OpenAI CEO Sam Altman Says ChatGPT May Take a New Approach to Ads. Will It Work?

In a recent interview, OpenAI co-founder and CEO Sam Altman announced that ChatGPT will soon be integrating ads into their platform. For trades and service businesses, this could be a huge opportunity for future traffic and leads. 

However, Altman claims he is going to change the paradigm of online advertising. And I’m really not sure if that will work. 

Instead of “pay to play” like Google Ads, Altman announced that ChatGPT ads will take a commission of the sale based on websites being placed in the inquiry results. The reason behind this logic is the theory that users distrust the top 3 results on a Google search because they paid to be there—not because they are the best result per se. 

Rather than paying for terms, ChatGPT will be taking commissions for placements. The objective is to source the best result for a query and then place those results as “ads” for which they’ll take a cut. For the travel industry, wedding industry, and other pre-planned events based industries, this could be a boom in leads. 

But what about for trades and services? 

On the surface, this seems like an outstanding idea. But the problem with trying to be a disruptor is that sometimes an industry is so well established that the disruptions that could work have already been done (for the most part). Here are three issues that I foresee with the OpenAI “pay for placement” model Altman is proposing for ChatGPT: 

1. Managing Ad Budgets 

One of the advantages in “pay to play” is the ability to micromanage the “pay” portion. With Google Ads and Meta Ads, our team at Armada Digital is able to build complex campaigns that focus on certain keywords, events or conversions. 

With that level of control over spend also comes the control of wasted spend. Knowing what key terms and phrases to emphasize versus pull back on allows us to maximize our clients’ return on investment. 

With “pay for placement,” how will managing your ad budgets work? How will you be able to ensure you display in the results for the correct queries? If you’re not converting, how do you make adjustments? 

These are all answers still to be determined. 

2. Ad Placements 

There will be a day when AI platforms advance to the level of being able to correctly pick keywords for each business, but we’re just not there yet. Even with Google’s AI search there are still flaws. SEO specialist Sean Flamand pointed out in a recent blog article that Google’s AI results frequently display incorrect information, even readily available concrete facts like when the Dodgers last won the World Series.

This has also been an issue with Google Local Service Ads pulling keywords from websites, reviews, and pages then creating ad campaigns. 

Marketing still requires a human touch and strategy. The placements of your ads and the keywords selected are a vital part of that strategy. 

With any “pay for placement” you’re relying on the platform to correctly place your ads. You’re removing a layer of control that your strategy provides. 

Will we one day be writing content purely to appease an algorithm? Has the human element of online been lost? 

3. Tracking 

How will ChatGPT track conversions if they’re going to take a percentage? If someone submits a contact form, will they automatically charge you a commission? Will it be per contact form submitted? Per phone call? 

This all goes back to a problem that “pay to play” actually solves: How to accurately track an ad budget. 

Tracking is the can of worms that Altman will need to figure out before OpenAI can truly disrupt the online advertising space. 

Will the OpenAI Approach to Ads in ChatGPT Work?

So will “pay for placement” disrupt an already established industry? Will ChatGPT be able to change the long established “pay to play” format that dates back to the Angie’s List days? 

The answer is we don’t know. But it may be another opportunity for brands to acquire new clients.

Sam Altman is ignoring three key issues in managing ad budgets, ad placements and tracking—but the idea of building consumer trust is always a winner in marketing.