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Spinning up an all-new ad network is pretty tough. I would think OpenAI would need to beat Meta/Google on basics like CPM in order for the network effects to ma

by Andrex 10mo ago

Spinning up an all-new ad network is pretty tough. I would think OpenAI would need to beat Meta/Google on basics like CPM in order for the network effects to make it desirable for ad vendors over Meta/Google. Ad budgets are fixed and zero-sum and vendors (in my head, I don't know) would prefer to spend their money on the best network giving the best results. I don't know if ads in LLM chats can get there.

rs186 10mo ago
If Apple can build an ad system within the app store, I don't see why OpenAI can't do that for ChatGPT.
- chroma205 10mo ago
  > If Apple can build an ad system within the app store, I don't see why OpenAI can't do that for ChatGPT. Because Apple iPhone users have no alternative. But Google Gemini is right there for Gmail, Google Docs, and Google Workspace users.
kavrick 10mo ago
Microsoft owns a big chunk of them and already has a big network. Why not just use theirs?
- rs186 10mo ago
  Why would OpenAI want to use and pay for any of Microsoft's products unless mandated by a contract? OpenAI has the talent to roll out and run their own ad product that is better and more efficient. Why pay Microsoft for a core part of their (future) business? P.S. In case you haven't noticed, OpenAI demos are done on Macbooks. Microsoft could not even get them to use Windows.
  - CharlieDigital 10mo ago
    Microsoft runs many of their demos on MacBooks. You missed the memo that Windows OS is no longer their bread and butter. Go check their GH OSS projects (e.g. .NET) and all of them have have shell scripts alongside PowerShell.
aurareturn 10mo ago
I'm betting that they can. Here's an idea that just popped into my head: ChatGPT shows a sponsored entry in chat history list with a colorful border around it to get users to click. This product is something that ChatGPT knows the user desperately needs from previous chats. The user can chat directly with the product and learn more about it. The advertiser specifically sent OpenAI information (like a RAG) about their products buyers might have questions for. When the user is ready, they can open a link to the product's website or just buy directly in ChatGPT.
- nerdponx 10mo ago
  They can also suggest chat topics. Like how Reddit ads are meant to look like threads. "Frustrated with food baked on dishes? Let's chat about it! (sponsored)"
- mattlondon 10mo ago
  But the missing part is "we know they need this!" but they don't have the ad network to have the pixels on the vendor sites to track the conversion (or not for remarketing!). They only have half (at most) of the picture. This is why they tried to create a browser (remember that? Nope me neither) to try and get the full picture. Advertisers are accustomed to pay for conversions now. If you can't track it, you cant prove it happened. Open ai will need to spin up the entire infrastructure (Inc sales teams, support teams, servers etc) to run the ad network. Not impossible but it is a big lift and they're already burning money. Their best bet is probably to just sign up for selling their ad space with Google, like all the other apps and websites do
  - DrewADesign 10mo ago
    I think the amount of money they’re burning on their operations would make that organizational lift a drop in the bucket. A few dozen annual 6 figure salaries? A few hundred? A bunch of normal CPU-based AWS services? They must spend 10 million per day on their current operating expenses.
    - mattlondon 10mo ago
dktp 10mo ago
Spotify, Netflix, Amazon Prime, Reddit, Twitter etc all have increasingly profitable ads I'm sure llm providers will also figure it out in due time. Consumer products are generally a good fit for ads, even if it takes time to reach full potential
- raw_anon_1111 10mo ago
  Every single one of those companies have ridiculously low marginal cost per request compared to ChatGPT and much lower fixed costs and continued development costs.
fweimer 10mo ago
I thought that most advertisers go through middlemen and do not do business with the ad networks directly? So you only have to make it attractive for the middlemen (of which there are fewer), and that shouldn't be a problem for anything AI-related. Furthermore, anyone offering some sort of assisted browsing service is automatically in the ad business, regardless what they do with affiliate links in generated page summaries.
- mcny 10mo ago
  Oh yeah and on top of that these companies like WPP hate the fact that Google and Facebook refuse to share more information with them. They can't wait to jump ship.
rco8786 10mo ago
They have all the resources anyone could possibly need to do this, including an enormous list of companies who would kill to get their products into ChatGPT. It’s “just” an execution challenge.
dylan604 10mo ago
Why would they need to beat Meta/Google, and at what game? They just won’t let any other add network work in their app. Voila! You just beat Meta/Google, and they didn’t even compete with them. I guess they could provide some sort of SDK for websites to embed that tracks users, or they could come up with a browser extension that tracks users too. They already have an app that people are freely giving them so much info. Where else could the compete as you suggest? Being a generic ad platform to serve ads not through their app?
jpalomaki 10mo ago
If OpenAI manages to get the agentic buying going, that could be big. They could tie the ad bidding to the user actually making the purchase, instead of just paying for clicks.
dolphinscorpion 10mo ago
They have enough money for it, and they hire former Google and FB execs. As long as they have eyeballs, it will work.
delaminator 10mo ago
Is it harder than spinning up a multi billion dollar data centre network with other people’s money? Partner branding would be a mechanism to get the ball rolling - and some are big names. Oracle, Shutterstock, BuzzFeed, Bain & Company, Salesforce, Atlassian, Neo, Consensus,

by Andrex 10mo ago

rs186 10mo ago

If Apple can build an ad system within the app store, I don't see why OpenAI can't do that for ChatGPT.

chroma205 10mo ago
> If Apple can build an ad system within the app store, I don't see why OpenAI can't do that for ChatGPT. Because Apple iPhone users have no alternative. But Google Gemini is right there for Gmail, Google Docs, and Google Workspace users.

kavrick 10mo ago

Microsoft owns a big chunk of them and already has a big network. Why not just use theirs?

rs186 10mo ago
Why would OpenAI want to use and pay for any of Microsoft's products unless mandated by a contract? OpenAI has the talent to roll out and run their own ad product that is better and more efficient. Why pay Microsoft for a core part of their (future) business? P.S. In case you haven't noticed, OpenAI demos are done on Macbooks. Microsoft could not even get them to use Windows.
- CharlieDigital 10mo ago
  Microsoft runs many of their demos on MacBooks. You missed the memo that Windows OS is no longer their bread and butter. Go check their GH OSS projects (e.g. .NET) and all of them have have shell scripts alongside PowerShell.

aurareturn 10mo ago

I'm betting that they can. Here's an idea that just popped into my head: ChatGPT shows a sponsored entry in chat history list with a colorful border around it to get users to click. This product is something that ChatGPT knows the user desperately needs from previous chats. The user can chat directly with the product and learn more about it. The advertiser specifically sent OpenAI information (like a RAG) about their products buyers might have questions for. When the user is ready, they can open a link to the product's website or just buy directly in ChatGPT.

nerdponx 10mo ago
They can also suggest chat topics. Like how Reddit ads are meant to look like threads. "Frustrated with food baked on dishes? Let's chat about it! (sponsored)"
mattlondon 10mo ago
But the missing part is "we know they need this!" but they don't have the ad network to have the pixels on the vendor sites to track the conversion (or not for remarketing!). They only have half (at most) of the picture. This is why they tried to create a browser (remember that? Nope me neither) to try and get the full picture. Advertisers are accustomed to pay for conversions now. If you can't track it, you cant prove it happened. Open ai will need to spin up the entire infrastructure (Inc sales teams, support teams, servers etc) to run the ad network. Not impossible but it is a big lift and they're already burning money. Their best bet is probably to just sign up for selling their ad space with Google, like all the other apps and websites do
- DrewADesign 10mo ago
  I think the amount of money they’re burning on their operations would make that organizational lift a drop in the bucket. A few dozen annual 6 figure salaries? A few hundred? A bunch of normal CPU-based AWS services? They must spend 10 million per day on their current operating expenses.
  - mattlondon 10mo ago

dktp 10mo ago

Spotify, Netflix, Amazon Prime, Reddit, Twitter etc all have increasingly profitable ads I'm sure llm providers will also figure it out in due time. Consumer products are generally a good fit for ads, even if it takes time to reach full potential

raw_anon_1111 10mo ago
Every single one of those companies have ridiculously low marginal cost per request compared to ChatGPT and much lower fixed costs and continued development costs.

fweimer 10mo ago

I thought that most advertisers go through middlemen and do not do business with the ad networks directly? So you only have to make it attractive for the middlemen (of which there are fewer), and that shouldn't be a problem for anything AI-related. Furthermore, anyone offering some sort of assisted browsing service is automatically in the ad business, regardless what they do with affiliate links in generated page summaries.

mcny 10mo ago
Oh yeah and on top of that these companies like WPP hate the fact that Google and Facebook refuse to share more information with them. They can't wait to jump ship.

rco8786 10mo ago

They have all the resources anyone could possibly need to do this, including an enormous list of companies who would kill to get their products into ChatGPT. It’s “just” an execution challenge.

dylan604 10mo ago

Why would they need to beat Meta/Google, and at what game? They just won’t let any other add network work in their app. Voila! You just beat Meta/Google, and they didn’t even compete with them. I guess they could provide some sort of SDK for websites to embed that tracks users, or they could come up with a browser extension that tracks users too. They already have an app that people are freely giving them so much info. Where else could the compete as you suggest? Being a generic ad platform to serve ads not through their app?

jpalomaki 10mo ago

If OpenAI manages to get the agentic buying going, that could be big. They could tie the ad bidding to the user actually making the purchase, instead of just paying for clicks.

dolphinscorpion 10mo ago

They have enough money for it, and they hire former Google and FB execs. As long as they have eyeballs, it will work.

delaminator 10mo ago

Is it harder than spinning up a multi billion dollar data centre network with other people’s money? Partner branding would be a mechanism to get the ball rolling - and some are big names. Oracle, Shutterstock, BuzzFeed, Bain & Company, Salesforce, Atlassian, Neo, Consensus,