Hi, I'm Lara O'Reilly, senior

correspondent at Business Insider.

Today, in the CMO Insider suite, we have

Dave Dugan, who's head of ad solutions

for OpenAI. Hi, Dave.

>> Morning.

>> You launched ads on ChatGPT very

recently, and you're essentially

building an entirely new ads category.

How does that feel?

>> Yeah, it's been an exciting week. We

launched ads 19 weeks ago. So, we have

this new offering that's exactly 4

months old.

Um we've had a great week at Cannes

talking about it. It's OpenAI's first

time at Cannes in an organized way. And

we spent the entire week talking with

advertisers, agencies, partners about

this new offer. And the reaction that

we're getting is this is incredibly

exciting cuz it is a new channel. It's a

new experience. Obviously, we have a new

ads product. But, the feedback that we

get is this is exciting because it

represents a whole new way that users

are getting information, doing research,

and thinking about products and services

to buy. And for marketers, that's a

chance to get in that moment when people

are making decisions.

>> Does this new ad category kind of have a

name? Are you calling it something? Or

>> Yeah, it's context is really the key

thing about what's different. So, we

think about being in what we call the

decision layer of researching,

considering, deciding what product.

People come into ChatGPT with a job to

be done. They have a question to answer.

They've got a task to complete. They

open up the ChatGPT app with that in

mind. They want to get something done.

And in that conversation, they're giving

us a lot of detail about what they're

interested in. This is a much longer

conversation than traditional search,

which tends to be shorter keyword-based.

Conversations giving us information

about what they're trying to solve. And

in that moment, it's a great opportunity

for advertisers then to introduce their

brand or their service in a way that

matches what they're looking for.

>> And you don't necessarily always show an

ad straight away, right? You kind of

maybe wait until they're deeper into

that conversation.

>> choiceful about when we introduce an ad

based on the conversation. We've been

very cautious and thoughtful about how

we roll out ads to users. For us, user

trust is the most important thing for

our business. So, we've got over 900

million weekly active users. These are

people who love ChatGPT. They enjoy

their experience. When we launch this

whole product, the real focus is how do

we make ads even enhance that user

experience? And we're looking at metrics

as we launch this so early about uh what

is user behavior?

Are they coming back at the same rate?

Are they asking the same amount of

questions? And the feedback that we've

gotten is ads is helpful to the

experience. We've seen no degradation in

that base user experience. And we've

been very principled to make sure that

we're clear about answer independence

and being very clear if there's an ad

served, it's labeled as sponsored, and

it's clear that it's separate from the

organic model response that came above.

>> And what's the kind of go-to metric for

you? Is it click-through? Is it

something else?

>> Yeah, different advertisers have

different metrics that they're focused

on. One is click-through rate in terms

of the efficiency of getting traffic

into that advertiser's destination.

We've gotten really interesting feedback

that often that traffic is more

qualified than advertisers are seeing

from other channels, which makes sense

because people are coming in with

context. They're describing that thing

that they're looking for, either the

budget or how that product or service

needs to work with other things that

they have. And the feedback that we've

gotten is often that traffic is more

qualified and converts at a higher rate

than other channels that advertisers

use. Obviously still early days, but

that's some of the initial feedback that

we've gotten.

>> And I I appreciate it's early, but I

know in the test

a few advertisers said they were having

sort of delivery problems. They've

they've got the budget there, but the

ads aren't being served. What's

happening there? Is that improving?

>> Yeah, we started very conservatively at

the beginning to focus on the user

experience. And in those early weeks,

and we're still early, but in the early

weeks, we really thought about keeping

ad load moderate while we looked at user

metrics to make sure that the user

experience was staying as strong as we

wanted. So, cautious out of the start,

we've learned so much about user

satisfaction. And as we've now 4 months

in, we've

gotten more confidence about how we can

deliver volume. And now we've expanded

into additional markets. We're now in

seven different markets globally.

Each of those market launches have moved

quicker and we have more information

about what to expect with users.

>> Is it tricky being a first mover in this

space? Obviously,

Google has said that it's not bringing

ads to Gemini yet while ads are are in

ChatGPT on the free version. So, they

can kind of hold back, see how things go

with you, and then and then pounce kind

of thing. Is it difficult being the

first?

>> It's super exciting for us and

invigorating for the team to do

something that's brand new. I think that

brings a lot of energy to us and such

good energy from our partners,

agencies, and advertisers. Um, we've

been very partner led in terms of

bringing this launch to market and very

choiceful to work with both agencies and

technology partners. And that's been a

great source of feedback for us because

these partners have clients across

multiple vertical industries, across

different sizes of clients, um, and

giving us information about how we can

expand our product road map. So, we're

we're invigorated to be first. And I

think that's a big part of this week and

the curiosity that we've had from our

meetings, which have been from very

early in the morning until late at

night.

But that's where the energy is coming

from because this is a new channel and

we're the first to go to market with it.

>> Do you think it would make sense to buy

rather than build on the ad tech side?

>> Uh, it's such a new experience. We want

to be choiceful about the features that

we build and the fact that we're

building it all ourselves.

>> Yeah.

>> Really make sure that we can control the

experience and it does come back to the

core ChatGPT app.

>> Mhm.

>> Users have very clear expectations about

the experience that they want to have.

We've got to be very careful and focused

on those users' needs, and that's why

we're really focused on building this

in-house.

>> I got it. And so, it maybe it wouldn't

make sense for technology that was built

for the open web or technology that was

built for other types of apps to try and

kind of sledgehammer that into the chat

GPT.

>> Exactly. This is a different channel

that's never come before. This is not a

keyword-based buy. It's very different

from traditional search. And meeting

consumers where they are and responding

to the queries that they have in the

moment, that's the most important thing

for us. We're conscious that if we focus

on user needs, that advertiser results

will follow.

>> What are advertisers asking you for this

week? Like, what are the key killer

features that they want to see?

>> Yeah, step one for us is explaining how

the current product works. Uh customers

are very interested in how we'll expand

internationally, so seven markets today

and we'll be expanding more. Uh Brazil

and Mexico are next on our road map.

We'll continue from there. So, I'd say

that's one element, very interested in

international expansion. And we've had

really good conversations this week

around um new product features like

bidding. When we launched, we started

purely with a CPM-based model.

10 weeks later, we launched CPC bidding,

and now we're getting into optimization.

We launched a conversions API. And I

think one thing that's different about

us is the pace of our product roadmap

has been incredibly fast. We're an

AI-first company.

Our engineers use our own products like

Codex to build out the product set. And

that's meant that the pace of our

launches, often on a weekly basis, is

much faster than anything I've

experienced before.

>> Mhm. And does that mean you need to

recruit lots more on the the ad side, on

the ad sales side, or because you're an

AI company, might not necessarily need

those big sales forces?

>> Actively recruiting. We're excited to

add a lot of diverse talent to the team.

We're building up my team on the ad

solutions side. And had such great great

reaction from the market, and such

energy for people interested to come and

join the team. Very proud of the team

and where we're at. Still lots to do.

And every new person that comes into the

team is bringing some new experience for

us.

>> And you've got like a new B2B CMO,

you've got a new B2C CMO.

>> Yes, Colin Fleming, new B2B CMO from

ServiceNow. Fantastic leader. We did a

bunch of meetings today. Really

fortunate to have him on the business.

Brings such a depth of experience. Very

happy to be working side by side with

him.

>> And what's been the most surprising

thing to you since launching this ads

business? Anything that's that's kind of

popped up unexpectedly along the way?

>> Yeah, I think the main thing is this is

a new channel and it's different from

what came before. This is very different

from traditional search. It's not a

keyword-based buy. And I think that's

been the biggest surprise for

advertisers that you have to think about

creative execution in a different way.

It has to be more conversational.

The creative has to match that

consumer's interests in the moment. And

I think that's the biggest surprise for

advertisers that they have to think

differently about the creative

execution. And that's what our team is

there to do, to give them advice about

how to optimize creative in this new

experience. And I think that's where the

curiosity has been this week, to learn

more about what this new space will look

like.

>> And how much do their sort of GEOs, the

generative engine optimization

strategies, how much do they sort of

blend with the paid strategies? Or is

that how it's sort of different from

search?

>> Yeah, the feedback that we get from

advertisers is there are two things that

they're focused on. One is the AEO or

GEO execution, which they're working

with different partners in the industry

to focus on.

But now that we have an ads experience

to meet the consumers where they are,

the feedback that we get is that's a

good tandem to work on together. We have

product feed integration that drives

both organic and the paid side, and

that's something that we work on with

advertisers to ingest product catalog

feeds, if that's the category that the

customer is in to drive both sides of

their business.

>> And do you have any kind of top tips for

marketers on ensuring that their brands

are kind of visible, prominent, correct

in ChatGPT?

>> Yeah, the creative execution is really

the key thing. It's having a wide

variety of creative that's written in a

benefit oriented way.

Um not just listing the name of the

product, but thinking about someone

comes into ChatGPT to ask a question and

get an answer and phrasing that creative

in a way that solves that users.

>> So is that like shoes for marathon

running in the rain? That sort of thing.

>> Yeah, and for a hotel for instance, it's

not saying the name of the property in

Las Vegas, it's saying steps from the

Las Vegas Strip. It's being much more

feature oriented which ties back to the

way that people ask questions in ChatGPT

which is very conversational and very

natural.

>> Mhm. Well, I'll let you get back to your

advertising meetings. Thanks so much for

joining us today. Cheers.

>> it. Thank you.

>> Thank you.