Zach Oldham, cofounder of the adtech startup Gravity, thinks AI ads will eventually become the world’s largest advertising channel.
His company just secured fresh funds to pursue the opportunity he sees in both ads designed to appeal to humans on AI platforms and those targeted at AI bots themselves.
Gravity exclusively told CMO Insider it raised a $30.5 million Series A funding round, co-led by Lightspeed Venture Partners and Committed Capital. It brings the startup’s total funding to $38.5 million.
Gravity offers a full-stack ad platform: a demand-side platform that helps advertisers place ads within AI chatbots and to agents, a supply-side platform that helps developers of AI applications monetize through ads, and an exchange that connects the two. It also offers tools to help advertisers measure campaign performance and create ads themselves.
The startup places text-based ads within AI chatbots and assistants, including ChatGPT, Codebuff, EcoGPT, Daimon, Magneta, Runable, and CTO.new. Its advertiser clients have included Best Buy, Target, Vercel, and MongoDB.
Gravity is also testing an “agent-to-agent” ad product that human users don’t see. Advertisers provide Gravity with their product catalog, including up-to-date features and current promotions.
“Every time the agent is looking for shoes, it’s given a list of all the different advertisers we have that are selling shoes,” Oldham said. “It’s got detailed descriptions and information about them, and it helps enrich the buying decision that way.”
Down the road, Gravity plans to integrate direct payment solutions so an agent can make a purchase once the user gives the go-ahead.
Oldham said he hopes that increasing the prevalence of ads within large language models will encourage more AI platforms to make their services free.
Ad giant WPP Media recently estimated that marketers will spend $100 billion on ads within generative AI search globally by 2030. In April, The Information reported that OpenAI forecast that its ad business alone would hit the $100 billion milestone by 2030.
“I think that even OpenAI is off on their projections,” Oldham said.
“It is much larger than they realize,” he added, referring to the potential size of the AI ad market.
Gravity is a small player in a big market. Google runs the world’s biggest advertising business. OpenAI has already signed up multiple adtech partners, including Adobe, StackAdapt, and Criteo. Plenty of other large adtech players are also hoping to edge in on the nascent space.
Oldham said Gravity’s competitive advantage is its focus on the AI-native ad space and that it works with both buyers and sellers of this nascent ad type.
“Because we’re owning the full stack, we benefit from true network effects as we scale,” Oldham said. “Our network gets smarter every day that goes by.”
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