What you need to know about OpenAI’s ad model
OpenAI is the only AI company so far to embrace advertising in its consumer-facing chatbot.
It announced in January that it would test ads on ChatGPT and, less than a month later, began rolling them out across the US.
Now, the new revenue stream is becoming essential to OpenAI as it seeks to reassure investors by creating a future revenue pillar projected to generate $100bn in ad revenue by 2030.
What’s the latest?
OpenAI has extended its initial testing phase by a month – now planned to finish at the end of April – and lowered the minimum spending threshold from $200,000 to $50,000, increasing access to the pilot.
It expects advertising revenue to reach about $2.4bn this year and quadruple next year to nearly $11bn, according to The Information, based on OpenAI’s financial forecasts from the first quarter.
The next phase of the pilot will expand into other markets, starting with Canada, Australia, and New Zealand, with plans to continue the rollout into additional markets later this year.
As part of this continued push towards advertising as a key revenue stream, at the beginning of April, OpenAI also launched its own ads manager. The tool is being tested among a handful of advertisers as it continues to be refined, allowing them to monitor performance in real time.
How does OpenAI’s future look?
Public perception of AI is shifting, with a March NBC News poll finding that the majority of American voters think the risks of AI outweigh the benefits, which could threaten growth.
In response to OpenAI’s TV ad at the end of last year, MI Media’s business director Annabel Sitwell wrote for The Media Leader that ‘accelerated growth for OpenAI must come from winning over a more cautious audience with a long-term goal of wearing down the sceptics’.
OpenAI follows in the footsteps of every other tech giant by turning to linear advertising
Since then, the company has acquired the daily live tech talk show TBPN, potentially to improve public perception.
Fidji Simo, OpenAI’s CEO of applications, announced the acquisition on its website on 2 April, stating that it has a “responsibility to help create a space for a real, constructive conversation about the changes AI creates.”
Simo asserted that TBPN will maintain editorial independence: running its programming, choosing its guests, and making its own editorial decisions.
But Margaret O’Mara, a University of Washington professor who studies the history of technology and politics, told NPR that this acquisition shows how OpenAI is ‘trying to control the conversation within the industry’.
The acquisition of TBPN is just one of many decisions that appear to have caught investors off guard, with the Financial Times reporting that investors are questioning OpenAI’s $852bn valuation amid a shifting strategy.
How does advertising work on ChatGPT?
The ads rolled out in the US are for logged-in adult users on the Free plan and for the new subscription, ChatGPT Go, which costs $8 per month.
OpenAI has maintained that ads would be labelled separately from answers and would not influence responses. User data would also not be shared with advertising companies.
Clients include brands working with major global agency groups Publicis, WPP, Omnicom, and dentsu.
Within six weeks of the pilot launch, it recorded a $100m annualised revenue.
What is the stance of other AI companies on advertising?
Anthropic’s Claude is the biggest competitor to OpenAI and, in stark contrast, opposes advertising in its Large Language Model (LLM).
This stance was made public through its Super Bowl ads, which appeared to criticise OpenAI and champion an ad-free user experience on Claude. As a result, app downloads increased in the days that followed.
Anthropic remains the only company to have publicly committed not to implement ads.
Perplexity was the first to experiment with ads in 2024, but removed them late last year due to concerns about user trust.
Microsoft Copilot has integrated sponsored content into the experience, and ads appear below responses with explanations of how they relate to the conversation.
The Financial Times reported that Elon Musk told advertisers last summer that the platform plans to introduce ads to Grok.
Meta AI does not insert ads directly into chatbot responses, but Meta has confirmed that interactions with its AI tools are used to personalise content and advertising across its platforms. It has also not publicly ruled out ads within AI conversations.
Further reading
Will AI companies embrace ad models? Perplexity and Anthropic step away as OpenAI doubles-down
OpenAI follows in the footsteps of every other tech giant by turning to linear advertising