S07, E35: OpenAI's advertising ambitions (with Asad Awan)

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The problem is that the distinction needs to be drawn [music] between the competence of the economists and the correctness of their analysis. Hello and welcome to the mobile dev memo podcast. I am your host Eric Sufort and I'm joined today by Assad Avon. Assad, welcome to the podcast.

Really glad to be here. Thanks for having me.
Thank you for coming. I am unusually excited to have this conversation. I'm always excited to have these podcast conversations, but I am unusually excited to have this one because I have written extensively about OpenAI's ads business and it'll be great to to discuss that at length with you. Before we dive in, could you please introduce yourself to the audience?
Awesome. So, I'm lead monetization product and engineering at OpenAI. Before this, I was building a A6 Zback startup on creators and creator monetization. And before that I spent 10 years at Meta where I started as an engineer working on ads and then when I left I was leading ads SMB creators creator monetization and the marketplace products. So a lot of the public content and business products over there on the Facebook blue app. I I think maybe the through line for a lot of the work I've done is like how do we democratize access to economic opportunity? How do we democratize voice and make that available for everyone? So at OpenAI you

know we as you know in in Feb we started with a careful ads pilot and we've been expanding the product as we learn and I think in the intro it's useful to start with the five principles that we started our ads product. So the goal for ads is how do we democratize access to AI so ads serves that mission. I think like the next most important thing is user trust. So how can answers always be independent of ads. So the model that answers the user is not influenced by ads. ads are always separate and I think we'll talk a lot more about this today and then of course the privacy of conversations the private conversations remain private and users have control over the data that is used and of course we have paid plans if you want to opt out of ads and finally the goal is how do we optimize for user value across the product not empty calories not time spent and we explicitly codified that into our principles as well since then of course we've grown at a fast clip hitting a billion AR in less than 200

days since we started and now expanded globally to more than 40 countries.
Great. Thank you. That's so I think it's a good idea to set the table with the principles just to remind people of those as as the kind of operating mantra of the as business. Maybe just before we dive into the the business side, I just on a just kind of personal note when this idea was pitched to you to come in and do this, I mean this must have been like a daunting proposition, right? I mean like green fields opportunity, but there's a lot to build. just talk talk to me about how you viewed that job opportunity like what was going through your mind and when you spoke to this with kind of I guess mentors trust trusted confidants like how what was the kind of feedback because I imagine this this seemed exciting but also like a lot of work.
Yeah. So I spoke a lot to Fiji and Vijay and I think like every every decade or so I feel like you have a consumer product that changes everything and Chad GPD is certainly that product for this decade. I think both in terms of the user experience but in terms of the

intelligence that we want to bring to everyone like our mission is truly like AGI that benefits all of humanity not few people not people who pay it's not like some small segment but everyone so I think like maybe it's a combo of kind of a new paradigm in consumer products like in your lifetime you don't get a chance to work on two of these of I was a part of that at Facebook as well and then with Chad GPD I think both jumping on to a great consumer product which is growing and And it is a product where I think people are making decisions. They're coming to with their goals and certainly very very suitable for for an ads business to truly add delight and value. Not just like you know a good business model which grows with the consumers but actually add delight and value to both users build the economy strengthen like you know small businesses. I think like all of that kind of came together and fits with my like that overall mission like how do we democratize access to economic opportunity for everyone. Okay, I want to kickstart the conversation. I usually like to instantiate the conversation

with just a really big broad question. How do you conceptualize the opportunity for ads with chat GPT?
Yeah. So, I think like it it goes back to the mission is to ensure AGI benefits all of humanity. A big part of this is how do we bring broad access to the most powerful AI to consumers and then on top of that of course people trust CHP to help them think clearly make decisions achieve their goals and people are coming here to to work through a decision often even before they know the product that they need. So I think like ads kind of fit with each one each part of this like how do we take this to all consumers and then if people are using this in a very specific native way how do we build on top of that I think so the opportunity for us is to build a business where we enable SMBs businesses of all sizes to reach people while protecting user trust and I think if it if done well it can truly enrich users by connecting them with services and products that they would love and then for businesses to reach like specific niche users I think like that's what a

lot of the the economy is built on and then of course like introducing an ad at the right moment for the user and help them make a next step. I think this is a much broader opportunity than matching let's say a keyword to a link. The native chat GPD experience is quite deep and ads very naturally fit into this and I think finally this is like a global opportunity. Both our product consumer product is growing globally. A lot of businesses are growing globally. So I think it fits with that mission as well.
Yeah. Well that's a good segue. So you know a point I made I I wrote a piece a couple weeks ago called the privilege position of chatbot ads. And you know, I kind of conceptualize chatbot ads as being this kind of like separate category of of advertising certainly placement, but I think even like fundamental call it a value opportunity. But but the point I made in that piece, but I made it elsewhere, is that a search query is is kind of this compressed expression of intent. You're not given a lot of space, right? You're not given a lot of surface area to express what that intent is. Whereas a conversation can reveal preferences, constraints, my budget, you know, just

personal trade-offs I have with different product characteristics over a number of turns. So the chatbot can ask me follow-ups, I can, you know, provide more information. How does that richer context change what an advertising system can do beyond just improving the relevance of the ad it selects? Yeah, I think like first of all you're like spot on like the users when they come to Chad they're not just like trying to do a transactional search but it is like they bring their goals they bring their constraints they bring their preferences and make decisions as they converse and they iterate through that. I think like the one one further insight before I answer the question is that users are engaged in multiple user journeys at a at a given time across conversations and then the memories product that we have helps bridge those preferences and journeys across threads. So as a result you could continue a previous conversation in a completely new thread or on a completely unseemingly unrelated topic the preferences that are learned through your memories can make that experience richer and I think like so in some sense the user has multiple

journeys going on on the app and it's not just even a single conversation of course within a conversation you see people iterate through the product and I think the memories is a pretty big part of that and that does enable us to serve really really good ads and of course I think as you said first First of all, this enables us to show ads that would truly delight a user both I think intentful and prospecting. I think like that comes together that we can help you discover a new product that you never thought about or even deliver a product that you truly want and then of course at the right right stage of the journey. But to go beyond ad selection which which is your question I think this goes to what what a truly native ad experience for chat GPT could look like and I I'll give three specific ideas just to make it concrete but I think each one of them is a class of things that we can continue to improve on. So first is is dynamic creative. So I think like selecting the ad is is a part of the job but the key part is helping the user understand why we selected it why it's connected to what they need. So, if I'm a nurse who's on their feet for long hours and I'm showing you a new sneaker,

I want to communicate that you know that this this is the that the shoe is very comfortable. It has extra cushioning and you could have created infinite number of creatives or you could do that dynamically through an explainer text or how you actually help the creative show up to the user so that they connected to their problem. So this is even before of course the ad has been selected now we're communicating to the user why this matters to them in a way that actually fits. I think the second one is variant selection. You could say again it's a it's a specific thing. But let's say if I'm looking at a shoe, what's the size of the shoe? What's the color of the shoe? There are so many things which you know in in product feeds, we actually get that information and you can do much better in terms of that variant selection, not just the product selection. And I do think that's a very very hard thing to do in many other platforms unless you have a very rich understanding of the user. But the final one which is probably the most interesting one is like you know more powerful postclick experiences and I think like the one which we are very excited about is the sponsored agent. So a person can choose to enter a clearly

labeled conversation with the business after an ad click and their original chat GPT conversation remains separate. And since sponsored agent is a native experience we get the ability to guide further product or service lead qualification or any other thing that can really truly help the user. but being very clear that you're engaging with the business. So I think like maybe that of course can be built on top of the rich information that we have but still in a very very commercial context so that the user is very clear who are the parties which are interacting but I think like each of these I do think are three different classes of things which is like how do you express the ad better to the user after selecting it once you have selected that ad is there something that you could do that the next step in their journey which is a like click to the website let's say is better because you know through whatever is the API between us and the advertiser which is privacy safe in this case product feed and variance can help communicate a lot of those preferences in a very very privacy safe way in some sense and then

of course native experiences on postclick
yeah I think that's a good setup for the next question which is the sponsored agent part of the the answer is a good setup for the next question which is that you know there's this recurring argument that I've encountered and you know I've called it a persistent superstition which is that chatbot advertising is non-starter it's nonviable because it by definition would undermine trust in the core product because the user wouldn't be able to believe that its best interests are being served by the chatbot versus in advertisers. How do you navigate that? And my sense is sponsored agents is one way, right? Because well, we've made the handoff now. You're not interacting with us the chatbot. You're interacting with the the company that that showed the ad that you just clicked on. I think that's one way, but just just walk me through that because I first of all, I reject that premise, but but just walk me through how you think about that. Yeah, absolutely. I think like it's it's certainly like user trust is something that I think our core native product depends on like you know I I'll take a photo of my kids bruise and ask chat GPD

a question about it and I need to trust the platform even more than like you know it doing the right thing. I think I need to trust that it will keep that information safe because I'm using it for many many use cases. So I think like from the get- go from our principles user trust was a core thing and then automatically as we did our internal round table we discussed with external partners we came up with the principles the five principles that I mentioned at the beginning and stated up front which is like answer independence both in terms of the ads don't influence the organic model and then when the ads come out they are separated in the user experience that showed up in those principles and I think like what the implication of course we publish those principles that keeps us accountable I think nobody almost has ever published ad principles in the way that we did and I do think it drives more accountability but I think like what it does internally is even more important is like our internal rubric for any ad decision is user trust is more important than user value. User value is more important than advertiser value. Advertiser value is

more important than revenue. Like revenue is a side effect of us doing all the other things correctly. But the long-term value really depends on ensure user trust and then deliver user value and advertiser value which shows up like you know when we design an ad score metric user value advertiser value is a core part of that. So this means like every day as a UI designer is making a decision or an ML engineer making a decision they're thinking about this rubric in in the decision. Some of it is very deeply measurable and some of it is I think principles. I think like one implication of this rubric and and the principle was also that user trust is not something just a guardrail which is how I think it's it could be treated in in many cases but we want to optimize for it and improve and sponsored agent I think product design is a great example I think like you very very correctly identified that that the clear context of where the user is and why is this bot helping me purchase a product is very clear because you are interacting with that business so I think it gives that space to bring that intelligence that we

have plus the information about the products and user preferences in a place where it's very much in the control of the user but also very clear that you are interacting with that business but I think like it it connects back to the design principle and then I think like hopefully we'll iterate through products which further kind of built around like how do we increase user trust not just use it as a guardria
yeah I think so I and you know the my response to that what I've called that persistent superstition is has just been that you know it's a design question. I mean, if you sort of clearly demarcate an ad,
y
I think you avoid that that mistrust. And you know there's another piece to this which I haven't spent as much time articulating but so I kind I think there's a really interesting natural experiment here if you look at OpenAI's advertising initiative versus Meta's because there's this question now in in the EU especially but it's like people

saying like well you know when Meta offered subscriptions we can't really understand in the EU because they were forced to we can't really understand what the natural demand for that would be because you're taking away something free. But had they offered subscriptions or ads as a choice at the outset, people, this is an argument that I hear made, more people would have chosen subscriptions cuz because there's just this this natural hostility towards ads among consumers and then well, but we can just never know because Facebook was free and then they had to offer subscriptions and you can't just take away something free or impose a cost on something that was previously free and understand what the natural demand for that would be. And now I say, well, but with OpenAI, you can because we can make that comparison because exactly
it was subscription based. And there was a the free tier of course at first alongside the subscription, but it didn't have ads. And
what you allowed people to do with the introduction of ads was to access more compute.
Exactly.
So right out of the gate, you got

something in exchange for that. And consumers, I think, understood that. Well, hey, wait a second. in staying with the free tier that has ads, which I I can also turn them off. I have the opportunity to do that. I'm getting more. I'm getting more. I'm getting something in return. That's just a very concrete value exchange. And it's it's been a really interesting thing to witness because I do think it does invalidate that that argument about well, you know, we don't people just dislike ads. People dislike ads and they would have chosen subscriptions out of the gate, but it wasn't an option out of the gate and now they're not going to pay for something that they previously got for free because you can just point to OpenAI.
Absolutely. I think that's a very good observation and and certainly we believe that by adding ads you are creating a really clear value exchange like you know better rate limits and being able to use the product fully without any constraints. That's our goal which is like again and it goes back to the mission as well is like AI for everyone without constraints which basically means higher rate limits and you're not going to get blocked because you created three images today. So I think that's

very interesting and of course I think like you know there is always an opportunity to delight the user with very relevant stuff help them discover something. I think like that's why people like some of these the ads which help them find something that they have never thought about and that's the bar that you have to kind of hit. I think the question you might have to answer is like you know how can people who pay get access to ads because that sometimes comes up but yeah
well maybe it's probably it's probably a good problem to have but I think it's also a benefit of the conversational interface right because some commercial intent is latent people might not know that they would like to have some product right they might not know that some product could add value to them and a conversation could surface that where someone is just ignorant of a product category right like if I don't know that this product exists right we get into Rumsfeldian in unknown unknown territory here but like you could surface that because you know the the chatbot knows.
Yeah, absolutely. So like this goes back to like you know what what the native user organic user experience looks like and that is very very different with conversations that we were discussing which is like people are continuing on

these user journeys and they're having this kind of relationship with the product where they're trying to make these decisions and goals and as I said also I think like memory is a key part of that which is like it connects the various parts of the user experience. So already users know that when I say that like hey I'm going to get hiking shoes the fact that I was discussing that I have to go to Alaska it knows that I need something warm as well right it's not the first time that the system is learning about it and I think it's less transactional than than just a keyword but I think even so first of all is understanding that these users are in these user journeys these user journeys are already impacting organic conversations because we are making connections that that the user might not have thought about Even like the fact that I have a 5-year-old and then I'm going to book an event. I need to know that the kid can go with me. I think the system actually does that in the organic product already. And memories makes that happen. And then I think like same thing allows us to do the do exactly the same stuff for ads. And I think I would actually break this down to to get more

concrete break this down into three different parts. So one is within contextual ads we can do much better with personalization right. So which is if the system knows that I'm into hiking then a conversation about planning a trip to yuseity is not restricted to showing me a hotel over there or a flight to yumi which is what would usually happen because it's like but you could actually show hiking gear and it would feel quite relevant and then that explainer text that I was saying which is like hey you show that above the ad which is like hey you're going to yumi and you might be hiking and then an ad for hiking shoe I think it makes contextually relevant you could say this is still contextual relevance but personalized based on a little bit longer history you could say it's one step removed in in the contextual it's not like say yuseimity is equal to location is equal to hotel right which is how a keyword system would work I think the second one is that there are clearly parts of our user experience which are very aminable to a different ad format which could be truly purely personalized and I think a good example is imagine it's like okay I'm waiting for the image to get generated that's a

really good place for us to experiment and say if I showed you the best continuation of a user journey with an ad
that you were talking about like again let's say the hiking shoe this could be a great place for me to show some more variance of that because in some sense I'm not in the contextual mode anyway I'm using the product like a tool not to answer a specific thing and I think like of course imagen is one place where you can make it more visual and and very interesting as well but I do think this this applies to other places which are tool style usage of the product which is like write an email for me the contextual ad might be a email writing tool but not really that's not very interesting for the user Hey, let's continue this journey.
And then I think we do want to compete in some sense that was on top of my mind just because I'm doing something else right now. And even if this contextual conversation could have a really good ad, I think we need to make them compete and but it does go back to we have to do a lot of

format work where the personalization connection can be communicated very clearly. So I think maybe that's the that's the work that has to be done but we truly believe that there is a opportunity to show the best ad to the user and not be constrained by this and the organic product allows that. I think one thing which I do want to add that like not every conversation is inventory like you don't want to turn a personal topic into a commercial opportunity like you know my kids bruise photo the ad has to fit in the right moment in the right journey which is like if I booked a hotel don't show me hotels again we can do that much better now than ever before because we understand the user journey. So I think if you're learning through that and the bar is like through through this feedback and careful experimentation we can get to this
right and and you know going just going back to the design principles also the data that you draw from some of it's just off limits and the the context has to be appropriate and
exactly
you know those channels your colleagues keep bragging about the ones getting all the credit. Yeah, they might be doing squat. Attribution makes every channel

look like a hero, [music] even when it's a zero. Incremental tells you who's actually doing the work. It's like a lie detector for your marketing budget. Start using incremental today. Get your demo at incremental.com. That's [music] n cmt.com. Mention that you came through the mobile dev memo podcast [music] for a special 15% discount for the first 6 months. I wrote this piece, the privileged position of chap on advertising and I mean it was a good, you know, it was a popular piece. I got a piece of push back though. I got a piece of push back that I thought was actually it was valid. It was thoughtful. So, let me just summarize the argument and I'll talk about the push back. So, so I argued that a chatbot can monetize conversations that contain no commercial intent just by showing ads that are relevant to the person rather than the topic. That's what you just were sort of articulating. And the push back I got and I said search can't do that. Search just can't do that. It's keyword based, right? And the push back that I got was that well it could do that. Search could do that. Google could show an ad for

a car or something next to a search for dog food. They could do that. They just don't because presumably it doesn't work. They tried it and it doesn't work. Let's just presume that they tried it and it doesn't work. My response to that was, well, okay, but it's it's a different environment, right? And also the search use case predates display advertising. There was no paradigm of an ad that is utterly unrelated to what I see on the page or in the product. When Google introduced search, it just that just wasn't a thing. Let's certainly Meta wasn't the the company that introduced it. But let's say that Meta popularized it. The feed ad, the display feed ad that has nothing to do with what you're seeing or doesn't necessarily have anything to do with what you're seeing on the page in the feed in that moment. totally utterly detached from the context. Let's say Meta popularized that if they didn't introduce it. And so Google is just anchored to that paradigm for historical reasons. But is there is

there another argument to me? You know, yeah, I've got the benefit of of having you on the podcast now to talk about this with. Do do conversational interfaces just also create more latitude for that kind of discovery advertising?
Yeah, I I think it certainly does. And as as I said like you know because the user is engaging in these journeys and and the organic product itself is bridging the gaps between journeys and connecting the personalization piece. I think it's it's very natural like I think like a search experience is certainly I think like there is two parts of it like how the traditional buying was done for a very long time which was keyword targeting because the relevance was determined by keyword targeting but also just the user experience. It's a navigational user experience which is which is like I ask for something and then I get the next link to click versus here the people are iterating through decisions and I think while conversation happens to be the to the container of that stuff I think they're iterating through that journey with the app and clearly memories show

that that works really really well when we are able to connect pieces even when you actually like you know remind people of a conversation that was happening. So I think like the organic product certainly gives us that latitude I think because users are not here to navigate they are here to kind of iterate in some sense.
Got it. JBD ads have evolved at like this blistering pace. I mean it's it's really been fascinating to watch you you all just speedrun the you know feature launch list but you you launched Cappy, you launched Pixel. So talk talk to me about the marginal value of advertiser supply data. So what's what's the value of that data that the advertiser gives to you in this environment where you know users are kind of telling you directly what they want?
Yeah, I think it's still quite important and I think there's two types of data and and both of them are important in slightly different ways. So one is the information about the products being advertised which is like you know really good feeds the even but I think if you want to elevate that like what is the product philosophy like there is a ramen noodle that I discovered which was a

vegan ramen noodle like what is the product philosophy why did they create it what's the brand voice and why should the user care about it I think like that information is either often on the landing page but it could be hidden as well I think us understanding why that product exists why that product could be valuable to match to the intent of the user is interesting. So I think like in matching the intent of the product creator to the intent of the user that's the thing that we are doing some of it is in the landing page but I think there is other stuff which for example we allow context hints which lets you tell us like hey this is our brand voice this is the kind of people who are interested in this is less about targeting but much more about telling us why should somebody care about this which then helps us make that decision and I think like you know internally entrepreneurs really think deeply about their products and they can add that some of it is in landing pages is of course if it's in the landing page we can understand from that. I think the second is conversion data which is of course I think like really really valuable to calibrate and ground the first party signals right

like of course like I'm saying I want this does that actually convert into an action is there [snorts] a stated and revealed preference mismatch is there a inflection at which I start taking those actions so I think the conversion data still helps us ground what we see on our platform because the user is talking about XYZ do they actually finish that action at what point does that inflection happen or like you know what is the review preference like hey I want really amazing you know high quality products but I need a lower price point how do we understand those things I think like that could that show up in the conversion data I mean over over time how does this evolve I still believe that like the intent of the product and intent of the user need to be matched a lot of that can be in the landing page but it could also come from creator content and other types of content sources the conversion data is I is always still valuable to ground everything because in the end that is the culmination of the user behavior and it's a way to calibrate what the first party signals mean.

Yeah, it's the label. It's just
but but it would have been less data hungry for sure. I I think that I I do believe.
Right. But ultimately it's it's the it's the source of truth. It's the label and
it's the source of truth. Exactly.
So kind of like as a correlary to that question. So, I mean, you know, you worked at Meta for a long time and you know, you're building ads for a chatbot, which is a different fundamentally different product experience in a social media feed, but you're also building a whole ad system from the ground up. And so, you get the the opportunity to build it with the benefit of hindsight and knowing, you know, what mistakes were made in building, you know, meta's infrastructure. How do these different features earn their place? So like you know I imagine coming in it's like how do we envision a modern adte stack is it put aside the fact that we're building for a chatbot. Let's say that we were just building for a new social media platform but we were building this thing from the ground up. Like what earns its place and what doesn't? What's antiquated? How do you make those

decisions as you're as you're building the infrastructure behind this?
Yeah I I think this is a really great question. So I mean of course like we were in this privileged position where CAD GPD has more than like 1 billion weekly active users. Of course it's grown through the year to this point and as a result I think like we could scale our business in in such a small time. So I do think it starts from like a really strong consumer product that was growing and then ads naturally fits into into that experience. But of course, I think like just being large with a lot of consumers doesn't it earns you a conversation, but it doesn't earn you the budgets and the technical integrations and and the fact that like advertisers still have to evaluate whether we're delivering performance and that's what we work a lot on. I think going back to your question about like how does it change how we build the system. I think like some parts of it is that how can we simplify and automate more of this. I think over time we've learned that every time a constraint was added later which made sense at some at

some point in early stages you know at some point in feed you could only see businesses ads from businesses which were one hop connected to you like like friends who are fans of a page you could see the ad only from that till it got to unconnected right so I think like similarly I I do think like you know how do we start from max automation from day zero how do we ground it in conversions and signals that truly matter to the business. How do we simplify creative optimization because that matters so much because eventually everybody starts with like hey like a very specific creative should be created and it gets to hey actually just needs to be optimized for that user because every user is so different. So I think we we want to kind of start with knowing that what AI can do to select a really good ad what AI can do to make it presentable to the user. How do we maximize the ranking versus let's say narrow targeting? How do we simplify bidding so

that it's not like 50 types of bidding systems? Of course, we have a max bait but we have an auto bidder now as well which is doing really really well like really finds you cheap opportunity. So I think like kind of maxing out towards automation because over time every system kind of learns that automation is the best way to deliver actual advertiser value. But I do think we continue to have to prove that value meeting the advertisers where they are in some cases. Like I think for example, we recently did an integration with Shopify and HubSpot. That's a really good way to like can we just integrate into the products that they use and they press a single button which is like hey I want to spend $100 today and get like these conversions go right. How do we make that really easy? How do you write a prompt and just create an ad? We we just launched that as a plug-in to chat work as well. I I I think like and then I think sponsored agent which is a very native thing. So maybe those are examples of things which we kind of skipping few steps because we know how the journey ends and not making the same mistakes as before. But still very

importantly I do think that's a reiterating thing which is like has to be grounded in advertiser value with these things. It's not because we want to do X. It's because we we know we can deliver better value through it. Well, you also launched the prompt-based optimization and analytics tool, right? I mean, that's that's like kind of a thing that you would launch for a modern ad platform. It has nothing to do with you being a chatbot product. It's everything to do with this is how an advertiser should interact with their data.
That is correct.
It's not a million clicks, [laughter] which is annoying as someone who managed teams and did that.
Yeah, absolutely. If you just simply want to say like what's my best campaign and what should I do differently, it should give a pretty thoughtful answer,
right? So with search, you know, advertisers historically express what they want to buy through keywords and then, you know, there's, you know, kind of expanded match, but still it's all anchored to the keyword. That's the that's the input from the advertiser. In social, it's more anchored to creative and then conversion objectives and automated targeting. So first of all, like what's that atomic unit for chatbot

ads and then what do you kind of need to get from the advertiser to sort of maximize the opportunity for them?
Yeah. Yeah. I think like the the the most helpful advertiser input is the value that that business can provide to the user which is like the products. Of course the landing pages the actual philosophy behind what their product is and what are the results that the business values like am I looking to sell more things with this much budget and mostly like budgets and bid is a good way to express that or or like you know I want to sell these specific types of products more which is you could say narrowing within their range of things. So I think like what is what are the what is the business offering? Make it clear through all the different means landing pages, product feeds, contacts. What are the things that the business values which is hey I I have a budget of X or I have max bid or like I want to achieve this kind of ROI rorowass. So that's kind of the basis of it. But familiar inputs are still important. So I think like we need to kind of cater to some of that. But our goal is like you know with prompt driven ad creation you

could just translate a website or a brief about a campaign some optional text and landing page some structured data and create ads. So I think like at some point in the future same as like you know what kind of codeex did for coding which is like you explain declare what you want you explain what you want and how it's done becomes irrelevant. Is campaign an important thing? Yes, it's there for some control, but just express that and under the hood, it could get automatically created because I do think having that that ability to not have to manage these very low-level units is is maybe the final future for us. Were there any ideas that you had that you felt like were clear improvements to the ad buying, media buying process, but that were just too off-the-wall or like it would be too fundamentally new or unrecognizable to advertisers to implement or was it was it pretty clear what you needed to build or were there things you wanted to build that you felt like this is just too far away from how

people buy media. We can't introduce this. Yeah, I think like that's what I was saying which is like know some familiar inputs still matter. I think if you look at our ads manager, it does look very similar to a traditional ads manager has the campaign structure and everything else. One of our teammates started a side project which has just created a plug-in for charg work and when I first used it I used one of my favorite brands solo stove and I was like hey create an ad for solo stove this is my website and that's it and it actually came up with really good ideas. I think that in the future I think that would probably be the key way but you have to start with some of the familiar inputs and that's not what we started the the the chat experience is not what we started with but it's growing really really fast it's like people just go connect their account and actually it just creates your account if you say I want to create ads and you can just start creating ads through chat video work but we started with a ads manager which is slightly more familiar I do think that of course there are different entities in the system like you you have larger advertisers you have bigger teams

you have agencies So I think they have different use cases but if I think about the SMB the final frontier would be that you could just write the prompt and it then daily gives you a summary of what's happening and based on that you just like as if you were talking to your CMO or your whole marketing team in English and it would do that. I think that's what the charg work plug-in does. Our ads manager is still slightly more traditional. We do want to convert these things. what can you share about the road map because I you know I follow this in the weeds right and you know I post I try to stay on top of everything you know your team releases so maybe we could just kind of give us a lay of the land what's the current state of the chat GPG ads platform for the people that are not you know kind of following it as closely as I do and then what what can you share about the road map what's coming up
so I think like we are now available more than 40 countries tens of thousands of advertisers really really strong self-s serve advertiser base business can buy through partners. So we have API partners and or they can buy through ads manager. We have a few bidding

approaches of course CPM CPC but the most important being outcome optimized bidding and then measure downstream actions through pixel copy. So kind of like very standard from that perspective. I think like maybe the new things which is like the AI tools for campaign creation, the sponsored agents. I think like those are the new areas that we're testing and then of course the integrations with Shopify, HubSpot which then takes us to where the businesses already operate and we launched that recently as well. I think in terms of the road map maybe there's still like three big aspects. One is expanding access so we growing globally. I think like we'll we'll be launching to even more countries as we go. I think measurement is still very important because you know going back to your small platform syndrome uh I think like what it's a low measurement syndrome is is a thing as well because like the tools that how people measure and understand value is not built for a new system. So we need to adapt to their existing tools. I think there will be a lot of work to make that happen and of

course that measurement then helps us optimize. So I think that's a conversion optimization loop that we need to continue to improve and a bunch of work in that. And then the last is I think format optimization. I I still feel like you know the iteration towards what a native experience look like is going to be interesting. I think how will sponsored agent work for lead genen ads. How will sponsor agent work for e-commerce different verticals? I think that's very interesting. How the experience shows up whether it's contextual personalized across the chat and how do we convey that to the user. I think that remains like a big big part of our work.
Well the measurement piece certainly resonates. I mean I think one of the issue so I guess one of the issues is that like you know SMB measurement is very different from and I'm talking from the the perspective of an advertiser here like SMB measurement is is very different from like big co measurement right and the big co- measurement like yeah of course I can onboard a new channel it's trivally easy I have measurement that you know is is spans everything and gives me insight into new channel performance and SMBs just don't they're reliant on the platform level

measurement and that that really is the hurdle to clear. I do think that's changing. I mean, you have look, you have companies like Incremental, like House, they do great work with incrementality measurement. They support SMBs, you know, full disclosure, I'm an investor in incremental, but and they're a sponsor of the podcast. But, you know, it's still it's still difficult. And so, I mean, I think that's the biggest challenge and that's that is the crux of the small platform syndrome problem.
Yeah, exactly.
I want to close on going back to the principles. So, so I wrote the series Google's gambit. I talked about search as this distribution mechanism. You go to search, the whole goal is to go somewhere else. You don't want to stick around search. And actually, search does a bad job. If you have to scroll or if you have to click to the next page of search results, that means the search failed, right? So, you go to search, you want to click somewhere else as fast as possible. That's their motivation. Chat bots are a destination. They retain the attention within the conversation across conversations. To your point about memory, successfully helping someone might also mean ending the conversation quickly, right? So, how do you define going back to that waterfall? You talked about the value waterfall like the and I

don't remember the the placements but maybe you could remind us but how do you define success for the ads product when more engagement more impressions more advertising opportunities and better user outcomes might not all coincide that you might not get all of those things. What are you optimizing for at the end of the day? Yeah, I I think like the rubric which I mentioned was like user trust more important than user value, more important than advertiser value, more important than revenue. And I think like even differentiating between user trust and user value is a important thing because like you know trust is a very different thing which like I might love an ad but I could still think that I don't trust the platform right so we have to solve for that and and then within the principle the fifth principle that we had and we specifically put that was like we're not going to ever optimize chat GPD for empty calories which is like time spent and you know just random clicks and of course this goes back to the independence part also because if the organic model is completely independent and completely separated out. So I think if somebody decides quickly that is success. I do

think that if we do that job really really well people will come for more decisions to make trust us with more things be a part of more of those user journeys. So I think it's it's about deepening that relationship versus like you know extracting from a single relation like a single kind of a user journey that's happening. I think building a really good habit for users where truly they find value in it is very important. So I think if someone decides quickly that is still success and then I think like as long as within the ad system of course like we optimize for ad score which is a user value plus advertiser value kind of a metric. So I think like that gives us a very clear direction of ads need to become more relevant and even every impression needs to count. So I think the nature of the product is that a strong understanding of the user and strong relevance can be capitalized for delivering highly relevant ads with much fewer impressions. It's not like you're scrolling through a lot of stuff and then everything has to catch attention and the more you scroll through the better. I think if you have really

identified a really good deep user need and you serve that through the organic product and combined [clears throat] with the ads product I think you can deliver much more value to the user by with much fewer impressions. So I think like again focusing on the long-term value for users so that they keep deepening their experience coming back to the product to solve their problems. I think as long as that continues, the business will thrive.
Assad, this was fantastic. I appreciate you coming on the podcast. I appreciate the pace at which you are deploying. How can people stay on top of what's happening with catchupt ads?
Yeah. So, I think like we like I think we have a very good clip of like updates which are coming every week or two. We post about it on Twitter as well often. I do that and then on CHBT edge block.
Great Assad. Thank you so much for your time today.
Awesome. Thank you.