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Invisible Ads in Generative Search by @ttunguz

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What does advertising look like in the world of AI? In a future where generative AI dominates search, the ten blue links & five sponsored ads disappear. What if they were invisible ads?

When a user executes a search query within a generative AI search engine, the query, for example, “best carbonated beverage for health-conscious individuals,” is combined with relevant documents typically web pages. These are both passed to the AI model into the context window. The large language model produces a result using the information in the context window.

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But what if an advertiser wants to influence those results? What if the training data contains caloric misinformation about a new Pepsi fizzy mushroom cola? Pepsi would want to pay to correct those inaccuracies.

Coca-Cola, looking to compete with their new wave Cremini Cola & Embrace the Earth mantra, would also like to contribute their view.

The future could be an ad auction for limited space in the context window.

Today, advertisers create ads for search & pay to associate them with keywords. In the future, Pepsi may pay per word to inject content into the context window. The more content in the window, the greater the fee to Pepsi. If Coca Cola would like intercede, they would pay for that right too.

The best ads are content, or at least content that is indecipherable from organic content because they’re perfectly targeted. Large language models have the ability to massage advertising content into text seamlessly.

More than users benefitting, new entrants must establish viable revenue. If the antitrust case against Google Search holds, successful monetization will be essential to shift share :

“At one point, [Microsoft] proposed giving 100% of its search ad revenue on iPhones and iPads to Apple, or even selling it Bing. But Apple executives concluded the 36% share of revenue they received from Google was more beneficial, partly because that company’s search advertising business was more robust.”

There are risks of deceptive advertising and users not knowing what is sponsored.

But with hallucinations not uncommon with AI use & the healthy skepticism that accompanies this experience, plus the relatively high churn rates on the consumer subscription AI products, I’d bet an AI ad model is very much the
future.

Even if they aren’t invisible.

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