As ads invade chatbots, AI companies are reshaping their revenue strategies due to privacy concerns

The rapid introduction of advertising on conversational AI platforms has sparked debate over privacy and trust as leading tech companies look to generate revenue from widely used chatbots. Companies like OpenAI, Microsoft, Google and Perplexity have launched or tested ads within their AI tools, as industry leaders defend their approach and critics question the impact on users.

OpenAI, the developer of ChatGPT, has started serving ads in chatbot conversations for free and low-cost users. This move is aimed at balancing hundreds of billions in spending obligations with new revenue streams.

The decision drew quick ridicule from competitor Anthropic, which has built its brand around safety and data security.

During last week’s Super Bowl, Anthropic aired an ad showing a man asking for advice from a conversational AI, which then inserted promotional text for a dating site into an otherwise relevant response.

OpenAI CEO Sam Altman responded by saying the clip was “clearly unfair.”

Elsewhere in the industry, Microsoft has been running contextual ads and sponsored content in its Copilot AI assistant since 2023. AI search engine Perplexity has been testing ads in the United States since 2024, while Google has also been testing ads in the AI ​​’overviews’ that its search engine offers since last year.

Data privacy concerns take center stage

Google has repeatedly said that it does not plan to serve ads in its Gemini chatbot. Demis Hassabis, head of Google’s DeepMind AI division, said ads “need to be handled very carefully.”

“The most important thing” with AI is “trust in security and privacy, because you potentially want to share your life with that assistant,” he added.

OpenAI has tried to reassure users that ChatGPT responses will not be changed by ads, which appear next to conversations rather than being embedded within them. The company has also pledged not to sell user data to advertisers.

AI companies are “concerned that selling ads will turn off users,” said Nate Elliott, an analyst at U.S. data firm Emarketer.

But “if it’s free, you’re the product. It’s a risk we’re all already more or less aware of,” says Jerome Malzac of AI consultancy Micropole. “We accept it because we find value in it.”

If true, advertisers are expected to embrace the growth of AI as it reaches more internet users worldwide.

Potential game changer for digital marketing

“It will be a game changer for the entire industry,” says Justin Seibert, Head of Direct Online Marketing.

“We’re already seeing how high the conversion rates (interactions that result in a purchase) are for people coming in through ChatGPT and the other LLMs (major language models),” he added.

Analysts at HSBC suggested in a report that AI assistants could account for as much as two percent of the online advertising market by 2030.

Brands, including US supermarket chain Target and software maker Adobe, are already prioritizing visibility on the new channel.

In addition to purchasing ad space, companies also want their products to appear in chatbots’ organic responses.

The practice, known as GEO (Generative Engine Optimization), is an evolution of search engine optimization, developed during Google’s dominance of the Internet.

“We have identified 90 rules that can ensure that the content you create is valued by AI and distributed to the right places,” says Joan Burkovic, head of French GEO startup GetMint.

The company says it already has 100 customers, including fashion brand Lacoste.

Malzac pointed to techniques such as citing scientific articles, adding a “frequently asked questions” section to websites and publishing structured, regularly updated information.

“If your brand is not referenced (by chatbots), it no longer exists” for some users, he warned.