Ivy Liu
ChatGPT Advertising: Initial Tests & Performance Metrics
The long-term viability of ChatGPT’s foray into the advertising landscape will depend heavily on demonstrating a tangible return on investment, extending beyond mere ad visibility. Target is among the first companies actively exploring this new advertising channel, initiating a pilot program within both the free and subscription-based (“Go”) tiers of the AI platform. This test commenced on February 9th, following a three-day postponement attributed to OpenAI. The retailer is leveraging the platform to promote its own offerings alongside select partners within its Roundel retail media network.
The core strategy involves aligning ad placements with the specific keywords present in user queries, mirroring the intent-based logic of traditional search engines but adapted for a conversational user experience. While Target has not disclosed the cost of these placements, prior reporting from Digiday indicated potential pricing of $60 per 1,000 impressions, as communicated to other advertisers approached by OpenAI. This approach aims to seamlessly integrate commercial messaging into user interactions, offering relevant suggestions without disrupting the conversational flow.
Conversational Commerce & Ad Integration
Consider a scenario where a ChatGPT user requests recommendations for compact kitchen appliances suitable for baking cookies. The system could then present an advertisement for an air fryer brand participating in the Roundel network. This exemplifies the intent to connect expressed needs with pertinent product offerings in real-time. The success of this model hinges on whether users perceive these integrations as genuinely helpful or as intrusive interruptions.
Roundel has affirmed OpenAI’s commitment to transparency, ensuring all advertisements are clearly labeled and distinct from the AI’s core responses, and will not influence the generated answers. However, the ultimate measure of success will be commercial performance, determining if ChatGPT can evolve into a valuable performance marketing channel for Target, or remain a limited experimental investment. The retailer has not specified the duration of the ad campaign or the specific demographic segments being targeted.
Evaluating Pilot Program Results & Future Expansion
“We don’t have a specific timeline to share,” stated Matt Drzewicki, Senior Vice President of Roundel, in an email correspondence. “The goal of the pilot is to take time to thoughtfully test and learn, while introducing new experiences in a measured way that prioritizes consumer relevance and trust.” Initial evaluation will focus on “aggregated performance metrics” – including impressions, clicks, and early indicators of whether conversational intent translates into actual purchases.
Following the test period, Target will collaborate with OpenAI to analyze campaign delivery, user engagement, and the effectiveness of ads in facilitating product discovery. Drzewicki explained that the assessment will pinpoint areas for improvement and inform future engagement strategies. This measured approach underscores a pragmatic question: how will this channel compete with established retail media ecosystems offering closed-loop measurement, first-party data targeting, and flexible buying options?
Long-Term Vision & Competitive Landscape
To command a significant advertising budget, ChatGPT will need to evolve towards standards comparable to existing retail media platforms. “Over time, we’d look for expanded capabilities that bring this offering closer to how Target and retail media networks operate today, including first-party data integration, closed-loop measurement and more flexible buying models,” added Drzewicki. He also highlighted the importance of dynamic ad formats capable of integrating product feeds for more relevant, real-time messaging.
The incentive for Target is clear: website traffic originating from ChatGPT has reportedly grown approximately 40% month-over-month, making advertising a natural progression. The retailer launched a dedicated Target experience within ChatGPT last November, as part of a broader initiative into AI and agentic commerce, and recently partnered with Google’s Gemini on similar shopping integrations. Drzewicki emphasized the desire to “meet guests where they are and make it easier for them to discover the on-trend products and curated assortment that define Target.”
Some advertisers have expressed caution, citing a lack of control over ad placement. Philip Thune, CEO of Adthena, noted that “Some of our clients who declined have said they were a little uncomfortable because they [OpenAI] couldn’t promise us when we’re going to show up, or where exactly we’re going to show up.” However, for Target, securing an early position in this emerging space is crucial for shaping its development and influencing future integrations.
