 "OpenAI likely to consider pushing ads on ChatGPT as it seeks to expand revenue base")
OpenAI, the $150 billion artificial intelligence powerhouse behind ChatGPT, might soon dip its toes into advertising as it seeks new ways to boost its revenue. The San Francisco-based company has grown rapidly, with ChatGPT becoming a household name for AI enthusiasts and businesses alike.
However, with sky-high costs to develop cutting-edge AI systems and its transition to a for-profit structure, OpenAI is exploring fresh monetisation strategies, including the possible introduction of ads.
Sarah Friar, the company’s chief financial officer, hinted at this during a recent interview. She mentioned that while the idea of ads is on the table, the company aims to be thoughtful about how and where they might be implemented. That said, Friar clarified later that OpenAI has no immediate plans to roll out advertising, emphasising that their current model is already showing strong growth.
Building an advertising dream team
OpenAI seems to be preparing for the possibility of ads with some heavyweight hires from the tech world. Kevin Weil, the company’s chief product officer, comes with a proven track record in ad-supported models, having been instrumental in building Instagram’s ad platform. Additionally, OpenAI has brought on Shivakumar Venkataraman, Google’s former head of search advertising, as its vice president.
These hires suggest OpenAI is laying the groundwork for an ad strategy, though company executives remain divided on how such a model might fit. CEO Sam Altman appears open to the idea, but concerns remain about the potential downsides, such as a shift in focus from users to advertisers and vulnerability to economic fluctuations.
Financial growth vs high costs
OpenAI has seen revenues soar to an estimated $4 billion annually, thanks largely to ChatGPT, which boasts over 250 million weekly active users.
The bulk of its income comes from licensing its API and subscriptions to ChatGPT, both for individual users and businesses. However, these streams are not without challenges. API access, for instance, offers thin profit margins, making it necessary for the company to explore other options like ads.
Pressure from industry trends
The potential move into advertising isn’t happening in isolation. Other tech giants like Google and Meta have built empires on ad-supported models, and smaller competitors such as Perplexity, an AI-powered search engine, are already experimenting with ads.
The pressure is on for OpenAI to stay competitive and maintain its edge in the fast-evolving AI space. Whether ads will eventually appear on ChatGPT or other OpenAI platforms remains to be seen, but the groundwork is clearly being laid.
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