Chinese AI firms are splurging on ads, report finds, as chatbot market gets crowded

Tech giants such as Alibaba and ByteDance along with start-ups spent US$70.2 million in the third quarter to promote generative AI products, report finds

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Chinese artificial intelligence firms are spending big on promotion as it becomes increasingly difficult to stand out in the crowded domestic market. Photo: Reuters

Published: 9:00am, 5 Nov 2024

Chinese artificial intelligence (AI) companies are racking up huge advertising bills, according to figures from a marketing consultancy, as firms search for any possible edge in a highly competitive market.

In the third quarter alone, AI firms – from high-flying start-ups such as Moonshot AI and Zhipu AI to tech giants such as ByteDance and Alibaba Group Holding – have spent more than 500 million yuan (US$70.2 million) to promote chatbots and other AI applications, according to marketing analytics firm AppGrowing. Alibaba owns the South China Morning Post.

The companies themselves have not published their advertising spending. AppGrowing said that it estimates spending using public data from earnings reports and third-party marketing metrics such as daily active users, fees, ad loads and effective cost per mille. It combines those data points to estimate an advertising platform’s revenue and advertisers’ placement plans for a specific period of time, deducing the ad spend from those, according tot he company, which calls its figures “for reference” only.

The latest numbers have fuelled debate in China over whether domestic AI firms are spending too much too quickly in an effort to monetise their products. Some in the industry worry that too much prioritisation of marketable products over fundamental research could in the long run widen the technology gap with the US.

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TikTik parent ByteDance and Moonshot AI, an Alibaba- and Tencent Holdings-backed start-up whose chatbots are among the most popular in China, were recognised in the report as the two biggest ad spenders, splurging 200 million yuan and 150 million yuan, respectively, on AI products in the third quarter.

ByteDance declined to comment. Moonshot AI did not immediately respond to a request for comment on Thursday.