Here is how ad agencies are working hard to make sure you see ads in ChatGPT responses

Back in 1999, Google was lauded as a "pure search engine," promising a simple, ad-free experience devoid of "portal litter," unlike the cluttered search sites of the era (see image below). The service was born from Stanford as BackRub, founded by Larry Page and Sergey Brin, initially shunning advertising as a potential conflict of interest that might degrade search quality.

Over the years, Google has fundamentally changed its business model. Despite that initial anti-ad stance, the need to monetize its rapidly popular search engine led to the launch of AdWords in 2000, quickly becoming a pay-per-click juggernaut. What started as simple text ads on the side evolved into ads deeply integrated into the search results page, transforming Google into an advertising colossus where ads are its primary revenue source, sometimes leading users to feel the search results page is now "riddled with ads."

Then came the explosive launch of ChatGPT in late 2022. This conversational AI, offering direct answers instead of a list of links, posed a significant challenge to Google's link-based advertising model. The threat of ChatGPT was enough to cause a palpable urgency inside Google, reportedly triggering internal alarms and accelerating timelines for bringing its own generative AI to the public. Just take a look at the number of times Google CEO Sundar Pichai mentioned AI, at Google I/O 2023, several months after ChatGPT launched; counts after the event pegged the number well over a hundred during the keynote, turning his repeated emphasis into a viral meme.

Now, FT reports that advertising groups and tech startups have wasted no time recognizing this shift. They are actively developing new tools to help brands ensure they appear in the responses generated by AI, like OpenAI's ChatGPT, Anthropic's Claude, Google's own AI Overviews, and the recently launched AI Mode.

This intense focus comes from the rise of generative AI products, which are quickly becoming a major way millions of people search for information online. Research highlights this trend; a study from consultancy Bain found that 80% of consumers now rely on AI-written results for at least 40% of their searches. This reliance significantly reduces organic web traffic, potentially up to 25%, as about 60% of searches now end without users clicking through to a traditional website. This poses a long-term threat to Google's main search business, which relies heavily on those clicks to serve ads.

Companies such as Profound and Brandtech have jumped into this new space, creating software for brands. These tools monitor how frequently a brand gets mentioned or surfaced by AI services. More cleverly, they use a method akin to probing the AI's "brain": feeding a slew of text prompts to chatbots and analyzing the resulting sentiment and mentions. This technology can predict an AI model's bias or likelihood to mention a brand, creating a ranking system. Agencies then use this analysis to advise their clients – brands like fintech company Ramp, jobs site Indeed, and whisky maker Chivas Brothers – on how best to get favorable mentions from the AI models.

This goes beyond traditional search engine optimization, or SEO, which focused on getting websites ranked in Google's link list. As Jack Smyth, a partner at Brandtech, puts it:

This is about much more than just getting your website indexed in their results. This is about recognising large language models as the ultimate influencer.

His firm has even created a 'Share of Model' product to measure and guide this effort. This feels like a paradigm shift. As James Cadwallader, co-founder of Profound, noted:

Traditional search has been one of the biggest monopolies in the history of the internet. And for the first time, it feels like the castle walls are cracking. This is a CDs to streaming moment.

The challenge is that getting mentioned by an AI is different than ranking a webpage. AI models like ChatGPT use traditional web search but then evaluate sources for relevance, credibility, and authority. As Adam Fry, OpenAI's ChatGPT search lead, explained, AI adds a "layer of intelligence above traditional search" because users are asking more nuanced questions. Denis Yarats, co-founder of Perplexity, another AI-driven search engine, reinforced this point:

LLMs understand more content and can be more nuanced. They can find contradictions or find if information is misleading ... so it's a much more thorough process than reviewing links.

He adds that:

It is much harder to be a target of SEO because the only sort of true strategy is to be as relevant as possible and provide good content.

Despite the inherent difficulty of traditional SEO with AI, the advertising world is finding its way in. Perplexity, for instance, is already piloting sponsored "questions" as suggested follow-ups after a user query, a clear indicator that direct advertising within the AI conversational flow is starting to emerge.

Still, it is worth noting that despite the perceived existential threat from these AI shifts, Google's core search and advertising business showed remarkable strength. On Thursday, Google's parent company Alphabet announced its search and other segments grew almost 10% to $50.7 billion in the first quarter of the year. According to FT, this strong result provided some reassurance to investors, even as they remain alert for any signs that Google's own Gemini chatbot or AI Overviews might start reducing the user clicks that fuel its ad machine.

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