They say nature abhors a vacuum and I can tell
you ad market columnists certainly do. So when the insights and analytics team at ad spending tracker Guideline passed along its just-published baseline for ad spending on ChatGPT I figured it would
make a good column for you. And it would also allow me to jump into my own thoughts about the burgeoning paid chatbot advertising marketplace.
In the two weeks since OpenAI announced it would begin testing ads on ChatGPT utilizing search-like
formats, I've seen some unsubstantiated projections that it could be a $1 billion marketplace this year.
Based on Guideline Chief Insights and Analytics Officer Sean Wright's assessment, it
will be at least three times that and could expand to as much as $20 billion in the next four years.
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Wright's projection isn't derived from Guideline's empirical ad spending tracking database,
but is modeled from a variety of factors including reasonable comps from other rapidly ascendant ad-supported platforms in the past -- mainly Hulu, Meta, TikTok in the past -- the size of the paid
search marketplace, OpenAI's own estimates and the share of revenue it expects to derive from ad spending (20% of total revenues) over time.
Based on the raw math, Wright's scenario calls for
a rough baseline of $4.9 billion in ad spending on ChatGPT in Year One, but he takes that down to $3.4 billion, because it likely will take OpenAI time to set up its sales management systems to
monetize demand from advertisers and agencies.
As of mid-January, OpenAI had already begun testing new ChatGPT ad placements from an undisclosed group of beta
advertising committing $1 million each to participate.
Based on that logic, Wright's model assumes little ChatGPT ad revenue in Q1, but scaling rapidly each quarter through the rest of the
year.
Wright concedes his 2030 projection is more of a "futurist" scenario than an economic model, but utilizing comps for the growth of three comp platforms -- Hulu, Meta and TikTok -- he
believes the ChatGPT ad market should grow to at least $10 billion and as much as nearly $20 billion in five years.
As long as we're crystal-balling here, I asked Wright what the total
ad-supported chatbot market -- including ChatGPT, Anthropic's Claude, Google AI, etc. -- might be over time.
"This is completely shooting from the hip, but I wouldn't be surprised -- despite
ChatGPT being the lion's share of users today -- if by 2030 they were somewhere in the realm of 40% of chatbot ad revenue.
"Based on that rough math, I wouldn't be surprised if generative AI
search is akin to something like $40 billion to $60 billion by 2030."