Observed Signal · Feb 20, 2026 · Partnership · Source: AdExchanger · Impact: 3/5 · Sentiment: Positive
Revolutionizing Chatbot Ads: Engaging, Native, and Non-Intrusive
Advertisers and AI publishers are experimenting with advertising inside large-language-model chat interfaces to find formats that are relevant, non-invasive and clearly separated from conversational responses. Luzia, a Latin America-focused chatbot that launched on WhatsApp in 2023 and became a standalone app in 2024, moved from Google Ads to Koah after finding traditional display formats poorly suited to chat. Koah, launched in 2025, offers ad formats tailored for chat interfaces (including interactive elements and adjustable visual elements) and a monetization mix of CPC, CPM and cost-per-engagement (CPE). Koah co-founders and Luzia’s product lead emphasize native, text-based ads that are clearly demarcated, mid-funnel advertiser opportunity, and targeting based on in-chat context and user signals while avoiding ads that feel “creepy.”
The article documents practical monetization experiments and format innovations for ads inside LLM/chatbot interfaces—an emerging ad inventory that could shift advertiser attention and creative approaches but is not yet a major platform-level policy or technical release.
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Key Takeaways & Evidence Grounding
- Luzia launched in 2023 as a WhatsApp-based chatbot and introduced in-app ads about a year later, then launched as a standalone app in 2024.
- Luzia tested Google Ads in 2025 but switched to generative-AI ad network Koah because Koah’s formats were designed for chatbot interfaces.
- Koah launched in 2025 and uses a monetization model blending cost-per-click (CPC), cost-per-thousand views (CPM) and cost-per-engagement (CPE).
- Koah co-founder Nic Baird said best-performing placements are native, text-based ads that are clearly demarcated and not embedded directly in chat responses.
- Koah targets ads using contextual signals and platform-held personal data (e.g., prior in-chat conversations and user location) but aims to avoid ads that feel invasive.
Connected Companies & Entities
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Koah Secures $20.5M to Monetize AI Chatbots with Ads
Koah, a San Francisco startup that inserts clearly labeled sponsored messages into AI chatbots, raised $20.5 million in a Series A led by Theory Ventures. Tomasz Tunguz joined Koah’s board as part of the round. Founded in September 2024 and launched as a two-sided marketplace in early 2025, Koah connects AI app developers with advertisers and takes a 30% revenue share. The company says its network includes partners such as Liner, DeepAI and Viro, has grown to more than 2 million monthly active users, processed over 350 million queries and delivered more than 35 million ad impressions. Koah plans to expand engineering, analytics and new ad formats (including brand-sponsored polls) and uses a mix of AI models, including OpenAI tools, to match and generate ad copy aligned with conversation intent.
Advertisers' Options for Reaching Chatbot Shoppers
Advertisers currently have limited direct control over appearing inside large language model (LLM) responses. Brands can optimize metadata and API feeds for ingestion, but there is no broad paid mechanism to guarantee placement in chatbot answers. Google is the notable exception: its AI Overviews (AIOs) serve ads at scale and cannot be opted out by Search, Shopping or Performance Max advertisers, though reporting for AIO delivery and conversions is opaque. OpenAI’s ChatGPT Ads is running a small, selective pilot with a handful of brand partners that has produced high cart values but low overall ad volume. Amazon’s Rufus chatbot is reportedly preparing to monetize via sponsored prompts and make existing Sponsored Products/Brands automatically eligible. Criteo has been named a third‑party ad‑tech partner in a ChatGPT pilot. The landscape favors big platform gatekeepers and presents measurement and scale challenges for marketers.
OpenAI Considers Ads to Fund ChatGPT's Future
OpenAI's Sam Altman described ads as a last resort for funding ChatGPT during a 2024 Harvard fireside chat. In January 2026, the article reports that OpenAI would soon test ads within its search chatbot, signaling a potential move toward an ad-supported model to maintain broad access. Industry observers, advertisers, and AI vendors are weighing implications—from ad formats and backend systems to whether AI platforms can monetize quickly enough. Omnicom Digital CEO Jonathan Nelson notes the rapid pace of AI change and the need for agencies to help brands decide if early participation is worthwhile despite expected growing pains. The piece also references Netflix’s past opposition to ads as a cautionary example and suggests agencies will guide brands through CPM costs and rollout challenges.
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