A new pricing structure is coming for ChatGPT ads, but OpenAI will need to prove the high CPC is worth it.
OpenAI is introducing a new cost-per-click (CPC) pricing structure, with bids between $3 and $5. This comes after the initial pricing of $60 CPM (per 1,000 ad views) fell to just $25 in the first ten weeks.
ChatGPT faces significant competition from well-established platforms like Google and Meta, both of which have established CPC structures. Meta’s generally sits between $0.50 and $2.00, and Google ranges significantly, but the average across all industries is $2.696 for search, and $0.63 for display.
This isn’t an unexpected move from OpenAI, with CPM providing a smoother launch, but CPC, a more complex infrastructure, needed to drive growth and build relationships with advertisers.
OpenAI’s premium pricing is likely due to the high-intent consumer base the chatbot company captures, with ChatGPT users often directly indicating what type of product they’re searching for. OpenAI will have to prove the high CPC is worth it by delivering high conversion rates.
Within the first two months of OpenAI’s CPM model, minimum spend rose from $200,000 to $250,000, with several hundred advertisers participating and $100m in annualised revenue. OpenAI’s internal projections suggest the tech giant expects to reach $2.5bn in 2026, and a further $200bn by 2030.
At the same time, OpenAI is facing a projected loss of $14bn, and there’s an extended list of projects, products, and promises made by Sam Altman’s firm that were eventually dropped or fell short of expectations.
These include video generation app Sora, which was axed after just six months, and saw Disney exit its planned $1bn deal with OpenAI. Also the Walmart Instant Checkout feature, which has only so far managed conversion rates at three times lower than purchases that require clicking out.
“OpenAI’s experimentation with CPC is driven largely by its need to maintain demand growth and build trust with advertisers, though declining CPMs and an expanding pilot are also factors,” Claire Holubowskyj, senior research analyst at Enders Analysis told Digiday.
The conversational aspect of LLMs provides a solid opportunity for advertisers to integrate their products and services, but the infrastructure is in an experimental phase, and advertisers must test these out to determine their worth.
