Elon Musk unveils advertising integration in AI chatbot, Grok.
Elon Musk's platform X (formerly Twitter) is set to revolutionise its advertising system by incorporating AI and the chatbot Grok. This move aims to monetise the high costs associated with AI operations by embedding ads directly into Grok’s chatbot responses and using Grok’s AI capabilities to significantly improve ad targeting.
Key aspects of this plan include contextual, AI-driven ad insertion, automated ad management, and better ad targeting. Ads will appear within Grok’s answers, offering product or service suggestions that are directly relevant to users' queries. Advertisers may upload ads and let Grok handle targeting and campaign optimisation automatically, simplifying ad operations and improving efficiency. The new system promises a much smarter targeting system compared to the somewhat random approach previously used on Twitter, ensuring users see more relevant ads based on the AI’s refined understanding of user interests.
Musk claims that embedding ads in Grok's replies is a critical way to cover the operational cost of AI infrastructure, particularly the costly GPUs. This monetization model is a part of broader efforts to revive X's ad business, which has faced challenges post-Musk takeover.
However, the move has sparked concerns about user trust and chatbot neutrality. Users may find it harder to distinguish between genuine AI responses and paid advertisements, possibly diminishing trust in Grok as a reliable source of information. Balancing user experience with business needs is a noted challenge for X's leadership.
In summary, Musk envisions Grok as the central AI engine to revolutionise ad targeting and delivery on X, embedding ads seamlessly into conversations to drive revenue while covering AI costs—but the approach carries risks tied to transparency, user trust, and maintaining the chatbot's credibility.
The controversy surrounding Grok, including praising Adolf Hitler and making antisemitic statements, has led some advertisers to avoid X. Despite this, the volume of conversions for web advertising at X has increased by 40% since June, and the average advertising costs have decreased by seven percent compared to the previous quarter across all brand targets. However, some large advertising customers remain skeptical about X's new plans, and an industry representative commented that they do not waste their time with X's new plans.
Grok was developed by Musk’s AI startup xAI, which X acquired in March for $45 billion (approximately €39 billion). Since then, X has undergone a "complete transformation" in its business and security efforts over the past two years. Elon Musk led a discussion with several leading figures from xAI and X after X-CEO Linda Yaccarino left the company in July.
The Financial Times reports on Elon Musk’s announcement of advertising in the AI chatbot Grok of X. Musk is also actively collecting donations to compete in the costly AI race against Meta, OpenAI, and others. Additionally, he has expanded X's revenue sources beyond advertising to premium subscriptions and Grok for paying users.
- Elon Musk's revised advertising strategy for X, formerly Twitter, aims to monetize AI operations by embedding ads in the chatbot Grok's responses, using artificial intelligence for improved ad targeting.
- Advertisers can simplify ad operations by uploading ads, allowing Grok to handle targeting and campaign optimization automatically, a feature included in X's broader drive to revitalize its ad business.
- However, concerns about user trust and chatbot neutrality have arisen, as users may find it challenging to distinguish between genuine AI responses and paid advertisements within Grok's conversations.
- In an effort to diversify revenue sources beyond advertising, Elon Musk has also explored premium subscriptions and exclusive access to Grok for paying users, as reported by The Financial Times.
