Several days after agencies took
to LinkedIn to discuss how they did not see performance from ChatGPT Ads, parent company OpenAI announced it had reached a $1 billion annualized revenue run rate for its advertising business.
"In less than 200 days after launch, ChatGPT Ads has reached $1 billion in annualized revenue run rate," the company wrote in a blog posted on Monday. "The platform is now used by tens of thousands
of advertisers and continues to expand globally.
Starting later today, advertisers can purchase ChatGPT ads directly via Ads Manager across India, Europe, the Middle East, and North
Africa.
The company said it is working on the next "phase of growth" to bring ChatGPT Ads to more markets and introduce additional formats, objectives, buying options, and measurement
capabilities, as well as explore new ways for businesses to interact with consumers in ChatGPT.
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OpenAI treated the announcement as a milestone as it prepares to take the company through an
initial public offering (IPO), calling its ad business as one piece of a "diversified business model, alongside consumer subscriptions, enterprise offerings, and usage-based APIs."
A
diversified business model is something all public companies need to attract investors, along with an advertising-supported, free tier to support ChatGPT's more than 1 billion weekly active
users.
OpenAI also reminded advertisers and users that ChatGPT
advertisements are always clearly marked and they do not influence answers that the chatbot provides.
"Advertisers do not receive access to people’s private conversations, and
users can control how their ad experience is personalized," the company wrote.
"This announcement is both incredibly impressive and terribly disappointing,” Emarketer AI
analyst Nate Elliott, wrote in an email. "On the one hand, OpenAI has ramped its ad business with amazing speed, but on the other hand, these numbers point to them missing their own goals by a
country mile.
“If they're just now hitting a $1 billion run rate -- rather than actual revenue -- eight months into the year, it'll be all but impossible for them to meet
their own $2.5 billion ad revenue target for 2026,” he wrote
Ads do not influence answers, but answers do influence the ads -- whether or not ChatGPT users click through after seeing the ad impression. Last
week, Peter Jaffray, managing director and privacy officer at Choice OMG, a Canadian digital marketing agency based in Edmonton, Canada, told MediaPost he ran a small campaign
targeting ads in Ontario and Alberta, but did not get any interested buyers, zero, though the ads were inexpensive and the people were real who clicked on them. In other words, the clicks were not
generated by bots.
“I got many more impressions than expected, but the clickthrough rate was substantially lower, about 0.6%,” he said. “Generally, I would get 2%, if I compared
the campaign with search ads, rather than display.”
Performance is what the ads lacked from the impressions and clicks, according to Jaffray, but at least one OpenAI ChatGPT Ads
advertiser disagrees.
OpenAI's new Max Results bid strategy has driven major improvements in CPC, CPM, and CTR — so much so that we now compete with Meta and Google. He posted a graph
that demonstrates "a clear-cut line where we enabled it across our campaigns, after which we had the highest CTR of the three channels," Evan Engler, senior paid search buyer at Common Thread
Collective, wrote in a LinkedIn blog post during the weekend.
Engler works with advertisers to run ChatGPT Ads campaigns.
"Spend volume is significantly
different here, so it's hard to compare directly, but these are the improvements advertisers have been waiting to see from ChatGPT," Engler wrote.
He has been touting
OpenAI's ad business for at least a week, writing that one of his clients in the first day saw a more than 50% increase to clicks, 108% increase to CTR, and all at a 19% less than typical CPC and
reduction in CPMs by 17% cost to CPMs.
Jaffray responded to Engler's post on LinkedIn.
"Early CTR gains on ChatGPT Ads are worth watching, but the attribution question is
where this gets interesting," Jaffery wrote, questioning Engler's outcome. "When someone sees the ad, then asks ChatGPT a follow-up question, then converts three days later on a branded search, none
of the three channels you named will cleanly own that. Are you seeing conversions land in the OpenAI reporting yet, or mostly the top-funnel metrics so far?"
Engler did not publicly
respond.
OpenAI wrote in today's post that it has expanded its ecosystem to more than 50 technology and measurement partners, which should help find that performance.
The company also
touted recent examples of an ecommerce advertiser achieving a 3x return on ad spend across its campaigns spanning 28 days, while a technology partner reported that more than 80% of ad-driven
ChatGPT traffic is from new customers.