‘Maybe ChatGPT is a different kind of a place’: Why OpenAI is saying no to search budgets — for now

“No, I think maybe ChatGPT is a different kind of a place,” Asad Awan, ads and monetization lead at OpenAI, told Digiday during a press briefing. “So I think this is not the same as a discovery platform feed or pure search.” 

Behind the scenes that stance is even more pronounced.

“They [OpenAI] wanted to emphasize the higher up the funnel, because [originally] they didn’t have the conversion pixel for the pilot,” said one agency exec, who spoke on condition of anonymity because they have clients testing ads on the app. “Our contact told us ‘don’t take from search, but take it from anything else you’re doing up the funnel, at least, just to get on the platform.’”

It’s not hard to see why OpenAI made that choice. With conversion tracking only just launching, it has no robust way to show marketers what happens after someone clicks on an ad. Pitching against search budgets in those conditions means being held to Google’s standards on Google’s terms — a comparison it would currently lose. Test budgets, on the other hand, don’t carry that evidentiary burden. They’re propelled by curiosity rather than proof, which means the ads they fund are more likely to be the kind that promote a brand than prompt an action.

“I think it will hover in that mid to upper [funnel] for a while,” said Jai Amin, chief solutions officer, media activation at Jellyfish, which has started helping clients test ads on ChatGPT. “The nature of the ads, these little favicons with very limited text — it’s good, you don’t want it to be intrusive — but I can’t see in the current format, it [ChatGPT ads] going too far down the funnel in terms of delivery.”

That won’t always be the case. The direction of travel is clear enough. David Dugan, OpenAI’s ads chief, helped build one of the most profitable performance advertising businesses ever assembled in Meta. Criteo, one of its main ad tech partners, has a similar pedigree. Conversion tracking has just launched, CPA bidding is next. And underpinning all of it, is the fact that OpenAI is burning through too much cash to leave performance advertisers on the sidelines indefinitely. What it’s doing now — pushing CPC while steering advertisers toward test budgets — is a way of advancing the performance question without yet having the infrastructure to back it up. 

Awan said as much. Advertisers, he continued, want to understand how conversational ads work and whether there are enough commercial legible queries to sustain a meaningful ad business at all. Until that’s clearer, CPC is less a performance product than a hedge. OpenAI absorbs the relevance risk, advertisers only pay if someone clicks. The only lever they have in the meantime is the creative itself — currently a single format, a small favicon with text. 

“We don’t want advertisers to take the risk and not get ROI,” said Awan. “We might show [an ad] — whether it’s relevant or not relevant, that’s our risk to take. The advertisers get the actual click, which is the outcome.”

The click, though, is only half the story — and the easier half at that. The harder problem is what happens to the environment that makes it worth anything. ChatGPT’s intent signals are valuable precisely because users trust the answers aren’t for sale. Push the ad load too hard and that trust frays — and the signal with it. But if ads never change behavior, advertisers stop paying. Every successful ads business has worked by changing what people saw or did. That is the tension OpenAI is selling around, not through.

“We have a lot of advertisers who are very performance focused. They’re not going to be OK in a world where they’re not able to see post click activity or as clearly or as cleanly,” said David Dweck, president at Go Fish Digital. He said that his clients who are preparing to start spending on ChatGPT were pulling from programmatic display, rather than cash earmarked for search. 

Whether that holds beyond the test phase — and for more than just those advertisers — matters well beyond OpenAI. Publishers have spent years watching their traffic migrate to AI-generated answers. Their ad budgets may be next.

“CPC is the best way to make sure that advertisers are getting ROI while we are incentivized to improve relevance ranking showing the right ad to the right person, and that’s improving every day,” said Awan.