ChatGPT Ads Struggle in India With Low Conversions and High Costs

OpenAI’s advertising business is facing an early challenge in India, where marketers are questioning whether ChatGPT advertisements can deliver enough sales to justify their high costs. Nearly two months after the advertising service launched in the country, brands are reporting conversion rates below 1.5% in some campaigns, while certain advertisers have cited click costs ranging between $200 and $400.

The early results have made Indian advertisers cautious about increasing their spending on the platform. Companies including Tata Neu, Tanishq, Traya, ixigo and Wakefit have experimented with ChatGPT advertisements, but marketers say the platform still needs to demonstrate consistent returns. While conversational advertising offers access to consumers researching products and services, its economics are proving difficult for businesses operating with smaller transaction values and tight acquisition budgets.

ChatGPT Ads Face High Costs and Low Conversion Rates

ChatGPT advertisements became available in India on August 27, 2026, allowing brands to reach users through sponsored placements connected to the context of their conversations.

However, early campaign performance has raised questions about the platform’s commercial viability.

According to marketers cited by Moneycontrol, some campaigns have recorded conversion rates below 1.5%. Advertisers have also reported cost-per-click figures ranging between $200 and $400 in certain categories.

For comparison, the marketers said Google and Meta campaigns can generate clicks for approximately ₹3–₹5 in some cases, with conversion rates reaching around 3%.

These figures are advertiser-reported observations rather than standardised platform-wide benchmarks. Advertising costs vary depending on the industry, campaign objective, audience and bidding strategy.

Nevertheless, the difference has made it difficult for brands to justify shifting significant budgets away from established advertising platforms.

Some marketers also said organic discovery through AI platforms can deliver conversion rates as high as 8% for certain products. This creates another question for advertisers: whether paying for sponsored placements offers enough additional value compared with consumers discovering products through ordinary AI-generated recommendations.

Why Advertisers Are Hesitant to Spend More

One of the biggest challenges is the difficulty of measuring the actual business impact of ChatGPT advertisements.

Traditional advertising platforms such as Google and Meta provide established campaign management systems, targeting options and performance metrics. Advertisers can track clicks, conversions, customer acquisition costs and return on advertising spend using tools developed over many years.

ChatGPT advertising introduces a different model.

Advertisements are matched to the context of conversations rather than relying exclusively on conventional keyword searches or browsing behaviour. This creates an opportunity to reach users while they are actively researching products, comparing services or considering a purchase.

However, advertisers are still learning how conversational placements translate into actual sales.

Divyat Kanyal, founder of Tall Creative Studios, said brands are accustomed to established platforms where targeting methods and conversion metrics are well understood. With ChatGPT, marketers are still evaluating how advertisements placed inside conversations contribute to customer acquisition.

Venu Madhav, general manager at Boopin, also indicated that the platform has yet to achieve the level of traction advertisers expect from established digital advertising channels.

For marketers, the central issue is not simply whether people see an advertisement. It is whether those advertisements generate measurable business outcomes at a sustainable cost.

More Than 50 Brands Have Tested ChatGPT Ads

Despite the concerns surrounding performance, several Indian brands have experimented with ChatGPT’s advertising ecosystem.

More than 50 brands participated in the platform’s advertising launch, according to reporting on the rollout.

Some companies have used the format to promote specific products and consumer services.

Brand	Advertising approach
Tata Neu	Participation in ChatGPT’s advertising ecosystem
Tanishq	Testing conversational advertising
Traya	Promoting consumer products
ixigo	Promoting flight-booking offers
Wakefit	Targeting consumers setting up their first homes
AbhiBus	Highlighting safety information and booking assistance
Libas	Promoting a Ganpati-season sale
The Man Company	Advertising fragrance products

These campaigns demonstrate that advertisers are exploring different ways to use conversational AI for product discovery.

For example, Wakefit’s approach focused on consumers furnishing their first homes, while AbhiBus used the platform to communicate information related to travel safety and booking support.

However, the number of participating brands does not necessarily indicate strong commercial adoption.

Viren Inaniyan, co-founder and CEO of Trucommerce, argued that the more meaningful measure is whether advertisers return to the platform and increase their spending after their initial campaigns.

Repeat spending would provide a stronger indication that ChatGPT advertisements are delivering acceptable returns.

E-Commerce and Quick-Commerce Businesses Face Difficult Economics

The high cost of acquiring customers could be particularly challenging for e-commerce and quick-commerce companies.

These businesses often operate with relatively low transaction values and depend on repeat purchases to generate sustainable profits.

Ishank Joshi, CEO of MobavenueAI, explained that a first transaction in quick-commerce and e-commerce could generate revenue of approximately ₹500–₹1,800.

If acquiring that customer through advertising costs around ₹2,000, the economics become difficult to justify.

The problem is especially relevant for companies that compete through discounts, delivery incentives and frequent promotional campaigns.

A business may generate substantial order volumes but still struggle to recover its advertising expenditure if customer acquisition costs exceed the revenue and contribution margin generated by the initial purchase.

This makes ChatGPT advertising less attractive for businesses that depend on inexpensive customer acquisition.

However, the economics could improve if customers return regularly and generate additional revenue over time. Advertisers will need to establish whether conversational placements bring in customers with sufficiently high lifetime value to justify the initial spending.

High-Value Categories Could Benefit More

Not every industry faces the same challenges with ChatGPT advertising.

Categories involving expensive products and longer purchasing decisions may find the platform more useful.

Automobiles, real estate and travel are among the sectors that could benefit from conversational advertising because consumers typically spend more time researching options before making a purchase.

For example, someone purchasing a car may compare prices, financing options, specifications and features across several conversations.

Similarly, a person planning a holiday may research destinations, accommodation, transport and travel budgets before booking.

In these situations, ChatGPT could provide advertisers with an opportunity to reach consumers during an active decision-making process.

Retail categories involving considered purchases may also benefit from this approach.

Joshi said the platform could become an attractive channel for advertisers whose products match the interests and requirements of its users. However, he emphasised that it would not be suitable for every business.

The difference suggests that ChatGPT advertising may initially develop as a specialised channel for high-consideration purchases rather than a direct replacement for conventional performance advertising.

OpenAI’s Global Advertising Ambitions

The challenges in India come as OpenAI continues expanding its advertising business internationally.

On August 31, 2026, OpenAI announced that ChatGPT Ads had reached a $1 billion annualised revenue run rate in less than 200 days after launch.

The company also said tens of thousands of advertisers were using the platform globally.

An annualised revenue run rate is an estimate based on the current pace of business. It does not mean OpenAI had already collected $1 billion in advertising revenue.

The company has also expanded its advertising infrastructure by introducing self-service campaign management, cost-per-click bidding and additional measurement tools.

Its broader strategy is to build an advertising business alongside subscriptions, enterprise services and API revenue.

India is an important market in this expansion because of its large digital audience and growing adoption of AI tools.

However, the Indian advertising market is highly competitive, with established platforms offering advertisers extensive targeting capabilities and years of campaign performance data.

OpenAI will need to demonstrate that conversational advertising can deliver measurable advantages rather than relying only on the novelty of appearing inside an AI assistant.

The Bigger Picture

The early performance of ChatGPT advertisements highlights the difference between user engagement and advertising effectiveness. A platform may attract millions of users and offer valuable consumer insights, but advertisers ultimately need measurable sales, customer acquisition and returns on spending.

For OpenAI, the opportunity lies in the commercial value of conversational intent. Users often explain their budgets, preferences and requirements while interacting with AI assistants, potentially creating more relevant advertising opportunities than conventional digital placements. However, higher costs can undermine this advantage if conversion rates do not improve sufficiently.

The Indian market will be an important test of whether AI-powered advertising can become a sustainable alternative to established digital advertising channels. The outcome will depend on pricing, measurement accuracy, repeat advertiser spending and the ability to demonstrate incremental revenue.

Looking Ahead

OpenAI is likely to face increasing pressure to improve campaign measurement, optimise advertising costs and demonstrate stronger conversion performance. More detailed reporting tools and better optimisation systems could help advertisers understand which conversational placements generate actual purchases. High-value categories such as automobiles, travel and real estate may provide an early opportunity to establish the commercial value of the format.

For Indian advertisers, the immediate approach is likely to remain selective experimentation rather than a major shift in marketing budgets. Brands will compare customer acquisition costs and returns against Google and Meta before committing more money to ChatGPT. The platform’s long-term success will depend not simply on attracting advertisers, but on convincing them that customers acquired through conversational AI are worth the additional expense.