00:00Hi, I'm Lara O'Reilly, Senior Correspondent at Business Insider. Today in the CMO Insider Suite,
00:05we have Dave Dugan, who's Head of Ad Solutions for OpenAI. Hi, Dave.
00:10Morning.
00:10You launched ads on ChatGPT very recently, and you're essentially building an entirely new
00:16ads category. How does that feel?
00:18Yeah, it's been an exciting week. We launched ads 19 weeks ago. So we have this new offering
00:24that's exactly four months old. And we've had a great week, if can, talking about it.
00:29It's OpenAI's first time at Cannes in an organized way. And we spent the entire week
00:34talking with advertisers, agencies, gardeners about this new offer. And the reaction that
00:39we're getting is this is incredibly exciting because it is a new channel. It's a new experience.
00:43Obviously, we have a new ads product. But the feedback that we get is this is exciting because
00:47it represents a whole new way that users are getting information, doing research, and thinking
00:52about products and services to buy. And for marketers, that's a chance to get in that moment
00:57when people are making decisions.
00:59And does this new ad category kind of have a name? Are you calling it something or?
01:04Yeah, it's context is really the key thing about what's different. So we think about being
01:09in what we call the decision layer of researching, considering, deciding what product. People come
01:15into ChatGPT with a job to be done. They have a question to answer. They've got a task to complete.
01:21They open up the ChatGPT app with that in mind. They want to get something done.
01:26And in that conversation, they're giving us a lot of detail about what they're interested in. This
01:30is a much longer conversation than traditional search, which tends to be shorter keyword-based
01:36conversations, giving us information about what they're trying to solve. And in that moment,
01:40it's a great opportunity for advertisers then to introduce their brand or their service in a way
01:45that matches what they're looking for.
01:47And you don't necessarily always show an ad straight away, right? You kind of maybe wait
01:51until they're deeper into that conversation.
01:53We're very choiceful about when we introduce an ad based on the conversation. We've been very cautious
01:59and thoughtful about how we roll out ads to users. For us, user trust is the most important thing
02:04for our business. So we've got over 900 million weekly active users. These are people who love ChatGPT.
02:11They enjoy their experience. And we launched this whole product. The real focus is how do we make
02:16ads even enhance that user experience? And we're looking at metrics as we launch this so early
02:22about what is user behavior? Are they coming back at the same rate? Are they asking the same amount
02:29of questions? And the feedback that we've gotten is ads is helpful to the experience. We've seen no
02:34degradation in that base user experience. And we've been very principled to make sure that we're clear
02:40about answer independence and being very clear if there's an ad served, it's labeled as sponsored,
02:46and it's clear that it's separate from the organic model response that came above.
02:50And what's the kind of golden metric for you? Is it click through? Is it something else?
02:54Yeah, different advertisers have different metrics that they're focused on. One is click
02:57through rate in terms of the efficiency of getting traffic into that advertiser's destination.
03:03We've gotten really interesting feedback that often that traffic is more qualified
03:07than advertisers are seeing from other channels, which makes sense because people are coming in
03:12with context. They're describing that thing that they're looking for, either the budget or how that
03:17product or service needs to work with other things that they have. And the feedback that we've gotten
03:22is often that traffic is more qualified and converts at a higher rate than other channels that advertisers
03:27use. Obviously still early days, but that's some of the initial feedback that we've gotten.
03:31And I appreciate it's early, but I know in the test, a few advertisers said they were having
03:36sort of delivery problems. They've got the budget there, but the ads aren't being served. What's
03:41happening there? Is that improving? Yeah, we started very conservatively at the beginning to focus on
03:46the user experience. And in those early weeks, and we're still early, but in the early weeks,
03:50we really thought about keeping ad load moderate while we looked at user metrics to make sure that the
03:56user experience was staying as strong as we wanted. So cautious out of the start, we've learned so much
04:03about user satisfaction. And as we've now four months in, we've gotten more confidence about how
04:10we can deliver volume. And now it was expanded into additional markets. We're now in seven different
04:15markets globally. Each of those market launches have moved quicker and we have just more information
04:20about what to expect with users. Is it tricky being a first mover in this space? Obviously,
04:26Google has said that it's not bringing ads to Gemini yet, while ads are in ChatGPT on the free
04:32version. So they can kind of hold back, see how things go with you and then pounce kind of thing.
04:38Is it difficult being the first? It's super exciting for us and invigorating for the team to do
04:42something that's brand new. I think that brings a lot of energy to us and such good energy from our
04:48partners, agencies, and advertisers. We've been very partner-led in terms of bringing this launch
04:55to market and very choiceful to work with both agencies and technology partners. And that's been
05:00a great source of feedback for us because these partners have clients across multiple vertical
05:05industries, across different sizes of clients, and giving us information about how we can expand
05:11our product roadmap. So we're invigorated to be first. And I think that's a big part of this week
05:16and the curiosity that we've had from our meetings, which had been from very early in the morning
05:21until late at night. But that's where the energy is coming from because this is a new channel and
05:25we're the first to go to market with it. Do you think it would make sense to buy rather than
05:29build
05:29on the ad tech side? It's such a new experience. We want to be choiceful about the features that we
05:35build and the fact that we're building it all ourselves. Really make sure that we can control the
05:40experience. And it does come back to the core ChatGPT app. Users have very clear expectations
05:45about the experience that they want to have. We've got to be very careful and focused on those users'
05:52needs. And that's why we're really focused on building this in-house. I got it. And so maybe it
05:57wouldn't make sense for technology that was built for the open web or technology that was built for
06:01other types of apps to try and kind of sledgehammer that into the ChatGPT app. Exactly. This is a different
06:07channel that's never come before. This is not a keyword-based buy. It's very different from
06:11traditional search. And meeting consumers where they are and responding to the queries that they
06:16have in the moment, that's the most important thing for us. We're conscious that if we focus
06:21on user needs that advertiser results will follow. What are advertisers asking you for this week? Like
06:26what are the key killer features that they want to see? Yeah, step one for us is explaining how the
06:31current product works. Customers are very interested in how we'll expand internationally. So seven
06:38markets today and we'll be expanding more. Brazil and Mexico are next on our roadmap. We'll continue
06:43from there. So I'd say that's one element. Very interested in international expansion. And we've had
06:49really good conversations this week around new product features like bidding. When we launched,
06:53we started purely with the CPM-based model. Ten weeks later, we launched CPC bidding and now we're
06:59getting into optimization. We launched a conversions API. And I think one thing that's different about
07:05us is the pace of our product roadmap has been incredibly fast. We're an AI-first company. Our engineers
07:13use our own products like Codex to build out the product set. And that's meant that the pace of our
07:19launches often on a weekly basis is much faster than anything I've experienced before. And does that
07:26mean you need to recruit lots more on the ad side, on the ad sales side? Or because you're an
07:30AI company,
07:31you might not necessarily need those big sales forces? Actively recruiting. We're excited to add
07:35a lot of diverse talent to the team. We're building up my team on the ad solutions side and had
07:42such great
07:43reaction from the market and such energy for people interested to come and join the team. Very proud of
07:49the team and where we're at. Still lots to do. And every new person that comes into the team is
07:53bringing
07:53some new experience for us. And you've got like a new B2B CMO. You've got a new B2C CMO. Yes,
07:59Colin Fleming, new B2B CMO from ServiceNow. Fantastic leader. We did a bunch of meetings today.
08:05Really fortunate to have him on the business. Brings such a depth of experience. Very happy to be
08:10working side by side with him. And what's been the most surprising thing to you since launching this
08:15ads business? Anything that's kind of popped up unexpectedly along the way? Yeah, I think the main
08:20thing is this is a new channel and it's different from what came before. This is very different from
08:25traditional search. It is not a keyword based buy. And I think that's been the biggest surprise for
08:30advertisers that you have to think about creative execution in a different way. It has to be more
08:34conversational. The creative has to match that consumer's interests in the moment. And I think
08:40that's the biggest surprise for advertisers that they have to think differently about the creative
08:45execution. And that's what our team is there to do to give them advice about how to optimize creative
08:51in this new experience. And I think that's where the curiosity has been this week to learn more about
08:55what this new space will look like. And how much do their sort of GEO,
08:59so generative engine optimization strategies, how much do they sort of blend with the paid strategies?
09:05Or is that how it's sort of different from search? Yeah, the feedback that we get from advertisers is
09:10there are two things that they're focused on. One is the AEO or GEO execution, which they're working
09:16with different partners in the industry to focus on. But now that we have an ads experience to meet
09:22the consumers where they are, the feedback that we get is that's a good tandem to work on together.
09:27We have product feed integration that drives both organic and the paid side. And that's something that
09:33we work on with advertisers to ingest product catalog feeds, if that's the category that the customer is in,
09:39to drive both sides of their business. And do you have any kind of top tips for marketers on
09:43ensuring that their brands are kind of visible, prominent, correct in ChatGPT?
09:48Yeah, the creative execution is really the key thing. It's having a wide variety of creative
09:52that's written in a benefit oriented way, not just listing the name of the product, but thinking about
09:58someone comes into ChatGPT to ask a question and get an answer and phrasing that creative in a way that
10:04solves that users. So is that like shoes for marathon running in the rain, that sort of thing?
10:10Yeah. And for a hotel, for instance, it's not saying the name of the property in Las Vegas,
10:16it's saying steps from the Las Vegas strip. It's being much more feature oriented, which ties back
10:20to the way that people ask questions in ChatGPT, which is very conversational and very natural.
10:25Mm-hmm. I'll let you get back to your advertiser meetings. Thanks so much for joining us today.
10:28All right. Cheers. Appreciate it. Thank you.
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