Gravity secured $30.5 million to insert advertisements within AI chatbots. Its upcoming product will focus on the bots themselves.

      In summary, Gravity secured $30.5 million in a Series A funding round led by Lightspeed Venture Partners and Committed Capital. This brings its total funding to $38.5 million. The adtech startup specializes in placing advertisements within AI chatbots such as ChatGPT and other similar platforms. It operates a comprehensive ad platform that includes a demand-side platform for purchasing ads and a supply-side platform that helps developers monetize their AI applications through advertising. Notable clients include Best Buy, Target, Vercel, and MongoDB.

      Gravity integrates text-based ads within ChatGPT and various AI assistants, including Codebuff and EcoGPT. OpenAI modified ChatGPT’s advertising model to a cost-per-click basis in April and is developing its own advertising platform in partnership with companies like Adobe, StackAdapt, and Criteo. Gravity aims to establish its position by managing the entire stack and functioning across multiple AI platforms rather than being restricted to one.

      A notable aspect of their offering is agent-to-agent advertising, which is invisible to human users. Advertisers supply Gravity with their product catalogs that include features and promotions. When an AI shopping agent looks for a product category, it gets a list of relevant advertisers along with detailed descriptions, aiding in the purchasing decision, according to cofounder Zach Oldham. Gravity is also looking to incorporate direct payment features to enable agents to finalize purchases upon user approval.

      The potential market is vast, with WPP Media estimating that global spending on ads within generative AI searches could reach $100 billion by 2030. OpenAI anticipates its advertising revenue could also hit $100 billion by that year, though Oldham believes this estimate might be conservative. Since introducing ads in February, ChatGPT has achieved over $100 million in annualized ad revenue within just two months. The challenge for Gravity lies in whether a smaller independent platform can generate significant network effects in a landscape dominated by Google and an emerging ad platform from OpenAI. Oldham argues that owning both sides of the transaction, the buyer and seller, enhances the intelligence of the network with each ad placement.