Why ChatGPT ads won’t likely impact holiday sales in a major way this year

Beyond barriers like expensive cost-per-click rates and unproven sales, AI assistants are still establishing themselves as a trustworthy source for product recommendations. Not to mention, the busy fourth quarter is not an ideal time to risk blowing ad budgets on experimentation. Advertisers still largely view ChatGPT as a costly testing ground rather than a dependable channel, especially when compared to tried-and-true players like Meta and Google.

Terence Einhorn, vp of solutions architect and head of insights at Measured, said he doesn’t expect ads on ChatGPT or Gemini to convert shoppers for some time. 

“If you are looking to drive business efficiently right now, you should probably not use tools that have a completely unproven track record,” he said. However, there is a case to be made for being an early adopter to have a competitive advantage as these platforms mature.

Adoption increase is among large advertisers 

According to Sensor Tower data, ChatGPT’s advertising business has been growing gradually. Kara Lee, senior insights analyst at market intelligence firm Sensor Tower, pointed to tracking data showing an increase in OpenAI’s ad campaigns in recent months.  

For example, in August, over 1,400 unique advertisers ran ads on ChatGPT, representing an 8% month-over-month increase. This highlights the speed at which advertisers are flocking to the platform since its launch in February.

However, the majority of the advertising campaigns are attributed to large companies. Sensor Tower’s September data showed companies like Capital One, Expedia and Cloudflare as the largest brands by spend on ChatGPT, accounting for 4%, 3% and 2% of platform spend, respectively. 

The challenges

Anders Bill, co-founder and chief product officer of Superfiliate, which works with DTC brands on creator-led ads, said many clients still view AI platform advertising as an experimental channel, as it still hasn’t proven itself as a meaningful e-commerce sales driver.

As such, Bill doesn’t anticipate ads on ChatGPT or other AI platforms to take up a significant share of holiday ad budgets this year. 

The biggest challenge, Bill said, is that, as of now, brands can’t pay for a ChatGPT campaign by specifying their target shopper the way they do on established digital ads, where they pick an audience demographic. Instead, sponsored product listings are surfaced as part of an organic AI response.

“We’re seeing brands test across the AI platforms where people are already going to discover products, like ChatGPT and Perplexity, but it’s still very much an experimentation phase,” Bill said. “Most brands aren’t moving meaningful budgets away from Meta or search yet.”

Similarly, Measured, which announced a partnership with OpenAI to measure advertising efficiency, still sees mainly large brand clients experimenting with advertising on these channels. 

Einhorn added that it’s understandable that many brands, especially those with limited budgets, become generally risk-averse to experimental channels during their busy sales seasons. “This is the last time of year folks are going to try a new thing like a ChatGPT campaign to see what happens,” he said. 

Even clients with big enough budgets to have been testing these campaigns in recent months aren’t seeing decent enough sales. “Generally the results have been pretty bad,” Einhorn said. “But that shouldn’t be surprising for a brand new ad platform that has no experience in the media landscape.”  

For one, the ad cost is still far too high, especially when compared to more reliable platforms like Meta and Google. “The equivalent to the cost-per-click on ChatGPT is around 6X of that on Google,” said Einhorn. 

One of the biggest hindrances to the advertising industry is that the platform must first build trust with users as an accurate source for product recommendations. Einhorn said many consumers have already been trained to spot sponsored products on other platforms and choose to ignore them when they’re irrelevant to their search. But the agentic nature of ChatGPT ads could make that search journey frustrating.

At a certain point, brands start to basically serve ads to high-intent shoppers who are going to purchase anyway. “But we know most of the [sales] are non-incremental, so you’re basically just subsidizing your own sales,” Einhorn said.

Bill said client brands are starting to run smaller tests to understand how these platforms surface products and where they fit into the customer journey, especially as the ad products themselves are still taking shape. “That said, brands are all very invested in how they can organically rank at the top of every wishlist,” he said.

Einhorn agreed that, for now, AI assistants will continue to act as discovery platforms for brands through GEO.  

That said, there is a need for brands to dedicate a “learning budget” if they want to know how these ads work over the next few years. “And most brands don’t or can’t do that,” Einhorn said.

“Brands can’t afford to use something until they know it works,” Einhorn added. “And they’re not gonna know it works until they’re using it. So it’s a bit of a catch-22.”