Cannes, France — Standing out at the Cannes Lions International Festival of Creativity, often called the advertising world's busiest gathering, is no easy feat. OpenAI is trying to do just that with an advertising platform that has been live for only four months, seizing the moment at an industry event where artificial intelligence is nearly omnipresent, viewed both as a creative booster and a threat.

The startup made its official debut at the Cannes Lions International Festival of Creativity this week, pitching a concept to the assembled brand marketers and ad agencies: the advertising industry is shifting from an attention-based economy to a chatbot-centric "intelligence economy." OpenAI says that in a world where users conduct deeper queries, ChatGPT will provide a more differentiated layer of insight than other channels in the digital space.

"The biggest difference is that users come to our app with a specific task," said David Dugan, OpenAI's head of global advertising solutions, at a media briefing for reporters on Monday. "Their intent is very clear. They provide us with information about the problem they're trying to solve, and that's the perfect context for marketers to deliver targeted advertising solutions."

ChatGPT ads entered beta testing in February, and OpenAI positions them to influence the decision-making layer of the purchase journey—the middle of the marketing funnel, when consumers are deeply researching a topic and comparing different products. According to Dugan, about 20% of queries on ChatGPT have direct commercial intent. Other platforms, including Google, are also reshaping their experiences around AI conversations, which can be more winding and complex than traditional searches, but also create opportunities for contextual advertising and commerce features.

With nearly 1 billion users, ChatGPT's behavioral patterns could also lay the groundwork for future contextual advertising. For example, a person just beginning to research the best time of year to travel to the Swiss Alps with their family shows no direct commercial intent, but rather predictive possibilities that marketers could exploit, Dugan explained.

"If an advertiser can step in before the conversation and introduce themselves at the right moment, there must be value in that," Dugan said. He joined OpenAI from Meta in March. "The top of the funnel will be harder to measure. This is entirely new for the industry."

Where things stand now

Since February, ChatGPT ads have expanded to seven markets, entering Japan and South Korea last week, with Latin American regions such as Brazil and Mexico also in the pipeline.

Early ad-tech partner Criteo said Monday that more than 2,000 brands have run ads on ChatGPT through its platform. According to Adweek, Criteo and StackAdapt have lowered the minimum spend threshold for ChatGPT ads in recent weeks, which could further spur adoption. OpenAI has also launched a self-serve ad manager to encourage more placements. ChatGPT ads initially used a cost-per-mille bidding model, then introduced a pay-per-click model, which quickly gained popularity.

According to Dugan, marketers value ChatGPT's scale, and some clients have informally told OpenAI that the traffic quality they receive from ChatGPT ad campaigns is higher than from other channels. Optimizing calls-to-action in ChatGPT ads has also proven effective for the format—which appears as a sponsored box below the chatbot's natural responses.

"One thing we're learning is that when the call-to-action is positioned as a benefit or a response to the user's original question, we see much higher response rates than when it simply lists the product name," Dugan said.

One metric OpenAI is closely watching is the dismissal rate—the share of users who click the X button in the ad's top-right corner to close it—which Dugan says has dropped 50% since launch. OpenAI faced considerable criticism for initially introducing ads, but Dugan says the decision has not visibly harmed the user experience. ChatGPT ads run on the free version of the AI program and the lower-priced Go tier, which together account for the majority of its users.

"So far, the main takeaway is that user behavior has not degraded after exposure to ads," Dugan said during the Q&A session of the briefing. "This gives us confidence that ads are effective and don't negatively impact behavior."

Moving fast, maintaining trust

As ChatGPT prepares for its highly anticipated initial public offering, OpenAI is accelerating the build-out of its advertising infrastructure. Ads are likely to become a key part of OpenAI's narrative around revenue growth, which is facing increased scrutiny due to the enormous costs of AI development. According to Dugan, ad revenue is also a way to subsidize other features, such as eventually providing free-tier ChatGPT users with more daily image upload allowances.

Despite OpenAI's rapid push into advertising, its executives have emphasized four principles aimed at maintaining user trust: keeping sponsored ads separate from natural chat responses; not sharing conversation information with advertisers; preserving user choice and control, such as allowing users to clear ChatGPT history; and delivering long-term value.

OpenAI also stressed that it is not going it alone in advertising, recognizing the complexity of getting things right in areas like measurement. Ahead of the festival's opening, the company announced a partnership with data collaboration platform LiveRamp, joining a roster that also includes Criteo, Adobe, and StackAdapt, as well as a major ad agency holding company. LiveRamp's initial focus is enabling advertisers running ChatGPT ad campaigns to use its Conversions API Hub, extending measurement beyond browser-based tracking, but the ad-tech firm said it will continue working with OpenAI as it expands its advertising business.

"AI companies have realized that starting with existing, proven infrastructure makes it easier to reach the partners, advertisers, and information they need," LiveRamp CEO Scott Howe said in an interview later that day. "This feels like a natural extension of our existing business."

OpenAI executives at the Cannes Lions International Festival of Creativity also sought to ease concerns that their work on advertising and AI workflows poses a threat to creative talent—the very people who have historically driven this festival. Sentiment toward AI and the broader encroachment of big tech at Cannes Lions was clearly mixed, but that does not seem to have cooled enthusiasm for ChatGPT.

"The feedback I get from agencies is that they're excited to have a new platform to experiment with," Dugan said. "I think they understand that the depth of context we get is different from other platforms, and they also understand this isn't keyword-based buying, so it's distinct from traditional search."