The trend: AI companies are pursuing ad monetization to address high costs associated with running AI models and capitalize on the shift away from traditional search engines toward AI tools.

• ChatGPT recently launched ads for select users, with a roughly $200,000 minimum commitment to address OpenAI’s massive infrastructure expenses and lack of diversified revenue streams that help rivals like Google subsidize their AI developments.
• Google is denying plans to introduce ads in its Gemini chatbot, but it has begun monetizing AI with ads in its AI Mode search engine.
• Tools like Microsoft Copilot are proving that these ads are worthwhile when executed correctly. Ads tested within the Copilot chatbot increased clickthrough rates 153% and improved user experience by 54% compared with traditional search.

Some companies are resisting AI’s move toward advertising.

• Anthropic has reiterated its commitment to Claude staying ad-free to appeal to the majority of users who feel ads in AI would undermine trustworthiness.
• Perplexity, meanwhile, recently pulled back from its ad efforts in response to consumer concerns.

Zooming in: Unless AI firms can generate meaningful revenues through other channels, advertising may ultimately become unavoidable.

Most recently, genAI ad network Koah bet that ads will be the driving force of growth and survival for AI apps. The company, which helps embed ads into chatbots, has raised $20.5 million to help AI chatbots make money through ads instead of subscriptions.

Koah acknowledged that many AI apps are growing user bases rapidly but aren’t making money to remain operational in the long term. Even AI pioneers like OpenAI’s ChatGPT are years away from achieving profitability—an issue that Koah believes sponsored ads will directly address.

Implications for marketers: The rise of ads in AI chatbots presents meaningful opportunities for marketers to invest in a new, influential channel for reaching consumers. But advertising on those platforms demands careful attention to privacy and brand safety amid the landscape’s rapid evolution.