ChatGPT’s parent, OpenAI, may soon become an adtech company. (Finally! Join us—the water’s warm over here!)
The Financial Times reports Sam Altman’s company is exploring the addition of ads to its GenAI platforms, like ChatGPT, as part of its efforts to generate revenue and diversify beyond subscriptions. Running an AI business isn’t cheap, of course—ChatGPT alone, according to a report last year when it had fewer users, cost $700,000 per day to operate—so ads could be a “simple” way to offset those costs.
The FT also highlights a few key hires OpenAI has made recently, potentially to support this move into advertising. These include Shivakumar Venkataraman, a former Google head of search advertising, who joined as Vice President (a fitting choice that’s pretty on the nose). This follows the recent launch of ChatGPT Search, which will likely be the foundation for OpenAI’s ad strategy.
Still, Altman doesn’t seem thrilled by the idea of ads. Speaking at a recent conference, he said, “I’m not saying OpenAI would never consider ads, but I don’t like them in general, and I think that ads-plus-AI is sort of uniquely unsettling to me.” Not cool, Sam!
Why This Matters:
Traditional search is a multi-hundred-billion-dollar industry dominated by Big Tech, particularly Google (hence the antitrust scrutiny). For LLM and GenAI platforms with scale and momentum, considering ad revenue was inevitable. Search leaders like Google and Microsoft have already begun rolling out ads in their GenAI search experiences. So, why shouldn’t the up-and-comers dive in?
And some of them are. Last month, Perplexity, the fast-growing GenAI search engine, began testing ads in the U.S., displayed as sponsored follow-up questions alongside answers. Perplexity positioned its approach as a new model entirely, rejecting traditional SEO-based advertising. Instead, its ads are contextual, avoiding the SEO gaming that can undercut the user experience. Plus, no end-user data is shared with its advertisers.
If OpenAI formally enters the ad space, it will likely adopt a similar privacy-focused, user-centric model.
Experts React:
Here are some of the best takes from X on the FT’s report and the idea of OpenAI becoming an adtech business:
— Eric Seufert (@eric_seufert) December 3, 2024OpenAI’s advertising opportunity
The hub-and-spoke social media advertising model might better serve chatbots than the search advertising model. Social media detaches the context of a user’s session from targeting, with each scroll being an opportunity for a new impression.… pic.twitter.com/5vgCLDTHci
— Steven Liss (@This_Liss) December 2, 2024AI-powered ads on AI content can be uniquely creative, but AI builders need to get over their biases.
"We can make superhuman intelligence"
everyone: hard, but we're rooting for you
"We can make ads a positive part of UX"
everyone: "Madness! HERESY! It cannot be done." https://t.co/C0YjVtR8Ue
OpenAI is looking at ads for ChatGPT (at some point). Would you be disappointed? Lack of ads is one of the virtues of ChatGPT vs. Google. But the gravitational pull of ad revenue is too great to resist. https://t.co/9UqGQFOOZD
— Greg Sterling 🇺🇦 (@gsterling) December 3, 2024
— Mike Ryan (@mikeryanretail) December 3, 2024Great read from @MrDannyGoodwin via @sengineland, and though I don't often agree w/ Sama's views, I like what he says here.
However, there will be ads. Maybe not today. But OpenAI’s financials are ugly as sin and there WILL be ads. Investors might one day ask "why not sooner?" pic.twitter.com/vhA70irZj5
Our Take:
Altman’s take is laughable, really. Ads are not cool, necessarily, and OpenAI cares about being seen as cool. Ads are also lower-brow to most people and OpenAI tries to bill itself as a premium AI brand, like Apple, which also doesn’t necessarily go around shouting about its growing ad business. But ads, quietly and with little fanfare (see Reddit), can make a lot of money, and Altman will do what he needs to do now that the company isn’t a nonprofit. Ads scream “that chapter in our life is over.”
Also, it should be noted that Perplexity leaned into ads right off the bat and made it exciting. Granted, OpenAI does not see itself as a like-for-like Perplexity comparable, as OpenAI is not just a search company, but this is an interesting example of OpenAI following rather than leading after another LLM business made something acceptable. That wasn’t really the case a year ago.