LLMs & CHATBOTS
OpenAI and ads – agentic commerce – #1 of 3
On Wednesday’s edition of TBPN (Technology Brothers Podcast), hosts Jordi Hays and John Coogan look at recent analysis in a segment titled, “OpenAI Prepares ChatGPT for Ad Driven Era.”
The segment title is a bit misleading.
As the listener discovers, the ensuing discussion really isn’t about a step toward ads by OpenAI. It’s about OpenAI’s embrace of affiliate marketing (aka agentic commerce) and OpenAI taking a cut of the sales it is helping to enable through ChatGPT and its latest iteration, ChatGPT-5.
To support this thesis, the TBPN team referred to the compelling insights of SemiAnalysis which has recognized a tipping point for OpenAI in its monetization strategy:
“To many power users (Pro and Plus), GPT-5 was a disappointing release… The real consumer opportunity for OpenAI lies with the largest user base, and getting the unmonetized users who currently use ChatGPT infrequently in their day-to-day to indirectly pay is their largest opportunity…”
The SemiAnalysis authors continued:
“Analysts focused on the model capabilities are missing the much larger context of network effects… On the top 10 list, every single property is much older than ChatGPT.com, and the sheer number of unmonetized users is staggering.”
“But that changes with GPT-5. OpenAI is laying the groundwork to monetize one of the largest and fastest-growing web properties in the world, and it all begins with the router.”
The router is the key. And, this is the underlying infrastructure for the affiliate model, i.e. agentic commerce.
Read more from SemiAnalysis. (August 13)
From tipsheet: To be clear, this argument would appear to preclude ads in ChatGPT.
LLMs & CHATBOTS
OpenAI and ads – Sam Altman – #2 of 3
OpenAI CEO Sam Altman has been openly hostile toward advertising in the past so perhaps an affiliate model rather than advertising makes sense for OpenAI. TBPN pointed to a couple of clips on Wednesday.
For example, what Mr. Altman said to a Harvard Business School audience just a year ago didn’t seem favorable to an ad model for ChatGPT:
“I will disclose just as a personal bias that I hate ads… I think that ads plus AI is uniquely unsettling to me.”
This statement appeared to be a swipe at Google, too, of course.
More recently (June), Mr. Altman had softened slightly on his ad stance as evidenced in an OpenAI podcast:
“I’m not totally against it. There are areas where I like ads… I think ads on Instagram are kind of cool. I think it would be very hard to… it would take a lot of care to get right.”
So maybe advertising will be possible in ChatGPT’s free version someday. But for now, it looks like the affiliate business (agentic commerce) is the next monetization step for OpenAI.
OpenAI and ads – Investor – #3 of 3
Later in Wednesday’s TBPN episode which discussed OpenAI’s monetization strategy, venture capitalist Keith Rabois joined. Mr. Rabois is invested in OpenAI through Khosla Ventures and Founders Fund so he had his “axe to grind.”
Nevertheless, here was his argument supporting OpenAI and ChatGPT and how he believed advertising’s run on the web may be ending:
“Well, I think ChatGPT is the fastest growing consumer app of all time… I think direct value, direct capture from consumers, subscriptions, etc. might be better.
And that would undermine the entire advertising business model… And if I can substitute [Google] by just paying 200 bucks a month… ChatGPT can become probably a trillion dollar company by just eating into that.”
From tipsheet: Advertising is just “Incremental revenue”? Hmm. That’s a boatload of revenue… That said, if you’re an OpenAI employee, you have to love the unrelenting nature of investor Rabois’ support.
It’s also worth noting that another OpenAI investor, Marc Andreessen of Andreessen-Horowitz, said on TBPN on August 6, that he’s supportive of advertising in ChatGPT if OpenAI wants to reach 5 billion users.
It will be interesting to see how former Facebook monetization leader Fidji Simo changes the conversation – or not – around advertising when she joins full-time starting next week.
Two more thoughts, one more link:
- Ultimately, OpenAI must not only drive profits but pay for all that compute (and win the AGI race). Ads may be the only way out for OpenAI whether they like ads or not.
- All that transaction data from agentic commerce (or affiliate marketing) is going to be a powerful dataset for ad targeting if/when OpenAI pulls the ad “trigger.”
- Nick Turley, head of ChatGPT, won’t rule out adding ads (August 14) – The Verge
LLMs & CHATBOTS
Optimizing travel with AI
Google is ingesting consumers’ travel data and optimizing travel purchases with AI according to Google’s The Keyword blog. The new tool is designed for “flexible travelers whose number one goal is saving money on their next trip.”
TechCrunch reported on the news, “Google confirmed… Flight Deals uses a custom version of Gemini 2.5…” Read it.
From tipsheet: When I attempted to give the tool a test run, Google had pulled it back. But you can see if it works for you here.
BRANDS
Google amps iOS, Diageo steps up
New ad formats, AI-powered tools and privacy-centric measurement can now make iOS campaign performance even better. (August 14) – Google Ads & Commerce blog
Diageo ‘steps up use of AI’ to drive efficiency of £2.7bn marketing budget (August 14) – Campaign
AGENCIES
Google’s Performance Max troubles
Anonymous confessions return to Digiday in an article titled, “It’s the worst execution I’ve seen’: Confessions of a marketer on pulling every client off Google’s PMax.”
The confessor appears to be working at an agency on behalf of a marketer and shares many anecdotes that don’t shine well on Google’s AI-enabled ad system known as Performance Max.
“Non-branded search incremental revenue is typically in the 80% to 90% range… But the first test on PMax… incrementality came back less than 10%.”
The agency rep also says that when they returned their client to the traditional Google Shopping product (and away from PMax) “ROAS went up by 20%…”
Read more on Digiday. (August 14)
SELL-SIDE
Google search referrals plummeting says DCN
“The numbers are in – and they are damning… referral traffic from Google Search to premium publishers down 10% over just eight weeks.”
Read: “Facts: Google’s push to AI hurts publisher traffic” (August 14) – Jason Kint, Digital Content Next
TECH
Chart: Big 3 revenue growth
eMarketer’s Zia Daniell Wigder shared a new graphic depicting ad revenue growth for Meta, Google and Amazon using data from the most recent earnings reporting period.
“Of the big 3, whose ad revenues are growing the fastest? Amazon’s. However, note Amazon’s ad revenues are just 1/3 of Meta’s and 1/4 of Google’s, so the growth is coming off a smaller base.”
Read a bit more. (August 14)
Related: “Triopoly Advertising Earnings Q2 2025” – eMarketer (subscription)
From tipsheet: In spite of Amazon’s growth lead, the company is well-behind Meta and Google in overall ad revenue.
According to ChatGPT, it will take Amazon ~13 years to catch Google’s ad revenue and ~66 years to catch Meta at current Q2 2025 rates.
TECH
AI startups raise funds
Profound raises $35M as Sequoia backs its ambitious bid to become the Salesforce of AI search (August 12) – Fortune on Yahoo! Finance
Evertune Raises $15 Million Series A to Scale Its AI Marketing and Discovery Platform (August 13) – LinkedIn
TECH
The Trade Desk defense goes full-court
After a spate of criticism, various sources internal and external to The Trade Desk came to the company’s defense.
“I think TTD is doing the right things… I’d take cleaner pipes over a “new AI” chatbot that just rewrites the help docs.”
Ian Colley, TTD’s CMO, wrote on LinkedIn:
“OpenPath is both a ‘canary in a coal mine and a stalking horse.’ It allows advertisers a clear view of publisher inventory and enables them to value ad impressions accurately.”
Sincera cofounder Mike O’Sullivan wrote on LinkedIn:
“…Combining The Trade Desk + Sincera tech and teams has accelerated development… Few voices are talking about how disconnected most SSPs are from representing publishers…”
CEO Jeff Green said on LinkedIn:
“Sometimes it feels like we’re firefighters trying to contain the fire of bad and desperate behaviors of the supply chain. Its feeling more and more like this one is sufficiently contained that we can say it is only a matter of time.”
From tipsheet: The Trade Desk is not giving an inch.
PROMPT
How will AI affect supply path optimization in digital advertising in five years?
Response from Anthropic’s Claude.ai:
Based on current trends, AI will fundamentally transform supply path optimization (SPO) in digital advertising over the next five years in several key ways:
Real-Time Intelligent Path Selection: AI will replace manual supply chain management with dynamic optimization…
MORE
- Ad agencies are down but not yet out (August 13) – Financial Times (subscription)
- Opinion: Why Human Voices Still Matter In The Age Of AI – Jim Lawson, People Inc. – AdExchanger
- Microsoft: SEOs Need To Study Clicks To Conversions From AI Search (August 14) – Search Engine Roundtable
- Perplexity Will Advertise on Theo Von’s Podcast To Answer Questions in Real Time (August 14) – Adweek