OpenAI, the company responsible for ChatGPT, is reportedly playing around with the potential of introducing advertising as a new revenue stream for its AI tool. If it went forward with this plan, it would be a complete reversal from its initial premise for one of the world’s most valuable AI companies.
OpenAI’s Chief Financial Officer, Sarah Friar, confirmed that the company is open to exploring advertisement as a way to increase revenue in a recent interview with the Financial Times.
According to her, OpenAI does not have any immediate plans to implement ads. She also added that the company is still committed to being “considerate” about when and where ads might appear.
OpenAI raised $6.6 billion in October as the Microsoft-backed AI firm’s value went above $150 billion. The company has also found success with its popular ChatGPT. The AI chatbot reportedly has over 250 million active weekly users.
Still, the company faces questions about profitability, which has brought on significant financial pressures for many other AI firms. Operating and scaling advanced AI models is expensive, with projected costs for 2024 expected to exceed $5 billion.
This year, OpenAI has hired advertising specialists from major tech players like Meta and Google. Kevin Weil, OpenAI’s Chief Product Officer, has extensive experience in ad-supported platforms, having helped develop Instagram’s advertising model.
Similarly, Shivakumar Venkataraman, a former leader of Google’s search advertising team, joined the firm earlier this year.
OpenAI is exploring its options with advertisement plan
For a long time, tech giants like Google and Meta have made money through advertising. However, OpenAI executives are still unsure how to add ads without hurting the user experience.
CEO Sam Altman is said to be warming up to the idea, but Friar has pointed out that ad models can bring problems like economic sensitivity and a possible shift in focus from users to advertisers.
OpenAI currently makes most of its money from enterprise licensing, paid ChatGPT tiers, and its API, which developers use to create apps based on OpenAI’s models. These revenue sources have been good for substantial amounts, but they may still not be sufficient to offset the company’s huge operational expenditures in the long term.
If it eventually decides to move forward with its plan, the company risks upsetting a user base that appreciates ChatGPT’s no ad experience and simple design. It could offer insights into why the company is adding advertising stalwarts to its roster as it carefully balances profitability with innovation.
What the future holds for AI
With its success, OpenAI is certainly one of the trendsetters in the AI space. While Friar assured users that the company does not have any imminent plans to introduce ads, the suggestion was enough to let speculation linger.
The move toward ads could put the company in competition with smaller AI companies like Perplexity , which is already testing ads in its products. If OpenAI eventually goes the ads route, it could radically change the revenue generation template for AI firms.
If implemented, the ads may take innovative forms, such as AI-powered personalized suggestions, rather than traditional banner ads seen on legacy platforms.
Still, the move won’t be straightforward. Targeted ads often rely on user data, which is a touchy subject for AI users and data privacy regulators, especially in Europe. OpenAI would have to address these worries if it moves forward with this model.
If Friar is to be taken by her words, advertising for now remains an idea, not a commitment. However, hiring ad experts like Shivakumar Venkataraman and Kevin Weil may hint at the company giving it a considerable level of thought.
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