Is an ad tech buying spree imminent?
With front-end, chatbot interfaces capturing vast swaths of consumer attention, AI native companies such as OpenAI have at least partially disrupted the Google search “cash cow” and media, in general, with their transformative large language models.
Subscription revenue has rocketed at OpenAI and others -and at affordable monthly rates to consumers and businesses, alike.
(Amazon-backed Anthropic may claim they don’t do chatbots anymore, but this version of Claude sure looks like one to me. Anthropic classifies it as an agent.)
With billions to spend thanks to bedazzled private markets, what’s next on the AI native’s revenue roadmap? Ads!
Echoes of a Netflix stratagem – bolting ads on to its “subscription-only” business – makes sense here. Advertising in the chatbot interface will undoubtedly bring in even more users through a free/cheaper version.
Great – more revenue!
But, that’s not the biggest deal.
data gold
The big deal is the data.
With the embedding of advertising technology in chatbots (or agents) like OpenAI’s chatGPT or Anthropic’s Claude, AI companies will get to build yet another dataset informing their large language models.
This will in turn will inform a new buying “machine” at the marketer’s disposal offering another approach to the full funnel of marketing that will likely improve at lightning speed given how fast things are moving with AI today.
Also: there’s no reason this “full funnel” view couldn’t be used by other entrepreneurial ad tech companies or media/publishing entities enhancing API revenue streams for ambitious LLM owners which, in turn, should further inspire the evolution of the ad tech and media ecosystems.
Oh yes, agency maven… there will be plenty of room for service (like this). You’re going to be need to be fast on your agency feet. And that’s a whole other discussion.
marketers’ leverage
Marketers’ interest should be through the roof once these new AI native options appear (how about starting this fall?) if for no other reason than the leverage it creates with the usual “walled garden” suspects who garner the majority of today’s ad budgets.
No doubt Meta and Google have their own, hugely powerful AI solutions quickly integrating into their platforms in order to improve advertising and marketing performance. In fact, it appears the walled gardens have a huge lead in that “ad” respect.
But, the large language models of the pure-play AI companies could arguably be more nimble because they are “native” to artificial intelligence, their content is better and they are an alternative for consumers.
AI natives may not be great at ads now, but they’re great at AI.
M&A boom
AI native co’s are going to need technology which is native to ads. Enter today’s ad tech ecosystem and the next wave of acquisitions.
To be sure, one key element will be the tech in this M&A spree. But, as is often the case in acquisitions, the ad tech people will be as important.
Not only will these people provide critical subject matter expertise for integrating existing ad tech and methodologies but also they will help lead the innovation in a complicated advertising and marketing landscape going forward at native AI companies.
We are in the midst of the biggest transformation of our lifetimes across advertising, marketing and everything else you can think of.
I’d say “get ready”… but the transformation is already happening.
So, good luck! Opportunity abounds.
related:
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The Upheaval Coming For The Internet Economy (May 23) – Stratechery
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LUMA’s State of Digital 2025 presentation from last week (PDF) (May 20) – LUMA
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What Sam Altman Told OpenAI About the Secret Device He’s Making With Jony Ive (May 21) – The Wall Street Journal