We’ve all known it was coming, but OpenAI finally announced its long-awaited introduction of ads into ChatGPT. Now, you can buy your way into ChatGPT’s chats so your brand can be seen by potential customers when they’re having conversations relevant to your business.

This is great, right? I mean, don’t you want to be the first company to sign up?

Maybe. But, maybe there’s a bigger picture that we need to look at too.

In this episode of The Digital Reset Show with Tim Peter, Tim looks at:

And a whole lot more. Want to learn more? Here are the show notes for you.

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Rutgers Business School MSDM Speaker: Series: a Conversation with Tim Peter, Author of "Digital Reset"

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Welcome back to the show. I’m Tim Peter. Well, it’s happening. ChatGPT is putting ads in its chats. We’ve kind of all known this was coming for a while. They’ve announced that they’re going to "start testing ads in the US for the free and Go tiers." That’s a quote. And that Go tier is a new plan that they’re offering for eight bucks per month. OpenAI also mentioned that their "Plus, Pro, Business, and Enterprise subscriptions will not include ads." That’s also a quote and more about that later.

We’ve all known that ads were coming to ChatGPT. The world of gatekeepers gonna gate essentially demands it. What we didn’t know was how those ads would work. And now we kind of do, at least in a few ways.

The question is, what do ads on ChatGPT mean for your business? Should you participate in these? Should you use these? What are these ads good for? And most importantly, how should you think about ads and artificial intelligence overall for your business?

This is episode 481 of The Big Show. Let’s dive in.

There are a few points that marketers should keep in mind for the moment when it comes to ads on ChatGPT. And I’m kind of going to go through these one by one. OpenAI says that, and this is a quote, "To start, we plan to test ads at the bottom of answers in ChatGPT when there’s a relevant sponsored product or service based on your current conversation."

I’m gonna be abundantly clear. I think that that is a capital G, capital T, good thing. Aligning ads with relevant answers ensures that customers continue to have a positive experience with your brand and a positive perception of your brand. You’re not interrupting them, you’re not getting in the way of what they’re trying to do, you’re simply enhancing that experience. That’s great on a number of levels.

My colleague George Roukas pointed out on LinkedIn that customers at some point will be able to train their agents and AI assistants not to suggest given brands if they’ve had bad experiences with those brands in the past. That’s a huge deal. This obviously underscores my long-standing point that customer experience is queen.

It also shows why it’s so important that ChatGPT’s ads not give bad vibes to potential customers. For as much as I’ve talked about the downsides of negative reviews on social and other places online, I hadn’t really thought about how damaging it might be if your customers taught their agents never to buy from you, never to recommend you, ever.

So that’s a really great point, George. I really appreciate you bringing that one to the conversation. It’s definitely food for thought as you consider ChatGPT’s ads.

Now, another piece of good news is that I’ve always been a fan of search ads because they’re tied to what customers are looking for. Google didn’t make roughly $400 billion last year by ignoring what their customers literally asked them for. Google Ads is one of the most successful products in history simply because it actually solves a problem in a moment of need.

ChatGPT, following a similar approach, makes loads and loads of sense for them. It also has the potential to make loads and loads of dollars for OpenAI, too. I think it’s a really, really smart play.

So cool, that’s the good news portion of the program. I don’t want to say the next bit is the bad news portion. It’s that there are a lot of unknowns.

There is no indication yet of whether the ads in ChatGPT will link to your web presence or whether they’ll keep customers within the ChatGPT environment. I will tell you, I know which one I’m betting on long term.

You know, you may receive brand awareness, you may receive organic traffic or branded search volume from people finding you in these ads, but you still might not get many clicks or, you know, any clicks. Time will tell if they’re going to limit these solely to businesses connected via ChatGPT’s apps and whether that’s going to happen at launch or whether that’s going to happen in the future. I’m not gonna have much else to say on this one until we see how the ads work in practice, but you can bet I’m going to be watching.

Speaking of, ChatGPT has stated a number of principles around how they believe ads should work as part of their environment and why it matters so much to them to maintain user trust.

I think that’s great. I genuinely believe in this. And I believe them. Just like I believe that Google honestly meant “Don’t be evil” back when they used to say that. You know, keep OpenAI’s words I just said a moment ago in mind. “To start,” they said.

Keep that mind. This is a test. They don’t know how ads will work for users in practice, maybe not even as much as we do. It’s tough to predict too much about what you should or should not do in terms of their ads because they don’t really exist yet. They’re announced, but we haven’t seen them. What their ads product will look like when it launches and what it will look like 90 days later could be radically different. I’m going to bet it will be.

So you can bet I’m going to review what they’re actually doing maybe 30 days, 60 days and 90 days after launch to see whether any of that has changed. To say nothing of what might happen six months down the road or a year down the road

I have a pretty, pretty high degree of confidence that if ChatGPT’s ads don’t satisfy advertisers’ demands for traffic or contribute meaningfully to ChatGPT’s bottom line, they’ll almost certainly make sure those ads are featured much more prominently.

Now, it took a long time for Google’s ads to become as prominent as they are today. If you do a Google search, they’re all over the place. When they first started, they kind of appeared off to the side. I also expect that ChatGPT’s ads will evolve a lot faster than Google’s did. They’re competing in a much more cutthroat environment. There’s way, way, way more skin in the game today than there was 20 years ago or 15 years ago.

One big takeaway though is that you can’t really think of what’s happening here in terms of absolutes.

This undoubtedly will be a rapidly-evolving environment, one in which OpenAI has almost as much to learn as you do about how customers will use these. If there was ever a scenario where you want to test and learn and then test again, this is going to be that one.

I don’t know that there’s much of a first mover advantage in this case. Instead, I suspect that the one where folks learn and adapt fastest are the people who will see the greatest benefit.

Speaking of learning and adapting, I want to point out that that’s a huge component of what we help companies do here at Tim Peter & Associates. You can drop me a line at [email protected] if you’d like to learn more about how we can help you do that too.

I also talk about how your business can adapt and learn quickly in my book, Digital Reset: Driving Marketing and Customer Acquisition Beyond Big Tech. You can find Digital Reset on Amazon.com or Bookshop.org.

Now getting back to the key points of what’s going on with ChatGPT and ads, don’t forget that Google is also testing ads within AI Mode, AI Overviews, and later this year, Gemini. They’ve announced all of that.

Ads in AI, aren’t going to be limited to ChatGPT, in other words. Google is going to be a player here too, and I expect they will be a really, really big player.

According to SimilarWeb, Google is steadily stealing market share and mine share from ChatGPT. It’s no secret that I think their deal with Apple and experience with advertising as a product, which I covered pretty extensively in last week’s show, positions Google for much better long-term success than ChatGPT does.

I also think that ChatGPT’s origins as a nonprofit entity hurt it. I’ve heard from a number of sources, I’ve talked to a bunch of people, that ChatGPT’s vision of commerce is not terribly focused or complete.

In one case, I heard from an executive e-commerce company that had conversations with OpenAI that were super frustrating from both sides. The discussions kept tripping up over relatively simple things because the OpenAI team simply didn’t have enough commercial experience. They were kind of stuck on how to actually give money and get money from the people they were talking to.

Now that’s absolutely a solvable problem for open AI. The question in the near term is how much of that is merely that they need to add talent and how much of that is its culture being too “science project-y” or “non-profit oriented” to fix quickly.

Just keep in mind that Google does not have that problem, not in any way, shape, or form. We know that’s true.

Google knows how to make money from this stuff. There’s lots of evidence of this, apart from just their $400 billion in revenue.

Take hotels, for an example. Google wrote in a blog post, something that they’re testing right now, they said, “just describe what you’re looking for to compare different flights or hotels and brown schedules, prices, room photos, amenities and reviews. You’ll be able to follow up and refine your options. And then once you’re ready, you can quickly complete the booking with the partner of your choice.” The blog post continued, there’s a quote, “we’re already working with partners, including Booking.com, Choice Hotels International, Expedia, IHG Hotels and Resorts, Marriott International, and Wyndham Hotels and Resorts to make this possible.”

That seems like a pretty big deal, no? And it illustrates that Google already has, a lot of these partnerships in place today. They’re in a much better position, I think, than ChatGPT is.

Normally, this is the point in the show where I outline a strategy around how you would use this new cool thing we’re talking about, like ChatGPT’s ads. In this case, though, I’m going to be really transparent. That feels premature. It feels early.

Again, for starters, the product isn’t fully live yet. Anything that’s too specific about, you must do this or you must do that will likely prove false eventually, possibly sooner than later.

Instead, I’d encourage you to take a step back and think about ads on ChatGPT as it fits into the big picture.

ChatGPT’s ads will undoubtedly offer you a great opportunity to explore reaching new customers. You can use our “Core and Explore” methodology, something I’ve talked about before, and I will link to that in the show notes so you can refresh your memory.

The other thing I want you to think about is that ads cost money. Now, I don’t mean that to be flip. Remember organic search though? Wasn’t it better when customers found your brand for free? Wasn’t it better when you didn’t have to pay for every customer? While it’s clearly a positive that ChatGPT is offering new ways for customers to find your business, to find your brand, it’s even better when they search for you by name, when they ask for you by name. Your mantra long-term still needs to be that “your brand is the prompt.”

Building a brand that customers ask for by name has to be at the core of your digital reset. Wyman Hawkins said brilliantly on my LinkedIn post, quote, “The ad mechanics will change. The need to be asked for by name won’t.”

If you’re chasing customers on ChatGPT or any other AI solely using ads, you’re simply trading one gatekeeper for another.

So as exciting as it is that ChatGPT is starting to offer ads, maybe we don’t want to go too far down that path without also building a brand that our customers ask for by name.

I’ll keep an eye on ads in ChatGPT and update you once you know more. I would encourage you to subscribe to the podcast on Spotify, YouTube, or wherever you get your favorite podcasts so you can stay up to date too. I’ll also remind you, you can find this episode, episode 481, and subscribe at timpeter.com/podcasts. Again, that’s timpeter.com/podcasts. I hope you’ll do that.

Now, looking at the clock on the wall, we are out of time for this week. I’m willing to bet that you might know someone who would benefit from what we’ve talked about here today. Are you thinking of someone? Why not send them link to the episode and let them know what you think too. Keep the conversation going. We all get smarter the more we have a chance to chat about this stuff.

If you’re looking for something new to read, mentioned it a little earlier in the show, but I’d love to suggest my book called Digital Reset: Driving Marketing and Customer Acquisition Beyond Big Tech. You can pick up a copy on Amazon.com or Bookshop.org. And let me know what you think. I’d really love to hear from you. I would genuinely appreciate that.

I want to thank you so much for listening this week and every week. This show would not happen without you. I’ll be back with a new episode next week, and until then, please be well, be safe, and as the saying goes, be excellent to each other. I’ll see you soon.

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