Now that OpenAI is in the ad platform business, the next step is getting into the prove-your-ads-work business.
Enter the OpenAI conversion API (CAPI), which the company announced on Tuesday along with the public launch of its self-serve ads manager, a cost-per-click bidding product (which is native to search advertisers, compared to the programmatic CPM) and new measurement tools.
Although plenty of news about ChatGPT’s ads launch has emerged in the past few weeks, this is the first time it’s been on OpenAI’s watch.
Reports of an OpenAI ads manager and CPC bidding in beta have circulated for weeks, not to mention the unannounced rollout of ads to logged-out users – all of which were made public before OpenAI made an official announcement.
Self-serve, at your service
OpenAI has been a compelling but difficult channel for advertisers, considering the business launched with a minimum spend commitment of $200,000, a $60 CPM and, according to early advertisers, not a lot of inventory.
But the self-serve ads manager will make ChatGPT ads more accessible to smaller businesses, in addition to a wider set of global brands, Asad Awan, who heads monetization for OpenAI’s ads team, said during a press briefing on Monday.
Marketers can, of course, still opt to work with agency partners, but now they also have the option to upload ads, set budgets, control their bids and track performance directly in the platform.
Plus, as the ads manager becomes available to all advertisers, the minimum spend commitment will be removed altogether, said Benji Shomair, OpenAI’s VP of monetization. (The minimum already dropped to $50,000 back in April.)
Supply and over-demand
Although OpenAI has a lot of demand from advertisers, it’s still figuring out how to make the most of its highly limited supply.
For example, as AdExchanger reported last month, even advertisers who didn’t have a problem with the high minimums did have trouble spending it all, due to insufficient inventory.
The ChatGPT “fill rates” (or the frequency at which ads are delivered) has increased over the past few weeks, said Awan, as OpenAI has developed a better understanding of how to measure an ad’s relevance.
However, Awan said that the ad a user sees in a given conversation isn’t determined by “pure relevance.” Instead, OpenAI takes into account the content of the conversation and the user’s profile and preferences (for logged-in users), as well as factors on the buy side, including how much of an advertiser’s daily budget has already been spent and the price of their bids.
Figuring out where and when ads perform best will help OpenAI determine the best contexts in which to serve ads and how to fill a client’s budget.
First impressions
But OpenAI’s goal isn’t just to ensure that ads are delivered – advertisers need proof that their campaigns have a solid return on investment as well.
To that end, Awan said that the introduction of CPC campaigns will help prove the channel’s ROI and encourage advertisers to keep buying ads within ChatGPT, while also incentivizing OpenAI itself to improve its relevance and targeting capabilities.
“We don’t want advertisers to take a risk and not get ROI,” he added.
Advertisers already see aggregated metrics like clicks and impressions, Awan said. But with the new CAPI, they’ll be able to track conversion events, such as landing page views and when someone adds a product to a cart.
Understanding what it even means for a brand to perform well in AI search results is going to take time, both for brands and for LLMs. The new media format is similar to search, but not an exact replica, nor is it like a social feed. ChatGPT’s modeling for brands is not just “a query matching to an ad,” said Awan (although, for logged-out users, that may be the best it can do). Instead, it requires a deeper understanding of the complete “user journey.”
Shomair said that, for OpenAI, ChatGPT users’ feelings about the service will take priority over the ad platform customers.
“We’re taking a deliberately conservative approach,” Shomair said, “as we ensure that we’re delivering a good experience for users.”
