Home Depot and Intuit Make Major Investments in ChatGPT Ads

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Key Takeaways

1OpenAI has doubled the ads per user on ChatGPT mobile in the United States, according to Sensor Tower.

2The number of advertisers on ChatGPT has tripled, rising from 300 to over 820 between April and July.

3Financial services have seen their share of advertising spending on ChatGPT increase from 2% to 12% since April.

💡Why it matters — The increase in ads on ChatGPT demonstrates OpenAI's strategy to monetize its large user base.

OpenAI Strengthens Its Advertising Strategy on ChatGPT

According to a recent report from Sensor Tower, OpenAI has significantly increased the number of ads shown per user on the ChatGPT mobile app in the United States. Users have indeed noticed a doubling of the number of ads per hour between April and July. This change marks a turning point in OpenAI's strategy, which aims to transform its vast user base into a significant source of revenue.

A Diversification of Advertisers

The Sensor Tower report reveals that OpenAI has nearly tripled the number of advertisers on ChatGPT in just a few months. In April, around 300 advertisers were present on the platform, a figure that rose to over 820 by July. Among these newcomers, at least 160 joined the platform in July alone. This diversification highlights the growing appeal of ChatGPT to major brands.

Major Brands Take Over

In April, the main advertisers on ChatGPT were primarily tech companies such as Speechify and Jotform. However, by July, these companies were replaced by consumer brands like Booking Holdings, Intuit, Home Depot, and L.L.Bean, according to Sensor Tower's estimates. This evolution underscores the increased interest of major brands in the ChatGPT platform.

The Retail Sector in Transition

Scheels, a sporting goods retailer, remained in the top 10 advertisers on ChatGPT between April and July, despite a general decline in the share of ads in the retail sector. However, this sector remains the largest in terms of advertising spending on ChatGPT. Meanwhile, ads for financial services, travel and tourism, as well as employment and education, have started to nibble away at the retail share.

Growth of Financial Services

Financial services have seen the largest increase in their share of advertising spending on ChatGPT, rising from 2% to 12% since April. This sector is now the third largest in terms of advertising spending, following retail and software. BestMoney.com, a financial services company, is among the top advertisers on ChatGPT in July.

A Diverse Advertiser Base

Sensor Tower emphasizes that ChatGPT is effectively diversifying its advertiser base, attracting a broader range of companies. This diversification is a positive sign for increased monetization and the expansion of advertising formats. Other companies, such as travel agencies Expedia and GetYourGuide Deutschland, as well as recruitment firm Talent Inc., also dominated spending estimates on ChatGPT in July.

Estimates and Outlook

Sensor Tower's estimates are based on data from a user panel and third-party data sources. OpenAI, for its part, has chosen not to comment on this information. The advertising on ChatGPT primarily targets users who do not pay for a subscription or who opt for the $8 per month Go plan.

A Significant Revenue Opportunity

In May, Sensor Tower estimated that the ChatGPT app had reached 1 billion monthly users. This user base presents OpenAI with a significant opportunity to generate advertising revenue, in addition to its subscription service. Although this initiative is still in its early stages, it has already generated $100 million in annual recurring advertising revenue as of May.

Competing with Advertising Giants

Despite these advancements, OpenAI still has a long way to go to compete with advertising giants like Google and Meta, which reported advertising revenues of $81.6 billion and $59.3 billion, respectively, for their latest fiscal quarters. Dave Dugan, head of advertising at OpenAI, stated that the company initially placed ads conservatively to prioritize user experience.

A Cautious Approach

Dugan explained that the company has learned a lot about user satisfaction and now has more confidence in its ability to increase advertising volume. Currently, OpenAI places ads below the AI's response to a user's request, avoiding queries related to personal health or politics.

An Advertising Product in Development

Although some advertisers have described ChatGPT's self-service advertising product as rudimentary compared to the services of Google and Meta, OpenAI continues to expand its markets and add new tools to attract more advertising funds to its popular app.