Will AI chatbot advertising disrupt adland?

With over 250 million weekly active users on ChatGPT alone, OpenAI has a substantial audience that could attract advertisers. Amid rising operational costs, which are projected to exceed US$5 billion annually, reports suggest that OpenAI is exploring advertising as a potential revenue stream. 

The company has recently made notable hires with advertising backgrounds. This includes appointing its first chief marketing officer as well as hiring Shivakumar Venkataraman, formerly the head of Google’s search advertising team, as OpenAI's vice president.

Yet, despite these hires, OpenAI's chief financial officer, Sarah Friar, stated that the company currently has "no active plans to pursue advertising”. Instead, it is focusing on core products like ChatGPT, Sora, Dall-e, and API services, which it believes offer significant revenue opportunities for the time being.

However, questions remain about OpenAI's potential move into advertising. If OpenAI does greenlight advertising, could AI chatbot ads become a major challenger to the social media advertising ecosystem?

"Introducing ads could distract from OpenAI’s primary objectives rather than provide significant long-term benefits," says Manolis Perrakis, innovation director at We Are Social Singapore. "Chatbots fundamentally differ from social media channels, and advertising in these novel environments can only be viable if it integrates seamlessly and avoids disrupting the user experience."

Unlike traditional social media platforms, where ads seamlessly blend into users' often passive scrolling experience, AI chatbots engage users in more direct, personalised conversations, where ads could either enhance or disrupt the user experience. 

"On the one hand, the targeted nature of AI-generated content allows for more tailored and high-attention ads, potentially boosting relevance and engagement," says Sebastian Diaz, head of media innovation at Bench Media. "Too much advertising could undermine the trust and fluidity of interactions that users expect from AI chatbots, especially those that use them as a conversation agent or in the creative space." 

Diaz adds that market viability will hinge not just on ad revenue potential but also on how well these platforms can balance useful AI responses and the occasional well-placed product pitch without feeling like what websites started to become—a virtual billboard.

"The most effective ad formats in chatbot environments will likely be those that blend seamlessly into conversations. Think sponsored suggestions, natural product recommendations, or dynamic, context-aware offers based on the user's queries. These ads would need to feel like helpful, personalised advice rather than hard sells,” he says.

No ordinary advertising channel

Open AI rival Perplexity has already launched a variety of AI-powered ads, focusing on placements that integrate with its search results. These include sponsored follow-up questions, side-positioned paid media, video ads and branded explanatory text. The company began running ads in late 2024 and has reported significant growth in user engagement, with queries reaching approximately 20 million per day by early January 2025, up from just 2.5 million at the beginning of 2024, which could significantly influence its advertising revenue potential.

Like Perplexity, search engines offer a unique and potentially more effective avenue for reaching target audiences.

"The reason ads work with search is that search history contains tons of information about consumer intent, which allows advertisers to show extremely relevant advertising content to consumers," says Jim Yu, founder and chief executive officer of BrightEdge. "Now, AI-driven search engines have even more information because searches have expanded beyond keywords and into entire paragraphs."

Kellyn Coetzee, Kinesso Australia’s national head of AI and insights, predicts that AI chatbots won't just be another advertising channel; they will be the next evolution of search.

"While TikTok and Pinterest flex their search muscles, chatbots like ChatGPT and Perplexity are positioning themselves as the Google of tomorrow, with a little help from their publisher partnerships," says Coetzee. "These platforms don't just capture eyeballs; they capture intent in its purest form."

Coetzee adds that the real magic [of AI chatbots] will lie in their ability to serve up ads that feel less like interruptions and more like solutions. 

"It's the difference between shouting in a crowded room and whispering the exact answer someone's been searching for. And while the ad formats might echo the visual flair of social media, their delivery is pure Google—precision-targeted and intent-driven. In this landscape, viability isn't just about impressions; it's about being the first responder to curiosity. AI chatbots aren't competing with social media; they're challenging the search status quo,” she says.

While AI chatbot ad formats—such as sponsored answers, suggested queries, interactive product demos, contextual recommendations, and branded placements integrated into AI-generated results—offer exciting opportunities, implementing these formats will likely come with its own set of challenges. 

"Unlike social media, where ads can be somewhat expected, users might not anticipate or appreciate product pitches while seeking answers or assistance," says Diaz. "Striking the right balance of advertising that feels natural, beneficial, and unobtrusive will be the primary hurdle in this new territory—but this will hinder immediate growth as the volume of ads will need to be carefully monitored."

Another potential hurdle is user trust. 

"Introducing ads in productivity-focused tools, such as ChatGPT or Sora, might evoke concerns about impartiality or bias, akin to why platforms like Google Docs avoid ads," says Perrakis. "If users perceive content as influenced or 'poisoned' by advertising, trust in AI chatbots could erode."

Potential for disruption

Looking forward, is AI chatbot advertising likely to become a dominant form of digital marketing, with potential to eat into ad revenues from social platforms such as Facebook, Instagram, and TikTok?

"Currently, OpenAI’s products are more aligned with search and productivity tools, making it unlikely that advertising within these products will substantially impact the revenues of social media platforms," says Perrakis. "However, there is potential for disruption in search-based platforms like Google Search."

Meanwhile, there is evidence that the big social media and tech companies are already future-proofing themselves from the likes of OpenAI and Perplexity beyond just advertising. 

"We have seen the integration of AI-powered social search across Meta and TikTok’s products and the creation of LLMs like Meta’s Llama and Google’s Gemini," says Perrakis. "Where I see the advantage that big tech and social-media companies have over OpenAI and Perplexity is their already established advertising ecosystem—introducing advertising with their chatbots is simply just a new ad format that will be easy for the millions of existing advertisers to leverage. For example, I foresee Meta doing this with Llama across its products, creating formats specially for this feature."

Perrakis predicts that if OpenAI were to introduce ads, they would likely focus on areas like GPT web search rather than productivity tools like ChatGPT, Sora or Dall-e, where ads could hinder user experience. "Consequently, any revenue impact would be more noticeable in search engines than on social platforms,” he says.

Jordan Heathfield, VP of connections & brand experience at Assembly APAC, believes advertising within AI assistants presents a transformative opportunity to redefine how brands connect with consumers.

"Rather than feeling like interruptions, ads in AI assistants should function more like personalised recommendations and go beyond traditional methods, offering voice-first experiences that are seamlessly integrated into conversations and genuinely valuable to users," says Heathfield. "Such interactions could be the key to differentiation, particularly when products across brands are otherwise similar. By fostering these deeper connections, brands can build consumer loyalty and trust."

Overall, while AI chatbot advertising has potential, it’s perhaps too early to suggest it will become a dominant force in digital marketing. For one, chatbots are still evolving in their capacity to truly understand and predict user needs, meaning that advertising within these platforms could feel more like a guessing game than a precise science.

"It’s more likely we’ll see a blending of AI chatbots within digital marketing, that is, AI-enhanced ads becoming another tool in the marketer’s arsenal," says Diaz. "For example, ChatGPT can be integrated into the ad creation process by helping marketers generate compelling copy and optimised messaging tailored to specific audiences."

The real power may lie in how chatbot advertising integrates with and enhances other digital marketing channels, creating a more holistic and responsive marketing ecosystem.

"These platforms offer a tantalising glimpse into a future of hyper-personalised, intent-driven marketing, but they're still in their infancy," says Coetzee. "As these AI assistants grow, you can bet Google is furiously coding its counterpunch."