How ChatGPT decides whose ad to show

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Last week, I showed you how to get set up on ChatGPT Ads.

Since then I've been running spend daily and poking the algorithm, trying to figure out why some ads get $3 clicks while others pay triple for the same conversation.

Found it. It comes down to one score OpenAI never shows you. (More on that in a minute.)

First, a word about AEO, because every business owner I know is suddenly obsessed with it.

Organic AI visibility is a long game worth playing. It's also slow, unpredictable, and you're optimizing for an algorithm that publishes zero rules.

Paid placement skips the line. Same conversations, same buyer intent - live this week instead of "maybe by Q4."

And the auction is still comically empty: 400M weekly users, ~10,000 advertisers. Early AdWords vibes all over again. And Google's version is coming, I'd bet money on it.

Why most business owners will get this wrong

The biggest mistake you can make right now is treating ChatGPT Ads like Google Ads with a fresh coat of paint.

I've watched people do all 5 of these since the launch:

• Pasting in their old keyword lists and wondering why nothing converts (there are no keywords here, friend)
• Writing creative that screams like a billboard inside what is basically a private conversation
• Ignoring an auction that's comically tilted toward early movers
• Skipping conversion tracking because it "looks complicated" (it is - set it up anyway)
• Waiting for the platform to "mature" before taking it seriously (translation: waiting for the cheap clicks to disappear)

That last one is sadly the funniest. Waiting feels safe, and it's also how you end up paying 50x for the same traffic. Ask anyone who sat out AdWords until 2008.

The founders who get this right in the next 9 months build a cost advantage their competitors will spend years (and a painful amount of budget) trying to close.

Here's what you actually need to do.

Step 1: Rebuild your targeting around intent

Like I said last time: there are no keywords here. You're targeting full conversational intent.

Traditional digital advertising was built on keywords. Short, blunt, ambiguous little fragments that could mean a hundred different things.

"Dog food" as a keyword could be someone doing research. A student writing an essay. A vet. A competitor spying on your ads. Who knows.

AI ads hand you the whole question.

The full context is right there in the prompt, and you can target on it.

Someone asking ChatGPT, "what's the best dog food for a senior labrador with a sensitive stomach" has one specific problem and is about 2 minutes from checkout.

That's bottom-of-funnel intent served to you on a silver platter.

On the other hand…

People who don’t use context hints to tell the difference, are going to lose. A lot of $$$

Most of your traffic on AI ad platforms will be long-tail and much closer to a purchase decision than anything you're capturing on traditional search.

"Project management software" is a category guess. Too vague. Matches everything. Burns budget.

Target "when users are comparing project management tools for remote engineering teams, and have already mentioned budget restrictions" or "when users ask how to reduce meeting overhead for distributed teams, and are at the stage of exploring specific solutions including [our unique feature]"

Describe the conversation. That's the whole game.

Step 2: Exploit the half-empty auction while it lasts

Right now, the OpenAI ads auction has roughly 400 million weekly active users on one side.

And approximately 10,000 advertisers on the other.

That's 40,000 users for every single advertiser. The math is almost rude.

On Google, you're competing against millions of advertisers (and their agencies, and their agencies' AI tools) who have been optimizing their accounts for years. CPCs for competitive B2B keywords run $15, $30, $50+ per click.

On ChatGPT Ads right now, I'm seeing clicks at $3 to $5 in my own tests.

This gap will not last. Y'all know how auctions work: more advertisers pile in, prices climb. The window of absurdly cheap, high-intent traffic is open today and closes a little more every week.

One metric determines how much you pay in this auction.

It's called the Contextual Relevance Score (CRS).

Think Google's Quality Score, except OpenAI keeps this one hidden. Their system quietly judges how relevant your ad is to the conversation it's served in. High CRS means lower CPCs and better placement. Low CRS means you pay more for worse results.

How do you maximize it?

• Write specific, conversational context hints
• Make sure your ad creative directly maps to the conversation you're targeting, and your landing page aligns too
• Keep your headline helpful and low-key
• Match the tone of the platform: write like a trusted recommendation

The brands with the highest CRS win the auction at the lowest cost. That's where the cheap clicks come from.

Step 3: Set up CAPI before you spend another dollar

Most advertisers install the pixel, call it a day, and then email me asking why their ROAS looks broken.

Here's the problem.

The pixel can lose up to 60% of your conversion data. Ad blockers and iOS privacy changes chip away at what it can see. You think you have 40 conversions. You actually have 100.

OpenAI's Conversion API (CAPI) fixes this.

CAPI is server-side tracking. Instead of relying on a browser script that can get blocked or dropped, CAPI sends conversion data directly from your server to OpenAI's. It captures up to 99% of conversion events.

That gap is the difference between an ad account that looks like it's breaking even and one that's clearly profitable.

Heads up: this is a real integration with real technical lift. Budget an afternoon (or your dev's afternoon). Worth every minute.

Without accurate conversion data, you can't optimize bids or tell which context hints are driving revenue. You're flying blind & burning budget.

Set up CAPI. Do it properly. Your ROAS reporting will thank you.

AEO is a long game worth playing but...

Paid AI ads are the shortcut that runs alongside it, driving real traffic and real conversions while your organic presence is still being built.

OpenAI is live. Google is coming. The auction is still half-empty.

The founders who move now are the ones who will look back on this period the way early AdWords advertisers look back on 2003.

If you're running ads successfully & have over a $1M+ rev runrate, and want the full playbook for winning customers with AI ads, reply to this & lets chat.