Adam Foroughi, Applovin CEO: Surviving a 92% Drawdown, Ads as ML 1.0 & the $50B Game Ad Market

There's been a lot of hand-wringing about the impact, uh, AI will have on, um, the ad networks, specifically Google's interface, and OpenAI has an ad product now.

I'm sure you've been monitoring it, uh, a-and trying to learn from it.

What is advertising gonna look like when people are doing five or six queries with a chatbot

chatbotBecause it's pretty obvious 95% of the world are not gonna pay twenty bucks a month for this technology.

They're gonna expect it to be free.

ChatGPT has already said they're gonna make it free.

Tell us what they're doing in advertising, and is it gonna be less effective each time, but in aggregate people are gonna use it more? Or is it gonna just be even better than Google Search's franchise?

Yeah, I, I mean, there's two sides of advertising.

One, one part of it is bottom of funnel advertising where a consumer sorta knows what they wanna buy, but they're doing research to go complete the transaction, and that's Google's search business.

If I wanted to buy a pair of dress shoes, go to Google historically, do some research, and they direct me to where I need to go based on the ads.

And today you can go to a large language model and close the loop on that same thing.

So that ads model is almost gonna exclusively compete with the Google search business.

What we operate in is a world where we're showing a user an ad, and we don't know what their intent is, so we're trying to create something that, that didn't exist before.

Show them a recommendation and get them to go, "Wow, that looks really cool.

Let me go transact on that and do it really quickly." That, that's what drives Facebook's ad business too.

And so the, the reason that's interesting to me is that the transaction via search or LLM was gonna happen anyways.

If the LLM didn't exist and Google Ads had never come to existence, but Google Search existed, that transaction, the closed loop would've happened.

So there's not actually a whole lot of economic expansion that happens from that.

But when you show a consumer an ad for something that they had no idea existed, they didn't know they needed to buy-

Discovery basically.

Totally.

Complete discovery.

And this is what makes Meta so amazing in their ad business and what we aspire to do.

You create that discovery moment.

Not only is it a really fun moment for the consumer 'cause then they're excited about what they bought, they wait for the package, they're excited to open it up, but you create economic expansion.