an Amazon spokesperson said. The ads themselves will surface as text and image units beneath organic ChatGPT responses with clearly marked sponsored labels, aligning with how OpenAI has served ads to date. ChatGPT currently runs ads on its free model and cheaper Go subscription tier. In addition, Amazon is offering product feed ads that automatically generate assets based on product catalogues. 

Advertisers value Amazon for its troves of shopping and streaming data that can be used to improve marketing precision. ChatGPT for its part has pitched its advertising as a way to realize more contextually rich and relevant campaigns. Those testing the ChatGPT Ads integration will receive some aggregated performance data related to impressions, clicks, cost per result, CPM and CPC metrics. The concept could be appealing to nonendemic advertisers, or advertisers that wouldn’t typically sell goods on Amazon. 

“Travel planning is becoming increasingly personalized, and travelers expect experiences that feel relevant,” Katrin Koenig, president of Delta Vacations, said in a statement. "Through our collaboration with Amazon Ads and ChatGPT Ads, we can leverage deep consumer insights to inform how and when Delta Vacations appear within ChatGPT Ads experiences to create new opportunities for travelers to engage and discover vacation possibilities.”

OpenAI began testing ChatGPT ads in February and has quickly built out the business as it prepares for a highly anticipated initial public offering where the segment could play a role in the company’s revenue-generation narrative. The decision to run ads has drawn flak from competitors while industry reports indicate some marketers have been underwhelmed by performance. OpenAI previously partnered with other retail media networks, including those operated by Target and Albertsons, but Amazon’s is significantly larger.

ChatGPT ads late last month achieved a $1 billion in annualized revenue run rate, a projection of expected annual revenue based on shorter-term gains. OpenAI says tens of thousands of advertisers use the service, which recently expanded in India, Europe, the Middle East and North Africa. It has also enlisted third parties to refine its capabilites in areas that are important for building advertising confidence, including working with LiveRamp on measurement. 

OpenAI linking with an established DSP in its quest for scale isn’t particularly surprising, but its initial pick of partner could be. The software developer reportedly discussed a deal with The Trade Desk, an independent rival of Amazon’s, earlier this year.