GenAI Advertising: Risks of Personalizing Ads with LLMs

Abstract: Recent advances in LLMs have enabled the creation of highly effective chatbots, which may serve as a platform for targeted advertising. This paper investigates the risks of personalizing advertising in chatbots to their users. We developed a chatbot that embeds personalized product advertisements within LLM responses, inspired by similar forays by AI companies. Our benchmarks show that ad injection impacted certain LLM attribute performance, particularly response desirability. We conducted a between-subjects experiment with 179 participants using chabots with no ads, unlabeled targeted ads, and labeled targeted ads. Results revealed that participants struggled to detect chatbot ads and unlabeled advertising chatbot responses were rated higher. Yet, once disclosed, participants found the use of ads embedded in LLM responses to be manipulative, less trustworthy, and intrusive. Participants tried changing their privacy settings via chat interface rather than the disclosure. Our findings highlight ethical issues with integrating advertising into chatbot responses