ChatGPT-maker OpenAI explores advertising model amid revenue expansion efforts

OpenAI, the $150 billion AI startup behind ChatGPT, is considering introducing advertisements to its suite of artificial intelligence products as it looks to diversify revenue streams amid its transition to a for-profit structure. Sarah Friar, OpenAI’s chief financial officer, revealed the possibility during an interview with the Financial Times, stating the company aims to be “thoughtful about when and where we implement them [ads].”

Despite confirming that ads are under discussion, Friar clarified in a later statement that there are “no active plans to pursue advertising” for now, adding that OpenAI’s current business model is experiencing significant growth.

The San Francisco-based company has already begun hiring advertising specialists from major tech firms like Meta and Google, according to FT. Kevin Weil, OpenAI’s chief product officer, brings deep expertise in ad-supported models from his time building Instagram’s ad platform. The company also recently recruited Shivakumar Venkataraman, Google’s former head of search advertising, as its vice president.

“The good news with Kevin Weil at the wheel is that he came from Instagram. He knows how this [introducing ads] works,” Friar said.

OpenAI executives reportedly remain divided on how advertisements might be integrated into their platforms. CEO Sam Altman is said to be warming to the idea, though Friar acknowledged the drawbacks of ad-supported models, including their dependence on economic cycles and the potential for shifting focus from users to advertisers.

“I don’t preclude [ads],” Friar remarked. “But for now there’s lots of low-hanging fruit in the way we are doing things.”

OpenAI’s revenues have surged to approximately $4 billion annually, driven by ChatGPT’s success, which now boasts over 250 million weekly active users. However, the company is also on track to burn through over $5 billion annually due to the high costs of training and developing cutting-edge AI models.

Currently, a significant portion of OpenAI’s income comes from licensing its API to businesses and developers, as well as enterprise and individual subscriptions to ChatGPT. However, margins on API access remain thin, pushing the company to explore other monetisation options.

The potential introduction of ads by OpenAI follows a trend in the tech industry, where giants like Google and Meta have built lucrative ad models. Smaller competitors, such as AI-powered search engine Perplexity, are already piloting ads, adding pressure for OpenAI to evaluate similar strategies.