X owner Elon Musk plans to add ads to responses from its Grok AI chatbot, he told advertisers in a live discussion reported by TechCrunch.

Grok is X’s in-house chatbot, and the move comes as the company seeks new revenue streams following the departure of its head of ad.

Musk told advertisers that marketers will be able to pay to have their products or solutions suggested directly in Grok’s answers when users seek help.

He added that xAI, his AI startup, will provide technology to help improve X’s ad targeting.

X, formerly known as Twitter, was acquired by Musk in 2022 for US$45 billion.

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🔗 Source: TechCrunch

🧠 Food for thought

1️⃣ AI search advertising represents a rapidly expanding market opportunity

X’s move to monetize Grok responses taps into a booming sector that’s projected to grow dramatically over the next few years.

U.S. advertisers are expected to invest over $25 billion in AI-powered search advertising by 2029, a significant increase from $1.04 billion in 2024 1.

This growth projection indicates that embedding ads in AI responses represents a new advertising format that brands are eager to adopt.

The timing aligns with broader industry shifts, as AI search ads are defined as sponsored answers and brand mentions embedded directly in AI-generated responses rather than traditional display formats 1.

For X, this means Grok’s responses could become valuable digital real estate, especially since 39% of users are already utilizing generative AI for shopping tasks, indicating growing consumer acceptance of AI-integrated commerce 1.

2️⃣ Meta’s AI advertising success demonstrates the revenue potential of intelligent ad targeting

The financial returns from AI-enhanced advertising suggest X’s strategy could significantly improve its revenue per user if executed effectively.

Meta’s AI-driven advertising technologies generated nearly $550 billion in economic activity in 2024, with advertisers achieving a $4.52 return for every dollar spent using these AI tools—a 22% improvement in return on ad spend 2.

This performance boost comes from AI’s ability to match ads more precisely to user intent at the moment of inquiry, which aligns with X’s plans to offer contextual responses through Grok.

Meta’s success with over 35 million U.S. businesses using their AI-powered advertising platforms demonstrates that businesses are willing to pay premium rates for AI-enhanced targeting capabilities 2.

Given that X previously struggled with advertiser departures, implementing similar AI-driven personalization could help rebuild advertiser confidence by delivering measurably better results than traditional social media advertising formats.

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