Shawn Lim
Jan 30, 2023

ChatGPT in advertising: Will clients pay the same for AI-generated campaigns?

ChatGPT is being hailed as the future of digital advertising, but experts warn that it may be an overstatement at this stage. How should agencies and their clients approach ChatGPT?

ChatGPT in advertising: Will clients pay the same for AI-generated campaigns?

ChatGPT, a language model developed by OpenAI, has the potential to impact the digital advertising industry, particularly search advertising, significantly.  

As a natural language processing tool, ChatGPT can understand and respond to user queries in a highly accurate and human-like manner. Understanding and responding to user queries could potentially disrupt the dominance of companies like Google in the search advertising market, as ChatGPT's abilities allow for more precise targeting and personalized advertising experiences for users.  

For example, integrating ChatGPT into search engines can create advertising campaigns tailored to individual users' specific needs and interests. In addition, ChatGPT's ability to generate human-like text could also potentially create more engaging and persuasive ads.  

One example of this is Ryan Reynolds' Mint Mobile ad campaign. Reynolds asked ChatGPT to write a commercial for Mint Mobile in his voice using a joke, a curse word, and letting people know that Mint’s holiday promo is still ongoing. The result, in Reynolds’s own words, is “eerie” and “mildly terrifying.”

The spot was successful in attracting new customers to Mint Mobile but also in increasing brand awareness and engagement. In addition, the use of ChatGPT in creating this ad campaign generated interesting content, resulting in a successful marketing strategy.  

Simon Hearn, managing director for Asia Pacific at Distillery, says ChatGPT has the potential to disrupt Google's business model by giving users a different option than clicking on links with ads. He predicts there will undoubtedly be a short to mid-term impact on advertising giants like Google and Meta, but it will not be sizeable. 

He explains as ChatGPT is still in its infancy, how it is integrated into Microsoft or commercialised is yet to be understood. In addition, he points out ChatGPT is still limiting in its information and runs the risk of falling foul to misinformation, as it is not yet optimized to understand the "truth". This limitation presents hurdles that will disrupt its long-term uptake.  

"Google it" is part of our vocabulary, and a large market segment will continue to use existing search tools. Am I going to switch to Bing because AI powers it? I am not sure," Hearn tells Campaign Asia-Pacific.

"The likes of TikTok emerged in this space for the past few years, as Gen Z uses the platform to get their answers, so the search market is already fragmenting. There will be more disrupters on the way. All these big tech brands will not be far behind in developing or acquiring their version of ChatGPT—Google will inevitably launch something soon, and how they integrate this into their ad platform will be interesting to monitor," adds Hearn.

(L-R) Simon Hearn (Distillery), Tom Chavez (Ketch), Manish Sinha (STL) and Paul Meinshausen (Aampe)

Tom Chavez, chief executive officer and co-founder at privacy-compliant adtech firm Ketch, points out Google has classified ChatGPT as a "code red" for its business as its search engine has served as the world's primary gateway to the Internet for more than two decades. 

He suggests a new chatbot technology poised to reinvent or replace traditional search engines. As a result, Google could face the first serious threat to its main search business. Already, a Google executive has described the efforts as "make or break for Google's future." 

"Let's assume that ChatGPT fundamentally changes how people search for and discover new products and services. It means that disruption has come for the disruptors. Consumers change their behaviour frequently, from migrating to new devices, technology, social media, etc. These evolutions have forced the digital advertising ecosystem to catch up to the consumer and meet them wherever they are," Ketch explains to Campaign Asia-Pacific.

"If ChatGPT, which Google helped fund, obliterates the search ad business, the industry will need to find new opportunities to insert ads into the consumer's discovery process. This constant need to evolve is business as usual." 

However, Manish Sinha, the chief marketing officer of digital network integration company STL, argues the word 'disrupt' is an understatement. Clicks on Google ads generated more than 80% of Alphabet's overall revenue in 2021, so as ChatGPT penetrates the market, it is bound to impact the search giant's bottom line.  

"Unlike other search engines, ChatGPT doesn't present users with a list of relevant links but instead offers a single answer in a conversational, human-like way based on information from thousands of websites. Offering a single answer eliminates much of the leg work for users regarding basic search queries," Sinha explains to Campaign Asia-Pacific.

Taking on a contrarian view, Paul Meinshausen, co-founder at communication technology firm Aampe, is bullish on Google surviving and maybe even thriving through the emergence of ChatGPT. 

He points out that most lay discussions about ChatGPT's relevance for search seem to focus on finding "answers" that consist of text summaries and facts. However, he questions how much of a search that represents, as he has yet to see any good empirical answers.  

"Google's search has been under increasing critique for several years about search performance—last year. There was even some hubbub about 'Reddit replacing Google search'," says Meinshausen.

"For shopping searches, Google has already been under increasing stress. In 2019, there was a commentary on Amazon eating away at Google's search business. For entertainment, the New York Times published an article this past September (right before ChatGPT) titled 'For Gen Z, TikTok Is the New Search Engine'." 

However, Meinshausen also acknowledged that it is unclear how the chat interface can replace the standard item inventory user interface at the bottom of the search funnel. He suggests one channel to watch to get an early sense of the direction of things is WhatsApp commerce.  

"Do people want to buy things in a chat interface? Suppose WhatsApp can't make it work massively. In that case, I'm sceptical that a chat interface can challenge conventional ecommerce, which again means there are clear limits to the relevance of text generated in conversation—or chat form," explains Meinshausen. 

"I would argue there is a lot of 'elite' and public interest and maybe even appeal in the idea of Google dying, or at least consigned to the paths of Kodak and Yahoo before it." 

Microsoft enters the chat

Microsoft and OpenAI have had a strategic partnership since 2019, which includes a multi-year agreement to use Microsoft Azure as the preferred cloud platform for OpenAI's AI research and development.  

Both parties have also been working together on several projects, such as the deployment of GPT-3 models on Azure and the development of a new programming language called "Equality" that aims to make AI more accessible to developers. 

Microsoft has since confirmed it will make a multibillion-dollar investment in OpenAI, worth reportedly US$10 billion, and plans to integrate many of its products, including Word, into ChatGPT. For example, Microsoft is looking at launching a version of its Bing search engine that uses the AI behind ChatGPT to answer some search queries rather than just showing a list of links. 

Microsoft incorporating OpenAI's GPT technology into its Bing search engine will cause ripples in the advertising industry, Sinha predicts. Still, he questions whether those ripples will turn into waves. 

"Search results will become more accurate as Bing will better understand the context and intent of user queries. In addition, natural language search and authentic-sounding conversational answers are also bound to be popular with users," explains Sinha. 

"There is a good chance this development will mark the end of the Search Engine Results Pages era and instead trigger huge innovations in voice assistant technology. Unfortunately, as with all things technological, those who fail to innovate will likely be left behind." 

Tim Lindley, VaynerMedia

Tim Lindley, managing director for APAC at VaynerMedia, says he would love for Microsoft to harness the power of ChatGPT to create a new type of search product as Bing has long sat in Google’s shadow.

In the short term, Lindley says it should garner enough attention for people to at least reconsider Bing as a search engine, continued adoption will depend on the experience and how Google counters.

"Any significant shift in search market share will create economic shifts in ad pricing; Bing could become a source of underpriced attention that advertisers can take advantage of in the very near future," Lindley tells Campaign Asia-Pacific.

Advertising dollars will follow the eyeballs and the clicks, points out Hearn, and if consumers switch to Bing, the results will speak for themselves. As a result, ad buyers will need to reallocate their money to the relevant platform.  

"The question is if Microsoft decides to serve up paid ads based on the AI response. Will the highest brand bidder manipulate the answers? Or will there be a paid call-to-action once your AI response links you to a related product or service? These are still unknowns, but ultimately these tech giants will find ways to commercialise them in such a way," explains Hearn. 

Chavez notes, to a certain degree, ChatGPT is an example of a new technology disrupting an entire industry, just like when Google introduced its Pagerank and upended the search engine business. 

"One can also view this as the weaponisation of ChatGPT, taking the fight directly to Google. I imagine it will catalyse a shift in search market share from Google to Microsoft," feels Chavez. 

What's in store for content and SEO

Going back to Ryan Reynolds’ Mint Mobile ad, it is impressive as it’s “mildly terrifying” because it encapsulates all the elements Reynolds asked of ChatGPT. 

One can see how brands and agencies can apply ChatGPT in many use cases, says Chavez. For example, advertisers can use ChatGPT to write a script and then feed that script into Synthesia to create a video. 

"Will ChatGPT eliminate or even reduce the role of the creative media agency? That's not likely, not anytime soon," says Chavez. 

"But it is easy to see how ChatGPT can be used to augment the innovative team's ideas, crafting content that feeds all of the media channels, like taking the 30-second spot and reducing it to a 15-second one. In other words, content production will grow as the cost and time to build it collapses." 

At Distillery, Hearn says the agency has "been playing with ChatGPT a lot". However, he jokes the term "run it through ChatGPT" is starting to wear thin with the agency's creative and writing team.  

His verdict? He says ChatGPT helped point his team in the right direction when they needed to spark creativity or had a mental block, but it is not producing anything perfect yet.  

"It still needs a human eye to adjust, and nothing beats the human touch. But, unfortunately, ChatGPT does not understand how our clients tick, nor can it pick up on minor nuances we've developed through experience and in building a relationship over time," explains Hearn. 

"For advertisers, we need to try and experiment with these technologies and platforms, but we can't rely on them. New tech can be prone to errors only a human eye can pick up. Then there is inevitably a case where an advertiser pushes sedatives without diligence, resulting in backlash." 

He adds: "It will either purchase in the language, be considered insensitive or breach copyright. The industry will hear about it, and risk-averse brands will quickly retreat to old practices. And the copywriters will say, "I told you so!”” 

For SEO purposes, Meinshausen notes that since advertisers will have little to say about where users choose to conduct their searches and the technology underlying those search channels, their decisions about ChatGPT will be about content production. 

"SEO is just about competing within the search engine. You want the user to engage with your brand—so you need to show up in the results. For a chat interface, you want AI to 'answer' your question. So, you produce content to get the search engine to point to you. This bland, 'grey matter' has already degraded the Internet from a human perspective," explains Meinshausen. 

However, Meinshausen expressed concerns about the potential for AI to accelerate the production of low-quality content rapidly.  

"The more optimistic view is that AI in the search gets better at filtering this kind of content, and it is all cancelled out. In the short term, advertisers will probably try to compete by generating SEO content at a scale we have not seen before." 

Meinshausen also highlighted the potential for AI to generate high-quality and personalised content for human consumption.  

For example, a travel site can provide a single and static paragraph of a hotel for every person searching for a hotel in that location. Their agency could then generate hundreds of paragraphs describing the hotel in diverse and rich ways. The holiday-goer will see a different hotel description than a business traveller. 

The future of ChatGPT in advertising

While there are hopes the future of digital advertising is ChatGPT, it might be an overstatement at this early stage. 

The significant risk for the ad industry is that work becomes generic. If it serves up language performing well elsewhere, it will become generic if everyone uses it over time.  

More crucially, if everything is from the same sources, Hearns questions how the industry will find those 'crazy ideas' stashed in the top drawer of the creatives desk. 

"Now is the experimental phase, where the likes of Mint Mobile, and even ourselves, with our AI Chinese New Year storybook, which we made on ChatGPT, ride the wave of intrigue. But that will wear thin quickly," Hearn says.  

"Agency adoption will be interesting to see! If you can still charge the client the same amount, but with less headcount or creative time, there will undoubtedly be adoption. But will clients be willing to pay the same if an agency creates the campaign through ChatGPT? Very unlikely. But if they can get 10 times more outputs to the A/B test that has been adequately briefed and vetted by the agency, it may become a win-win for everyone." 

In addition, Sinha suggests ChatGPT could help brands hone their digital marketing and content strategies much more rapidly than they traditionally do.  

For example, a brand might be able to optimise its customer support with ChatGPT, offering timely, personalised, and knowledgeable responses to specific customer queries. ChatGPT can learn and adapt throughout this process while gathering data on the customers' interest topics.  

"A marketing team could then use this information to plan marketing campaigns that speak directly to audience pain points and interests," explains Sinha.

Campaign Asia

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