Ads are Coming to ChatGPT: Beyond the Hot Takes
The second order effects of OpenAI ads
In case you missed it: On Friday OpenAI announced ads are coming to ChatGPT. This is a big deal!
You can expect coverage about how OpenAI needs the money, since they are burning through cash on datacenters. There will also be dunking on Sam Altman who called ads a ‘last resort,’ questions about privacy and bias, and skepticism about whether their lofty ad principles will survive going public.
These are important but predictable. (I asked ChatGPT for hot takes and it gave me all four) 🤔
I’m more interested in the ripple effects and what this means for businesses. Here are five things I’m watching for:
Marketers’ jobs will get more complicated
“What’s our ChatGPT strategy?” Every CMO will need to answer this question.
CMOs just got a brand new channel to reach customers. This hasn’t happened since 2020 when TikTok began selling ads. And that was familiar territory: TikTok behaved much like Instagram and other social media apps.
Today, marketers already monitor ChatGPT answers and try to influence results indirectly, for example by building a presence on sites like Reddit. Now they will need to design ChatGPT ads, optimize performance, and shift budgets from other channels.
And these ads will perform differently. Traffic coming from AI chatbots is highly ‘qualified’ because users are further along in their decision. ChatGPT doesn’t just know you searched for running shoes; it knows you’re trying to qualify for Boston. Marketers will need to learn how this traffic works.
They’ll also need to prepare for new firedrills. Just wait for the first time a company’s ad shows next to a ChatGPT answer recommending a competitor.
OpenAI needs to build a sales machine
OpenAI is estimated to have 4,000 employees, with fewer than 10% in sales, marketing or business development.
That will change. They’ll need to build a salesforce that can explain offerings, share benchmarks, help set up campaigns, and provide performance readouts. They’ll need infrastructure: ad formats, optimization tools, measurement products, and billing systems. And they’ll need to integrate with the ad tech ecosystem companies rely on.
For context: Google and Meta each added more than 50,000 employees as they grew from $10 to $100 billion in annual revenue. OpenAI is at the start of this climb.
This is good news for the industry. Marketing agencies and measurement partners will need ChatGPT experts. Emerging tools that monitor ChatGPT’s answers will expand into ad performance. Established ad tech companies will add ChatGPT to their offerings.
After years of post-Covid job cuts in Big Tech, this will be welcome growth.
This is actually good for Google
ChatGPT is usually framed as Google’s biggest threat. But this announcement is positive for Google.
Google has been under pressure to transition users to AI without destroying its search advertising business. In December they walked back reports they would begin showing ads in Gemini. ChatGPT going first normalizes AI ads, giving Google cover to accelerate.
This also erodes OpenAI’s high ground. Sam Altman once said “Ads on a Google search are dependent on Google doing badly. If it was giving you the best answer, there’d be no reason ever to buy an ad above it.”
Don’t expect to hear that line again.
Second-tier platforms should be nervous
Every company will take a call from OpenAI’s sales team, and most will try ChatGPT ads.
That’s not a problem for Google and Meta. Companies are not going to stop running ads there.
It is a threat to the next tier which includes platforms like TikTok, Pinterest, Reddit, and LinkedIn.
These platforms are often fighting to keep their place in company ad budgets. Marketing teams are lean, and just landing a meeting can be a challenge. OpenAI is about to start taking those meetings.
They’ll need to fight back, likely by touting their own AI features.
Those retail partnerships won’t last
In Q4, OpenAI announced partnerships that let users buy from Walmart, Target, Instacart and Etsy directly within ChatGPT.
Those partnerships will get…awkward. If a user asks about buying laundry detergent will they see an ad, a shopping experience or both? Ads and integrated retail will compete for space in ChatGPT’s answer page.
My bet is that ads will win. They are more profitable and easier to scale without complex retailer integration. I expect OpenAI to quietly deprioritize these partnerships.
OpenAI will make mistakes
Getting digital ads right is hard. How do you personalize ads without being creepy? What data do you share with advertisers? How much control do you give users?
OpenAI will need to answer these questions while delivering ads that actually perform. Advertisers will experiment, but won’t stay unless the results are strong.
Media, industry watchdogs and competitors will be watching. You can expect them to pounce on any missteps.
ChatGPT will make mistakes. The real question is how quickly they identify them and how well they recover.
Dad Joke: “What did Sam Altman say about the new strategy? It all adds up” 😂
Thanks for reading!
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Smart take on the infrastructure buildout OpenAI needs. The second-tier platform threat is probably the biggest immediate impact since they're already fighting for budget and OpenAI will instantly have mindshare. I worked on ad platform integrations a few years back, and the measurement/attribution piece is gonna be messy inicially. The qualified traffic angle is intersting too because conversational context gives way more signal than keyword search, which could upend performance benchmarks across the industry.