The news: OpenAI is turning to small businesses to achieve its ambitious advertising goals, The Information reports.

• OpenAI executives told outside ad tech firms that it’s looking to court small and local companies like dry cleaners and car washes.
• An agency executive also claimed that OpenAI is introducing features this week that are better suited for small businesses, such as ads designed to prompt specific actions like booking an appointment.

Zooming in: OpenAI is coaxing SMBs with performance-dependent payment, but is asking that they integrate with its ad tech stack.

• OpenAI has told some marketers that these conversion-oriented ads will only require payment if the ads lead to results, per an agency executive cited by The Information. Testing these campaigns requires marketers to install OpenAI’s ad pixel to track actions after initial ad clicks.
• OpenAI is also pushing marketers to link their internal systems to its newly launched API, enabling them to report on-site actions and strengthen OpenAI’s claims that its ads deliver measurable results.

Why it matters: The move is a notable departure from the company’s initial ads launch that required minimum upfront costs of $200,000—and brings OpenAI’s ad strategy closer to Meta’s focus on SMB clients, which represent an estimated 250,000 Meta advertisers globally, per Axios.

The goal: If OpenAI wants to achieve its goal of generating $2.5 billion in ad revenues this year and over $100 billion by 2030, it has to expand its ad buyer base. Part of that effort is making ChatGPT ads seem more accessible and impactful:

• OpenAI began rolling out a self-service ad buying portal for US businesses earlier this month that can be used regardless of company size and requires no minimum spending commitment, The Information notes.
• That builds on an April ads manager launch that brought tools similar to Google Ads to OpenAI.
• OpenAI has struck partnerships with ad tech companies including Criteo and StackAdapt to legitimize its ad capabilities and bring familiar workflows to a nascent format.
• The company previously reduced minimum upfront commitments to $50,000; this new announcement allows some ad buyers to only spend if the ads lead to concrete results.

Implications for marketers: Targeting small businesses, combined with consistent efforts to prove its ad offerings, could help OpenAI curb current concerns about the potential of AI chatbot ads.

Targeting small businesses could prove valuable: These companies are typically more performance-focused, more willing to test lower-cost channels, and less constrained by the brand-safety concerns that weigh on larger advertisers. But OpenAI still needs to show that ChatGPT can drive measurable local actions beyond clicks if it wants to compete with platforms with established small business bases like Meta and Google.