Musk Embedding Ads Into X’s Chatbot

Elon Musk will reportedly let companies promote their brands within X’s artificial intelligence (AI) chatbot.

As the Financial Times (FT) reported Thursday (Aug. 7), Musk said during a live discussion with advertisers broadcast on the social media platform that the company would let marketers pay to show up in suggestions from Grok, X’s chatbot.

“Our focus thus far has just been on making Grok the smartest, most accurate AI in the world and I think we’ve largely succeeded in that. So we’ll turn our attention to how do we pay for those expensive GPUs,” said Musk, referring to graphics processing units, the expensive chips required to power AI applications.

“If a user’s trying to solve a problem [by asking Grok], then advertising the specific solution would be ideal at that point,” he added, but did not offer additional details on the company’s monetization strategy.

Grok, introduced in November 2023, is a creation of Musk’s AI startup xAI. That company acquired X, formerly known as Twitter, in March for $45 billion.

According to the FT report, Musk also discussed plans to further automate the advertising process for brands and improve the targeting of ads through xAI’s technology. Before the merger, X’s advertising technology team had been hampered by difficulties in displaying ads to their targeted audience, the report added, citing company insiders.

The FT notes that multiple ad executives have told the news outlet they want AI companies to sell advertising space in their chatbots. But companies like OpenAI have steered clear of such plans out of worries over a backlash from consumers.

At the same time, the report added, brands and ad agencies have been testing organic ways to promote their products in chatbot search results, such as posting content they suspect is more likely to be picked up by the AI.

Google, meanwhile, began testing the placement of ads in AI chatbot conversations as a way to protect its crucial advertising business.

Kaveh Vahdat, president of marketing company RiseOpp, told PYMNTS that Google’s decision was “less about short-term monetization and more about safeguarding its long-term control over the discovery layer of the internet.”

As people flock to AI chatbots, Vahdat said, Google is at of risk losing the behavioral data and ad real estate that uphold its business model.

“By preemptively commercializing chatbot interactions, it is trying to reassert that control,” he said. “But doing so at a time when its market dominance is already under antitrust scrutiny could accelerate regulatory pressure.”