GenAI transforms advertising's core pillars. It enables hyper-personalized creatives at scale, democratizes ad production for smaller businesses, and fundamentally enhances the two most critical functions of any ad platform: predicting user behavior and measuring campaign outcomes.

The dominance of Google Ads is threatened by AI-powered chatbots, which are poised to disrupt search-based advertising just as Google disrupted the Yellow Pages. Businesses reliant on this channel must pivot their strategies immediately.

Internal projections reveal ads are a core long-term strategy, not an experiment. OpenAI expects "free user monetization" to generate $110 billion through 2030, with average revenue per user (ARPU) growing from $2 to $15. Gross margins are targeted at 80-85%, mirroring Meta's highly profitable ad business.

Pulse isn't just a feature; it's a strategic move. By proactively delivering personalized updates from chats and connected apps, OpenAI is building a deep user knowledge graph. This transforms ChatGPT from a reactive tool into a proactive assistant, laying the groundwork for autonomous agents and targeted ads.

While competitors focus on subscription models for their AI tools, Google's primary strategy is to leverage its core advertising business. By integrating sponsored results into its AI-powered search summaries, Google is the first to turn on an ad-based revenue model for generative AI at scale, posing a significant threat to subscription-reliant players like OpenAI.

While other AI companies are hesitant, Google is expected to lead LLM ad integration. As a company built on ads, it is culturally positioned to implement monetization quickly and effectively, unlike competitors that may view ads as a necessary evil rather than a core competency.

The ChatGPT app's blank start screen represented wasted real estate. The "Pulse" feature transforms this into a personalized feed based on user history. This creates a highly valuable, monetizable surface for ads placed *between* prompts, avoiding the conflict of serving ads within direct AI responses.

Previously, marketers told Meta who to target. With the new AI algorithm, marketers provide diverse creative, and the AI uses that creative to find the right audience. Targeting control has shifted from human to machine, fundamentally changing how ads are built and optimized.

Analyst Eric Sufert predicts OpenAI's ad model will not be anchored to the content of a user's query, which could compromise trust in the answer's objectivity. Instead, it will function like Instagram's feed, where ads are targeted based on a user's broader conversion history, independent of the immediate conversational context.