ChatGPT's ads are a lot like San Francisco’s infamous billboards

• A new report from Graphite shows the dominance of B2B software in ChatGPT's advertising.
• OpenAI is now more than 6 months into its ads push, and says it hit a $1 billion run rate.
• Graphite has positive news for the AI company: less than half of ad-eligible users are seeing ads.

San Francisco's stretch of Highway 101 is infamous for billboards that peddle wonky software to other tech companies. ChatGPT, invented nearby, is so far more of the same.

Ads pitching business software to corporate buyers made up the largest category of ad impressions on ChatGPT from March to August at almost 20%, a new study by marketing agency Graphite found.

Another 8.5% of ChatGPT ad impressions in the period promoted business and professional services and 4.6% plugged developer tools, according to the report, which analyzed Similarweb user data.

OpenAI launched ads on its main AI service in February and is trying to grow the business into a meaningful revenue stream before its planned initial public offering next year.

Some good news for Sam Altman: Graphite found that the click-through rate for ChatGPT ads more than doubled from late March to early September, indicating the company is doing a better job of targeting. And less than half of ad-eligible users have been served an ad at all.

"There's a lot of upside, or there's a lot more reach that they can hit," Ethan Smith, Graphite's CEO, told Business Insider.

ChatGPT ads have a SaaS-sales tilt

OpenAI says the ads it places on ChatGPT are relevant to the conversation a user is having with the chatbot. The company also bars certain categories, such as legal services, politics, and gambling.

So far, many of the biggest advertisers are software companies, Graphite's report shows.

Monday.com and HubSpot were among the advertisers that appeared most often in the data, along with Resume.io and Canva. The form builder site Jotform, another top advertiser, ran more than 930 varieties of ChatGPT ads in just a month, Graphite found.

The agency noticed a fair amount of fluctuation when it looked at companies over time. HubSpot and Canva each advertised in a burst before trailing off over the summer. Some companies, like Zapier and the Wall Street Journal, dropped off entirely by the end of the reporting period.

Cursor, the AI coding company acquired earlier this year by SpaceX, also advertised heavily on ChatGPT, according to the Similarweb data.

Smith said the presence of Cursor and other AI tool providers like Speechify among the top ChatGPT advertisers is easy to explain: if you're using a chatbot, you're more likely to use those other tools, too.

"It's self-selecting people who are necessarily AI-forward," he said.

OpenAI's ads business is still in flux

At a Goldman Sachs conference in early September, OpenAI CFO Sarah Friar said the company's ads team is still working on the basics of the product, including figuring out pricing and deploying it globally. She said the business had hit $1 billion mark in annual run-rate revenue.

"We're starting to really see some strong outcomes for advertisers who care about performance," Friar said. "And this is all before we've really launched a format that feels truly endemic to AI. That's what I get super excited about."

It isn't totally clear what an AI-native ad format would look like, but Friar said she'd like the ads product to eventually be like "if Google and Meta had a baby."

Meta and Google have huge amounts of demographic data on their users. As OpenAI tries to figure out how to make its ads more valuable, Smith thinks the company has room for optimism.

"I suspect that the targeting is much harder here and will probably improve much more over time and might become, perhaps, hyper-relevant," he said.

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