Brands Explore ChatGPT Advertising Ahead of the Festive Seas

Festive advertising in India has traditionally focused on capturing consumer attention through television commercials, celebrity endorsements, social media campaigns and promotional offers. However, with advertising on ChatGPT emerging as a new opportunity, brands are now exploring ways to influence consumer decisions closer to the point of purchase.

Conversational artificial intelligence could offer marketers a new way to connect with shoppers who actively seek product recommendations, compare prices and research options before making a purchase. As the festive season approaches, brands are experimenting with the format to understand whether it can deliver meaningful business results.

While the opportunity is attracting interest, advertisers remain cautious about shifting substantial budgets towards the platform. For now, the focus is on testing its effectiveness and understanding how conversational AI fits into existing media strategies.

According to Shagufta D’sa, head of partnerships at OptimizeGEO, traditional advertising focuses on capturing attention, while conversational AI offers the potential to reach consumers with stronger purchase intent.

For example, someone looking for Diwali gifts within a specific budget provides a clearer indication of their requirements than a general search query. This creates an opportunity for advertisers to reach consumers when they are actively evaluating products and making buying decisions.

D’sa says the initial response from brands and agencies has been driven largely by curiosity and experimentation. She notes that more than 50 brands and the first agency partners have joined the initiative in India, while some categories, including banking, financial services and insurance, are following a gradual, approval-based rollout.

Targeting Consumers With Purchase Intent

Categories such as electronics, home appliances, beauty, gifting and travel could benefit from conversational AI advertising because consumers frequently research products and compare alternatives before purchasing.

The format may also help emerging brands reach shoppers who have not previously considered them. If a product meets a consumer’s specific needs, it could become part of their shortlist during the decision-making process.

However, appearing during a purchase journey does not necessarily mean an advertisement has influenced the final decision. Marketers must determine whether the interaction genuinely encouraged a purchase or simply reached someone who was already planning to buy.

Anang Pandya, head of marketing solutions at TransUnion INDAS, believes generative AI is becoming an important part of consumer discovery by helping people find, evaluate and compare brands. He expects it to complement existing discovery channels rather than replace them in the immediate future.

Pandya suggests that conversational AI may currently be most useful towards the bottom of the marketing funnel, where consumers have already identified a need and are deciding which product or service to choose.

This creates a measurement challenge. Consumers may interact with AI after being influenced by television advertising, social media campaigns or creator recommendations. As a result, marketers risk attributing a sale to the final interaction instead of recognising the combined impact of multiple channels.

For advertisers, measuring incremental sales and understanding the actual contribution of conversational AI will be essential to evaluating its effectiveness.

Why Brands Are Taking a Cautious Approach

Bajaj Life is among the brands exploring the potential of conversational AI. Chandramohan Mehra, chief marketing officer at Bajaj Life, says the company views the medium as an opportunity to engage consumers researching financial planning and protection.

Rather than treating it solely as another advertising placement, the insurer is focusing on relevance, awareness and understanding how consumers interact with brands in conversational environments.

Mehra highlights India's position as one of ChatGPT's largest markets outside the United States, citing more than 100 million weekly active users. He also refers to Capgemini research indicating that 53% of consumers have made purchases based on generative AI recommendations.

For financial services brands, conversational AI could provide opportunities to connect with consumers while they are exploring questions about insurance, financial security and future planning.

However, Mehra says it is too early to compare ChatGPT advertising directly with traditional media in terms of cost-effectiveness. The opportunity, he believes, lies in reaching consumers at relevant moments rather than simply purchasing additional advertising reach.

Bajaj Life therefore sees conversational AI as a complementary channel within its existing media strategy, rather than a replacement for established platforms.

Television, social media and creator-led campaigns will continue to play important roles in building awareness and interest. Conversational AI could support the next stage by helping consumers compare options and narrow their choices.

Paid Advertising Versus Organic AI Visibility

As brands experiment with ChatGPT advertising, marketers are also paying attention to how their products appear in AI-generated responses.

D’sa distinguishes between paid advertising and organic visibility. According to her, brands cannot pay to be recommended within a ChatGPT answer, and advertisements appear separately below the response.

This means paid advertising and organic representation are different considerations for businesses. While advertising can create additional opportunities for visibility, it does not automatically guarantee favourable representation when consumers ask AI tools for recommendations.

Brands are increasingly interested in understanding how AI describes their products, which competitors are mentioned alongside them and what information sources influence the responses.

As AI becomes a more prominent part of product discovery, managing a brand's digital information and visibility may become increasingly important alongside paid media investments.

D’sa expects experimental budgets to dominate initially. If the format demonstrates measurable incremental results, it could eventually compete for spending currently allocated to search advertising, affiliate marketing and performance display campaigns.

Measuring the Impact of ChatGPT Advertising

For marketers, the immediate priority is to determine whether conversational AI can deliver measurable outcomes beyond generating curiosity.

D’sa argues that advertisers should look beyond cost per impression and assess how effectively their campaigns influence purchase decisions. Testing comparable offers, tracking sales over consistent attribution periods and measuring customer acquisition costs could help establish the channel's contribution.

Customer quality and incremental sales will also be important indicators of long-term value.

Mehra says Bajaj Life is prioritising experimentation and learning, with the findings expected to guide its future approach to the evolving advertising format.

The wider challenge is understanding where conversational AI fits within an already fragmented media environment. While traditional advertising remains valuable for awareness and brand building, AI-powered conversations could offer another opportunity to influence consumers during product evaluation.

Conversational AI may also reshape the search landscape. Traditional search engines provide links for consumers to explore, while AI tools increasingly deliver summarised answers that can influence product discovery. Nevertheless, conventional search is likely to remain relevant for consumers with specific brand, product and transactional requirements.

As the festive season approaches, ChatGPT advertising presents marketers with a promising but still developing opportunity. Its potential lies in reaching consumers closer to the moment of decision. Whether this translates into additional sales or simply receives credit for purchases that would have happened anyway will determine its long-term value for advertisers.