By 2026, according to Gartner, search marketing will lose market share to AI chatbots and other virtual agents, with traditional search engine volume dropping by 25%. While the ad market’s growth within chatbots remains to be seen, ad dollars tend to follow eyeballs.
Two-person startup Adzedek is testing ads via sponsored links within custom GPTs via OpenAI’s GPT store and chatbot apps using OpenAI’s API. In a video demo showcasing its service, the company showed a Nike-sponsored link appearing at the end of a response from a “basketball expert” chatbot. Axios reported that the firm uses a pay-per-click model, with 75% of the ad revenue going to the chatbot creator and Adzedek keeping 25%.
Advertisers could replicate their paid search strategies like keyword targeting within AI chatbots, said Jon Morgenstern, evp and head of investment at VaynerMedia.
Interactive formats
Another way ads could end up within AI chatbots is via interactive formats, using the conversational AI framework to move beyond interaction to drive conversion, said Wilkinson. While brands are yet to test these interactive ads, they can guide users through the sales funnel, providing relevant recommendations, facilitating transactions and ultimately converting consumers.
“When somebody prompts something to a chatbot and a relevant answer could be provided by a brand, then there’s no reason why you couldn’t dive into having a fully interactive conversation with that brand,” said Wilkinson.
For example, prompting ‘Plan my weekend in Nashville’ will see a chatbot generate a list of restaurants and hotels, which could prompt the following response: ‘What makes this restaurant so popular?’ In such cases, if the restaurant has signed up to use the LLM-based chatbot for advertising purposes, it can directly respond to provide information about its popularity, ultimately leading to a booking.
Ad placement will become more important in driving revenue, but companies looking to insert themselves into the conversation need to tread carefully so that placements are detailed and contextually relevant, said Nicole Greene, vp analyst at Gartner.
“Brands will also need to continually revisit their paid channel strategy, as chatbots join the list of sprawling channels that require different types of content to meet customers where they are,” she said.
