Seedtag applies advanced AI to deliver privacy-first advertising at scale. As the creator of neuro-contextual advertising, Seedtag moves beyond traditional contextual targeting methods such as keywords and categories. Instead, Seedtag understands deeper signals of interest, intent, and emotion to create custom audiences based on a brand’s objectives.

Marcus Johnson (00:00):

Ever seen an ad that just fits perfectly? That's Seedtag. Their neuro contextual technology combines AI and neuroscience principles to place brands exactly where they belong. It's privacy-first advertising that taps into the user's interests, emotions and intentions, making every interaction feel natural and relevant. Seedtag, where context becomes intelligence.

(00:27):

Hey gang, it's Friday, February 6th. Marisa, Nate, and listeners, welcome to Behind the Numbers, an eMarketer Video podcast made possible by Seedtag. I'm Marcus, and join me for today's conversation. We have two New York residents. We start with our analyst, Marisa Jones. Hello.

Marisa Jones (00:42):

Hi. It's great to be back, Marcus.

Marcus Johnson (00:44):

Yes, indeed. Welcome to the show in 2026. We're also joined by principal AI analyst, Nate Elliott.

Nate Elliott (00:51):

Hello there, Marcus.

Marcus Johnson (00:52):

Hey, fella. Thanks for being here. We start, of course, with the fact of the day. All right. Which film has the longest movie credits? So according to the Guinness World Records, Avengers Infinity War holds the record for the most credited individuals on a movie as listed on IMDB with how many people? How many people do you think are listed in the credits for that film?

Nate Elliott (01:19):

I mean, a masterpiece like that must have millions.

Marcus Johnson (01:23):

It is millions. It's not millions, but it's high. Marisa, any guesses outside of millions?

Marisa Jones (01:29):

I'm not sure if a guess like 300 is too high or way too low.

Marcus Johnson (01:32):

300 people?

Marisa Jones (01:32):

Yeah.

Marcus Johnson (01:35):

Just 300? Have you sat through the credits of a Marvel-

Marisa Jones (01:37):

No, I haven't.

Marcus Johnson (01:37):

Okay.

Nate Elliott (01:38):

300 minutes, maybe.

Marcus Johnson (01:41):

Lasts for a while. 5,109 people is the cast and crew as January 2024. That makes it the movie with the greatest number of credits currently recorded. The largest contributor to this total is the film's enormous visual effects team, which consists of about 2,700 people. The credits for Once Upon a Time in the West and also, what's the other one? Superman. That film also have the record for the longest credits ever. So they go on for the longest amount of time, 12 minutes, those credits roll for. And as we've mentioned before on the podcast, the actual action of an NFL game, when they're actually playing the game, not when they're in the huddle or when they're doing replays or when they're just staying on the sideline, is 11 minutes. So the credits of Superman are longer than the football game action. That's tragic.

Nate Elliott (02:47):

It's a bizarre comparison.

Marcus Johnson (02:51):

This is gone, it's gone off the rails. That's where it's gone. Four people were involved in the making of this podcast, not 5,000, four. Three of them on the show. The other is Lance in the background. Thank you, Lance. Anyway, today's real topic, ChatGPT with a side of ads. All right. We're talking about ChatGPT with ads. ChatGPT's free ride is ending. Here's what OpenAI plans for advertising on the chatbot, writes Matt O'Brien of the Associated Press. OpenAI will soon start testing ads by showing them to ChatGPT users who aren't paying for a premium version of the chatbot. The ads will appear at the bottom of ChatGPT's answers when there's relevant sponsored product or service based on your current conversation, so they say. So searching ChatGPT for places to visit in Mexico could result in essentially a holiday banner ad appearing. The company has made a commitment not to serve ads to what it believes are under-18-year-olds.

(03:46):

And they say ads won't appear alongside sensitive topics like health or politics. Most importantly, Fiji CMO, the company's CEO of applications said, "Most importantly, ads will not influence the answers ChatGPT gives you. Your ads will be influenced by your conversations. Personalization will be on by default with an opt-out." Marisa, I'll start with you. What was your main takeaway from this ChatGPT with ads news?

Marisa Jones (04:10):

My main takeaway is that this is really where GenAI is going to be able to keep up with the massive costs that go into making and operating a GenAI platform. ChatGPT has been struggling for quite some time with profitability. It's very far from achieving that. And this is just, to me, obviously, the next step in becoming profitable, except for people who can pay to afford the ads. Obviously, that might increase subscriptions if there are people who don't want to see ads. So that's also a goal of it. But this is really OpenAI's best bet right now to inch toward profitability in the long-term.

Marcus Johnson (04:49):

Yes. Same as me. "Of course they added ads," was what I thought first. Company valued at half a trillion, owes about a trillion on what they call future procurement commitments contracts for AI chips and energy. OpenAI told investors in September they could burn over a hundred billion dollars in cash by 2030, according to the information in the Financial Times reported. Then 2025, OpenAI operated at a loss around eight billion in the first six months of the year and that only 5% of ChatGPT's over 800 million users are paid subscribers. So they need money. And quite quickly, Nate, it appears.

Nate Elliott (05:26):

Oh, yeah. I mean, of course they are offering ads. As you say, this was inevitable. This was always what was going to happen. And all the AI platforms have been protesting for years that they don't want ads except for Microsoft, which has actually been running AI ads for three years now. All the others have been saying for years, "We don't want ads. We don't like ads." Sam Altman himself has said that he hates ads, calls ads in AI uniquely unsettling and once referred to ads in ChatGPT as a quote, "Last resort." And yet it was always inevitable that they are going to run ads, because as Marisa says, as you say, they're burning money like there's no tomorrow. I actually have a higher number. I believe their spending commitments are up to $1.4 trillion, and there's no end in sight to the red ink over there. So this was always the only option for them.

Marcus Johnson (06:21):

Yeah. And others have Google already introducing ads in AI Overviews and AI Mode. So it's not like they're the first. My next question, Nate, I'll throw this to you first. Will this scale users away?

Nate Elliott (06:33):

I don't think it will. Not in any meaningful number. I mean, listen, some people are going to leave because of this, but I don't think that number's going to be significant. It is their greatest fear. I mean, if you look at the state of AI right now, while everyone assumes that everyone uses AI, the reality is the majority of Americans don't use AI in any given month. As you can see from the chart on the screen, which happens to be in my new report on ChatGPT ads available at all good local eMarketer.coms, the majority of those who do use AI in any given month are more casual users for whom the switching cost is close to zero. And we see the AI user base continuing to grow. So if you add up all the new users coming into generative AI over the next five years, and you combine that with all the casual users who could switch from ChatGPT to Gemini or Claude or Perplexity tomorrow without missing a beat, that's a huge number of people. And that's what OpenAI is afraid of losing.

(07:31):

They don't want their casual users to leave. They don't want new users into this space to decide to go elsewhere. The reality is though, ads are already elsewhere as well. So as I mentioned before, Copilot has been quietly running ads for three years now. Google introduced ads into AI Overview about a year and a half ago, and just before ChatGPT announced their ads in January, Google announced their first AI-specific ad unit, which are effectively sponsored coupons in AI Mode. And I fully suspect that we'll see ads from Perplexity and Grok and Meta AI within the next year as well.

Marcus Johnson (08:11):

Marisa, I mean, Jeremy Goldman, who's one of our colleagues, was speaking to Reuters, and he said, "If ads feel clumsy or opportunistic, users can easily switch." Not that they will, but can, could easily switch to rival chatbots. What do you think of how this is going to sit with users?

Marisa Jones (08:30):

I do think there will be some resistance, but not necessarily enough to convince users to flee the platform en masse. Like Nate said, going to another platform, if they don't already have ads, they'll probably be getting ads at some point. And more people are using ChatGPT than other platforms. It's kind of a lot of people's first thought when you think of a GenAI platform is ChatGPT. So I don't think this will be enough. And we also have to consider that users are very good at tuning out ads entirely. This for a lot of users might just be something they notice once and then they tune out for the rest of their experience because they do that with other platforms.

Marcus Johnson (09:15):

How much more effective, if at all, I'm assuming they are, but how much more effective are chatbot ads compared to traditional search ones?

Marisa Jones (09:25):

I do think they can be very effective. There's some data from Microsoft, which obviously Copilot is kind of the one that's been doing this for quite some time, Microsoft internal data showed 153% lift in click-through rates and a 54% improvement in user experience actually from running Copilot ads compared to traditional search. So there is great potential for this. It really does come down to how ChatGPT integrates these ads, which we're still kind of yet to see. The format is still very nascent, obviously. It might require a test and learn approach. Microsoft, like Nate said, has been doing this for years, so they've had time to work out the kinks and make a more established ad platform. ChatGPT is just now getting into it. So there is a chance at first, it might not be the most effective thing. Advertisers might not see the best results at first, but in time, this is obviously going to become a core part of the ChatGPT experience. So with that, its effectiveness will likely grow.

Marcus Johnson (10:31):

I was reading a piece for this and it was saying about how the company's hinted at taking this step further already and talking about how static recommendations could eventually be able to be followed up on, asking questions about advertising products directly within conversation, transforming ads into extensions of the AI interaction. Zooming out a little bit, Nate, could you walk us through how this type of an ad does look different from what people are used to and how powerful that could potentially be?

Nate Elliott (11:06):

Yeah, I mean, there are limitless possibilities for what they could do with advertising in this space. And the reality is Microsoft in its three years of running ads in Copilot have tried out, I think, three or four different ad formats. We've seen other experiments with other ad formats from other players along the way, and we don't know what the format will be for these ads. I mean, by all means, the easiest version of this is what Google's been doing in AI mode for the past year and a half, which is just taking regular search paid listings and dropping them at the bottom of or next to an AI-powered response.

(11:44):

That might not be the most effective form of advertising. It might not deliver the best results, but from a platform perspective, there's a lot of appeal there because billions of dollars per year are already spent on these regular search paid listings from nearly every advertiser on earth. And it's really easy for Google, for instance, to just choose some of those, run them in their AI products and call it a day. They would flip a switch and make a ton of money from that right away. Microsoft could have done the same thing and has. That's actually one of the formats they've tried alongside Copilot, but they've tried a richer experience that they call showroom ads. They've tried some comparison ads where they have tables of comparison content for different advertising brands.

(12:27):

They've tried a bunch of different formats. I fully expect that we'll see OpenAI try a bunch of different formats as well as they work to figure out what's going to be most effective in terms of that triangulation of what makes them the most money from the most advertisers, what delivers the most value to the advertisers, and what's most effective or at least least offensive to their consumers and their user base. We don't know what it's going to look like because they don't know what it's going to look like, but-

Marcus Johnson (12:56):

They've said testing, so yeah.

Nate Elliott (12:57):

Yeah, I mean, it could be back and forth conversations with a branded chatbot. I mean, when Google introduced its coupon ads in AI mode in January, one of the things they announced alongside that was branded chatbots. And so you could see those coming together at Google at OpenAI, anywhere else. The showroom ads that Microsoft has in Copilot are interesting in that they expand into almost full-screen multimedia experiences that are designed to replicate the experience of going into a physical store. Of course, they don't quite do that, but they're certainly a lot bigger and shinier and flashier than a simple text listing. So there are a lot of different ways this could go, and OpenAI is going to need to take some time to figure this out, which is unfortunate for them, because as we've all said already, they are burning money like there's no tomorrow and they need to ramp this up as quickly as humanly possible.

Marisa Jones (13:55):

So they're charging and they're charging a very high rate and are going to have to convince advertisers that whatever they do will be effective. So they're going to have to do a lot of testing and very quickly to figure out what works best, what drives the highest return on ad spend, and what's most effective for advertisers.

Nate Elliott (14:12):

Marisa, you don't want to pay Super Bowl ad prices for a largely un-targeted, unmeasurable ad?

Marisa Jones (14:19):

That we don't know if it works.

Nate Elliott (14:21):

Right. I mean, that sounds reasonable, right?

Marcus Johnson (14:23):

Do we think, I mean, in terms of their rate, we saw Netflix when they first started doing ads come in with a very high rate and saying it's a premium spot and we're not going to have as many of them. Do you think that they'll be able to have something that's above market down the road or do you think that they're actually going to come down the same way Netflix had to come down something closer to market rate?

Nate Elliott (14:43):

I mean, they might. They might be able to get a good price for it, but the reality is the price isn't determined by the seller. The price is determined by the value that the buyers are getting from it. And so they can quote whatever rate card they want, and apparently the rate card they're quoting right now is $60 per thousand, which is very, very high. It's really fascinating that they're quoting a CPM instead of an action-based price like cost per click or cost per conversion. And it's really interesting that they think they can get that amount of money. Now, I've argued that AI brand experiences are closer to branding than they are to direct response, that when you look at where in the customer journey AI conversations sit, they tend to sit really high up in that funnel, discovery, maybe even before the point of discovery. We see increasingly that these chatbots are responding even to explicitly non-commercial queries like, "Why does my back hurt," with responses that mention products.

(15:52):

And so if that's the case and these are brand ads, then CPMs actually make sense and high CPMs may be justifiable, but to make that make sense, to justify it, you need to help brands measure it. And from what we're hearing, the measurement capabilities that they're launching this trial with are exceptionally rudimentary. They're going to need to do better at helping brands and buyers understand the value that they're getting from these ads if they want to charge those prices.

Marcus Johnson (16:22):

Yeah. You mentioned the, "Does my back hurt?" And it's getting a lot of health-related questions, and health-related questions can be particularly personal. I wanted to throw this at you guys. Miranda Bogen, director of the Center for Democracy and Technologies AI Governance Lab saying, "Introducing personalized ads starts OpenAI down a risky path previously taken by social media companies. People are using chatbots for all sorts of reasons, including as companions and advisors. There's a lot at stake when that tool tries to exploit users trust or hawk advertisers goods." And Megan Morrone and Kerry Flynn of Axios also shared some concern writing that quote, "Ads and chatbots were always inevitable and concerning given how much sensitive personal and emotional information people share with ChatGPT and other bots," close quote. Nate, I'll start with you on this one. Do they have a point?

Nate Elliott (17:09):

No.

Marcus Johnson (17:10):

Is there more of an ethical component to advertising during a search conversation versus traditional blue link format?

Nate Elliott (17:16):

I mean, sure, they have a theoretical point, but do they think that search engines and social platforms don't know anything about their users? I mean, sure, people type sensitive questions and content into AI models, but guess what? You've been Googling stuff every bit as sensitive for probably decades now. Especially you, Marcus. I know you like to ask personal questions to online sites.

Marcus Johnson (17:41):

Hey. [inaudible 00:17:41] please.

Nate Elliott (17:43):

And you've had very sensitive conversations and posted lots of personal information on social platforms as well. All of these sites, therefore all of these companies have incredible amounts of very sensitive information about us that we wouldn't really like to have exposed for public consumption and that we probably don't want used to target advertising. And the responsible companies in this industry are at least relatively safe in terms of saying, "We're not going to use things." If you declare a medical diagnosis or condition into Google, they're not going to use that to target ads back to you.

(18:20):

Having said that, if you ask a question about medication in Google, by all means, they're going to sell ads to competitors of that medication. Now, I suspect that we'll find something similar in ChatGPT ads and ads across other AI platforms. Having said that, again, we've noted that OpenAI is particularly desperate for revenue at this point, and OpenAI's executives have never shown an inclination to be terribly sensitive or responsible about matters like this. So we may see something different from ChatGPT, but this isn't new. This is just the latest technology, the latest set of technologies that have information about us that we wouldn't want to tattoo on our foreheads, and they follow in a long line of lots of other technologies and companies that also have similar information about us and also run successful, responsible advertising businesses.

Marcus Johnson (19:17):

Yeah. Marisa, what's your take here?

Marisa Jones (19:19):

I would say I mostly agree. And I think that's because while I do think AI can hold disproportionate weight for people who are... I've been doing a lot of research and writing on AI companions lately, so people who use these for companionship and really develop a personal relationship that they feel. Obviously, in that case, if an AI is recommending you and you see this chatbot as your friend even, it might hold disproportionate weight. I do think ChatGPT by saying they won't be serving anything harmful to minors, it could kind of curb some of those concerns. A lot of AI companion use happens among minors. A lot of teams have used AI as companions. So I do think that is an important safeguard that could help them avoid some of these problems that they would otherwise maybe be facing.

Nate Elliott (20:09):

Yeah. Having said that, this is the same company that claims Sora 2 wouldn't violate copyright.

Marisa Jones (20:14):

That's true.

Nate Elliott (20:15):

You can go through a long list of things that they've claimed they would do responsibly and well, and then just launch whatever they had, and that's what we got.

Marcus Johnson (20:24):

Yeah. I like you wrote this line, Marisa. I like it. It sums up this quite nicely. "I think emotionally adept AI can strengthen engagement and foster brand loyalty on the good side of things, but missteps could lead to perceptions of manipulation." So yeah, it depends on the execution. Let's end by talking about the marketers here. So Matt O'Brien of the AP writing, "OpenAI gears up to launch ChatGPT ads. Marketers try to keep up." Jon Mew, CEO at IAB UK saying, quote, "For marketers, the key issue is less about specific formats in the short term and more about whether conversational interfaces can support long-term brand building alongside performance outcomes," close quote. Marisa, I'll start with you. What should marketers do with this news that ChatGPT will have ads?

Marisa Jones (21:11):

I think the really only route is approach these with interest, but approach them with caution. Going too far into investment, especially with the prices ChatGPT is charging, especially with them not having any proven results yet, it's risky, but there is interest in this format and ChatGPT is particularly well positioned because of its user base and because of how engaged a lot of its users are. But I really think the imperative is to just approach it as you would any new ad environment that is still in very early stages. Like I said, user base could make it a really great platform for delivering ads to very engaged users, but we don't know fully the full picture of how privacy-compliant these ads are, how transparent they will be. So it is still difficult to tell whether this will be a worthwhile investment that helps brand building, that helps brand loyalty, but AI ads at the same time are really the future.

(22:10):

I mean, AI is obviously the future and advertising is the next step in these platforms. So marketers do need to be paying attention to how this evolves and to know and pay attention to when this format proves it's worth, which it eventually will, even if it's not with ChatGPT.

Marcus Johnson (22:27):

Nate, in terms of advice of marketers, you went and wrote a whole piece on this in a ridiculously short amount of time. It's called The Gradual Then Sudden Rise of Ads in AI. [inaudible 00:22:39].

Nate Elliott (22:39):

What a bar burger of a title, huh?

Marcus Johnson (22:42):

Get the full report. Of course, we'll put the link in the show notes, but for folks who haven't read that yet, or folks who have and there's something else you want to say to them, what do you think marketers should be paying attention to here?

Nate Elliott (22:55):

Yeah, I think marketers should respond to the launch of ads in ChatGPT by buying ads in Copilot. I mean, there are a lot of challenges that OpenAI will have as they try to launch these ads. They don't have an established technology in place to manage the ads. They don't have established teams in place to help sell the ads or service the advertisers. They don't know their best format and haven't tried even a single format as far as we know at this point. They are charging incredible amounts of money, as we've discussed, and they're not providing very much in the way of reporting. Ads in OpenAI or on OpenAI look like they're going to be difficult to turn a profit on, at least in the near term. But ads within Copilot actually don't have any of those problems. They have established teams and technologies. They've tried different formats. They have experience. The prices aren't ridiculous. They have reporting. If you're really interested, I would make sure that you are at least running ads in Copilot as well as on ChatGPT.

(24:02):

But having said that, if you trust your paid search team, if you as a CMO or a marketer trust your paid search team, I would give them the keys to AI advertising and say, "Spend as much as you want on these platforms." Because the thing that good search marketers do so well is they measure and they optimize and they update their investment levels in different keywords, different engines, different platforms and surfaces from day to day, sometimes from hour to hour to get the best return on investment. I said it before, I don't think that ads and ChatGPT are going to generate a great ROI, at least not in the first several months, maybe the first couple of years. I mean, it's hard to remember this, but it took Facebook several years before their ads stopped being terrible. Facebook ads were really, really bad when they launched. They had a lot to figure out.

(24:55):

OpenAI is in the same position. They haven't done any of this before. They need to figure all of this out. There are other companies where they have done this before. And so I would say the AI specific ad placements that Microsoft is offering, that Google's about to trial in AI mode, I would say those are equally valid places to trial ads in AI chatbots and more likely to be easier to work with and maybe produce better results. But as long as you are measuring and optimizing and only spending what you're getting your money back on, only spending as much as is delivering more value than you would be able to get from that dollar spent somewhere else, then go for it. Spend whatever you want. I just think that if you follow those rules, you're going to end up spending not a ton in AI advertising in the near future.

Marcus Johnson (25:44):

There are folks who are skeptical of this. One being Mark Ritson wrote a piece in an ad week titled OpenAI's Ad Offering is a Last Resort, and It Still Won't Save the Company. And to compare it to Netflix again, we're talking about ad prices. When they launched advertising, didn't go well out the gate. This year, they said, or 2025, they said they made one and a half billion dollars. That's a drop in the bucket compared to the 40, 50 that they're making, but they're eventually getting there. So this could absolutely take some time if it gets there at all. We shall see. That's what we've got time for for this episode. Thank you so, so much to my guests. Thank you first to Marisa.

Marisa Jones (26:22):

Thank you so much for having me.

Marcus Johnson (26:23):

Yes, indeed. And of course, to Nate.

Nate Elliott (26:26):

Cheers, mate.

Marcus Johnson (26:28):

Yes. And thanks so much to the whole production crew. It's Lance. Thank you to Lance. John and Danny didn't do anything on this one. Lazy. And to everyone for listening in to Behind the News, an eMarketer video podcast made possible by Seedtag, thank you to you guys. Subscribe, follow. If you have some time, leave a rating, review. If you have some extra time, we'll be back on Monday. Happiest of weekends. Not to you, John or Danny. Didn't do anything.