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- [00:01]
Kieran
Chatgpt, they're putting ads in free, something we've talked a lot about on this show and we have been waiting for this announcement. Kip, give me your take. What do you think this actually means for marketeers? Entrepreneurs being able to get access to ads right there and then in ChatGPT?
- [00:19]
Kip
I think this is going to be a gold rush for marketers. I think this is going to be one of the biggest marketing stories of.
- [00:24]
HubSpot Representative
The year, maybe the decade.
- [00:25]
Kip
We're going to give you three specific ways we think it's a gold rush on the show today. And we're going to tell you a story of someone who did this in the early days of Google Ads and became a billionaire. And we're going to help you follow his same path.
- [00:36]
Kieran
All right, let's get into today's show.
- [00:43]
HubSpot Representative
Before we get into today's show, here's a quick word from HubSpot. Cutting your sales cycle in half sounds pretty incredible, but that's exactly what Sandler training did with HubSpot. They used Breeze, HubSpot's AI tools to tailor every customer interaction without losing their personal touch. And the results were pretty incredible. Click through rates jumped 25%, qualified leads quadrupled, and people spent three times longer on their landing pages. Go to HubSpot.com to see how Breez can help your business grow.
- [01:29]
Kieran
We're going to cover an incredible opportunity for all you marketers out there, all you brands out there, and all you entrepreneurs out there. And that is ChatGPT is getting into the ads game and AI ads in general. That's what we're going to cover on this episode and how you can make a ton of money from a new AI ads platform like ChatGPT. Now, the setup here, why is this an opportunity? AI ads in general are an opportunity, but ChatGPT is the gorilla, the Goliath. Like it is a huge opportunity because it's a net new platform where we can start to do paid ads. And ChatGPT has 900 million weekly active users, 6 billion monthly visits, and they are a top five global website. If ChatGPT was able to get the equivalent dollar value per user as Google, Google make about $52 per user. ChatGPT at 900 million users could be a 47 billion a year company in terms of paid ads. Right? So that's a huge opportunity for ChatGPT and a huge opportunity for everyone here listening to this to be early and extract a lot of that value. ChatGPT think it's going to do about $1 billion in ads in 2026 scale into 25 billion in 2029. And I think this is what a lot of us have been waiting for for two reasons. Because it's a new platform where we can start to really build forecastable and scalable growth. And it actually may give us some new analytics into ChatGPT because they're probably going to have to give their users some analytics. So Kip, what do you think? Are you excited by the opportunity to start paying attention dollars to reach all those users?
- [03:16]
Kip
First of all, I'd love to play chatgpt some dollars. I think this is the eve of probably the next big marketing gold rush, Kieran. I'm showing some of what the early mock ups that OpenAI has released of what these ads are going to look like and they're going to be very contextual ads in the ChatGPT experience. And they're even going to hand off to kind of a transaction experience, it seems like within OpenAI, which is super wild.
- [03:42]
Kieran
And the early rumors on that, Kip, is this is like early, early Internet rumors that the model is going to take a percentage of that transaction versus an auction model. Have you heard that and maybe explain.
- [03:54]
Kip
I have heard that the information I think might have insinuated that's coming. There's been a few Twitter accounts that have insinuated that's happening. We won't know until OpenAI actually has this out in the wild. So no idea that it's just pure speculation. But what we do know is kind of what these ads are going to look like. They gave us some basic principles to Kieran, that independent of the answer, that users are going to have choice and control of how their data is used, that these ads are going to add long term value to their platform. These are kind of like the principles that they're building around. I think what's really important here, Kieran, though, to understand why we're so excited and why this is the next big marketing gold rush, you have to take a trip down memory lane. And one of the biggest moments in history for so many businesses is when Google launched ads in Google Search. And I have a wild story to tell you, Kieran. It's actually about this guy in the uk. So there's this guy, Simon Nixon, and he had an accounting degree and in the early 90s he started publishing a magazine for accountants and he was earning about 10,000 pounds a month, pretty nice living. But then he realized that the Internet was going to transform his market and he launched moneysupermarket.com and by 2002 he was doing £13.6 million a week. What's really crazy is he he built this entire media business off of Google Ads and advertising on Google and at its peak, right before it IPO'd, he was spending 39 pence and getting a pound back constantly. And what's wild is that he was running over half of all the price comparison for like these financial companies in the UK. And what's crazier is after the IPO he was worth over $700 million and today his net worth is over $2 billion billion dollars. AdWords entrepreneur, which is incredible for really just building a business on top of the early days of AdWords, he was able to become a billionaire.
- [06:04]
Guest Speaker / AI Expert
Look, if you're thinking about capitalizing on the ChatGPT ads gold rush, here's what you need to know first. Before you can advertise in this space, you need to understand how to actually show up. And in AI engines, that's where Answer Engine optimization comes in. Our team at HubSpot put together an early science guide that breaks down exactly how you can optimize for AI powered discovery. It's the same strategies we're using to appear in AI. Get it right now click the link in the description. Now let's get back to the show.
- [06:41]
Kieran
There was two ad forms Google launched back in the day. I think paid ads was their more successful one. It was 100% the ones that lasted the longest and has created incredible stories like that. There is also AdSense. I don't know if people remember AdSense.
- [06:55]
Kip
Oh yeah, remind us what that is.
- [06:57]
Kieran
Yeah, they launched the ability for content creators to monetize that content by putting ads right within that content. And actually AdSense is a little more similar to what it's going to be like to advertise within ChatGPT, because you're trying to integrate ads into a chat and here you're trying to integrate ads right into the content. And there was a pretty well known guy who was really successful back in the day with adsense, Jason Kalakanakis. So his very first company he sold, I think it maybe was his only company. He sold for 25 million, which isn't, you know, a lot, but was a lot back in 2003. And so he formed this network of blogs, it was like web blogs and it had all these kind of specialist blogs, like these niche blogs. And he was able to integrate ads into those blog. And I think at one point he was generating a million a year just of Adsense. His network of blog bought by AOL for 25 million. He. He went on to famously make a pretty good investment in Uber and some.
- [07:53]
Kip
Other companies, but, and now host the all in pod. But this is how he got started.
- [07:58]
Kieran
Yeah, it just shows you being early into these kind of ad forms and ways that you can reach customers that you have not been able to do before. There's just this incredible opportunity to like be first and extract the most amount of value.
- [08:10]
Kip
We think that there are opportunities with this launch to actually create a whole nother generation of success stories like the ones we just shared. Right. And we think there are kind of three core gold rush opportunities that are going to happen as we get ads coming into ChatGPT and probably longer term a lot of the other AI search platforms. So, Kieran, I think the first and most obvious opportunity is the fact that we know from our experience doing marketing at HubSpot that when somebody discovers our company in ChatGPT and comes to our website, they become a customer at like 10 13x higher a rate than like old traditional Google search engines. Right. And so if you believe that that same crazy jump in conversion rate is going to also be true for advertisers compared to people advertising on Google search, then there's probably going to be an arbitrage opportunity where you're going to be able to buy ads much lower than the money you're going to be able to make on them. Very similarly to the story I shared about the company in the UK and how he's able to basically have a really high return on his ad spend.
- [09:27]
Kieran
And I think a big reason for that is the Google AdWords model for the most part has traditionally been based upon keywords. So I try to figure out what keywords you're using and searching for and then I can bid and show an ad on those keywords and someone clicks on the ad and buys a product. The reason that ChatGPT and these AI assistants are going to be a better, more qualified form of advertising and is you're kind of advertising based upon intent. And so the system is able to like conversate with someone and then figure out actually this person really does want to buy this product or this service. Like they've kind of qualified themselves. And so by the time they see the ad, they're already in buy in motion and they can actually go click and buy that thing. And so you actually should see broader opportunities because you can have much more intent than keywords, so you should see way more ability to do advertising. And I know Google is moving to intent in their model as well on AdWords. And you should see better qualified people. So you should see an increase in conversion rates. And as you said, this will normalize. And so at some point the conversion rate will be the conversion rate, but there will be this opportunity where its costs are much lower because people are getting used to the platform and there's ways to like really optimize your ads and then the return on investment you make is going to be much, much higher.
- [10:49]
Kip
I completely agree. The early adopters of ad products have historically gotten much better rates and been able to build really successful businesses. And that's opportunity one. Opportunity two. Kieran of the Gold Rush, I think is kind of a derivative of the old AdSense model. So the AdSense model was, hey, I start a community forum or a website or a blog, I publish information and I throw ads on that and I get a small cut of revenue from that. And I just do that at scale and I make a decent amount of money.
- [11:22]
HubSpot Representative
Right.
- [11:23]
Kip
I think the modern day equivalent of that is going to be a little different. What we are able to do is use answering and optimization tools. HubSpot has one. There's lots of them out there. We acquired a company called xfunnel, there's lime AI, there's, there's a bunch of cool. Then you can look and see what people are prompting ChatGPT for. And then instead of trying to build a media website, what you're going to do is Vibe code applications, mobile apps or desktop apps that you could sell them to solve their very specific problem they have and put ads against those prompts. And I think that over the long term a lot of people will be very successful by just running a portfolio of a lot of vibe coded apps that they are then advertising on ChatGPT. Do you agree with me, Kieran?
- [12:16]
Kieran
Yeah, I think what you're saying is people will use an AEO tool. So what a EO tool allow you to do is upload a bunch of prompts. So I can say, actually I'm curious, is there much demand for this app that I want to do on my dog's health? Right? Like I want to track all of the things in my dog's health and get recommendations on how to keep my dog much, much healthier. And so I would go to an AEO tool and I would say, I wonder is there a demand for things like this? And I would upload a bunch of prompts in the way that people might ask for questions around this or search for it or ask a chatbot for help on that. And the AEO tool would say, here are all the kind of things that AI assistants like ChatGPT, here's all the kind of answers it's given back. And you would say, wow, like there's nothing really that great here. And so I'm going to go build the tool and instead of waiting to appear organically, they'll just buy the ads. Because my tool is now better than any of the things that chatgpt a suggestion and then I can take all of that revenue for myself.
- [13:13]
Kip
Exactly.
- [13:13]
Kieran
And I think that is an incredible opportunity for two reasons. First one is ChatGPT in a lot of instances is still trying to be a pretty good answer engine. And there's going to be a lot of places where it's not providing great answers and you can run ads on those answers. And so you probably can build something or create something that is better than the answers it's giving you back. And so you will be able to, for a time being, be the best option and do it instantly because you can do the ad. And the second reason is just that is going to be such a new thing that people are doing. Right. So the breadth of things that you can actually go and create apps for, create services for and advertise for is going to be huge and get slowly saturated. Like 900 million people having conversations creates a lot of opportunity.
- [14:01]
Kip
Uh, that is really perfectly set. And I think there's going to be a lot of businesses built on that motion. I think there's a third motion in lane of the Gold Rush that is also kind of similar to the old AdSense model in that one of the big opportunities with ChatGPT is Answer Engine optimization. How you and your brand show up in results when people prompt chatgpt. Karen, you were just talking about this. One of the things, Kieran, that we've learned is a big factor in that is how your brand and company shows up across the Internet on all the sites ChatGPT looks at. Right? And sometimes they're looking at Reddit, sometimes they're looking at customer reviews, sometimes they're looking at these third party ranking sites. There's all these different sources they're looking for. And what's going to happen is that there's going to be an opportunity to create a lot of ranking review sites for niche industries to help the companies within those industries properly rank organically. And so they'll pay for kind of an affiliate marketing placement. And what that means is let's say I have a website that ranks the top 10 pet groomers in every state. I'm just making this up. Right. And so those pet groomers will pay because some people are going to come to our website and look, look for them, but they're also going to pay because when ChatGPT is looking to figure out when I ask who's the best pet groomer in my area and knows where I live, it will use those listings to come back and return results for me. Which means there's a big opportunity for the people owning these websites in the future.
- [15:40]
Kieran
Yeah, like you're basically saying that you can run the AdSense model today, but instead of selling ads on the AdSense, you're selling citations, Correct?
- [15:48]
Kip
I think that's the simplest way to put it.
- [15:52]
Kieran
Look, AI tools are everywhere.
- [15:54]
Guest Speaker / AI Expert
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- [16:27]
Kieran
And that's the opportunity. If you were doing the Jason California play, you would have the same blogs and instead of actually putting integrated AdSense across all of these niche blogs, your integration, you can pay for these citations and people are probably going, that's not allowed because Google do frown upon paying for links. Hasn't really been any information given out in terms of paying for citations. And I suspect that it is almost impossible to enforce. I think paying for links is likely something you can enforce because you can actually see in the patterns that likely someone has manufactured this to be much harder. In these kind of organic citations. A citation is basically within an article, within a piece of content. Someone is recommending your product. There's no link, there's no anything. You're literally just saying the words or write in the words. And the AI engines can pick up on that and say, hey, this product gets cited a lot across all these blogs, all these websites. You must be the best answer for this question.
- [17:23]
Kip
And when we explain these, I hope that you see that there's like a really massive opportunity because this is the leading edge of a massive consumer behavior change. And what we do know, Kieran, is that OpenAI is going to be very cautious in rolling these ad products out. They want to get the experience right, they don't want to alienate their users. So it's going to be a very gradual process. The number one thing you can do because the ads product is not yet out is one, prepare which of the three ways we've given you, which one of those do you want to actually follow? And the second is you just need to keep a close pulse on when they start rolling out the ads products so that you can get access to it. And so that's following the show hit like hit subscribe, but that's also just continuing to monitor the ever changing world I.e. chatGPT and ChatGPT ads. Kieran, what else you got for us? Anything else on ChatGPT ads? Any predictions? Any things you're particularly excited about or worried about?
- [18:20]
Kieran
I think this is a really big thing for marketers for all the reasons we discussed. And then the one thing we will just mention is because today there is no analytics given to you about anything and to do with how you're brand shows up in ChatGPT. It's really hard to understand. And if they're gonna have an ads model, they're gonna need to be able to have an analytics product. And I think that's another big plus for all of us who want to be able to figure out how to get more visibility in these platforms.
- [18:44]
Kip
So you're basically saying, hey, we have these three opportunities to make money and then there's a bonus. And that bonus is that because ChatGPT needs to sell ads and make money and there's a big opportunity around that, they also need to give you data so that you know what you're paying for. And that's gonna just give us a lot more insight as marketers to how people are using ChatGPT and how we can better market our products or services through ChatGPT.
- [19:08]
Kieran
They have to give you targeting and the targeting means that you have to be able to say I want to target people who are talking about these topics.
- [19:14]
Guest Speaker / AI Expert
Yes.
- [19:15]
Kieran
And if you're going to be able to say I want to target people who are talking about those topics, then I suspect you can basically look to see what topics are frequently talked about in your vertical. Things like that. Yeah. Which I think would be huge.
- [19:26]
Kip
I think that's totally true.
- [19:27]
Kieran
Yeah.
- [19:27]
Kip
I personally very pumped. I think they're approaching this in a smart way. I know it's kind of a controversial thing to do, but I think we also have talked many times on the show that it was also felt like an inevitable thing for them to do and that it's going to be, regardless, a big opportunity for marketers. And if it's not a big opportunity for marketers, and that means that they kind of don't have product market fit, and it's not going to be that much of a successful business for OpenAI. So marketers incentives and OpenAI's incentives, at least in the short term, I think are very aligned. And so we've got a big opportunity ahead of us. And we will keep you all up to date here as we see these ads out in the wild. As we talk to people who are early advertisers, we will share those stories here so that you all can learn right along with us. We'll see you real soon. On the next episode of Market against the Grain.