CAN ADVERTISING FUND FREE AI? EVIDENCE FROM CHATGPT'S INTERNATIONAL ADVERTISING ROLLOUT

Summary from the TLDR Marketing newsletter

ChatGPT's current advertising model cannot yet fund free access because its ads deliver less value to advertisers than established search channels. Ads reduced organic referral traffic by 6% to 8%, but conversion rates remained unchanged at 2.21%. Paid ChatGPT visitors generated $0.89 in revenue per session compared with $2.45 for Google Search and converted at less than a third of the rate. ChatGPT would need to lower ad prices substantially to compete with Google and make its free tier financially sustainable.