OpenAI is moving closer to launching a new advertising model that will display paid ads to ChatGPT users. According to a recent report, the company has already begun working with advertisers to test this system, and a full rollout could happen as soon as next month. This marks a significant shift in how OpenAI plans to generate revenue from its popular AI chat service.

Advertising Plans and Testing Phase

OpenAI announced last week its intention to insert ads into conversations with its AI bots. Initially, these ads will be based on a pay-per-impression (PPM) model, meaning advertisers will pay for each time their ad is shown, regardless of user interaction. This approach is different from the more common pay-per-click (PPC) model used in web advertising, which charges only when users click on an ad.

The report indicates that OpenAI has already been in talks with dozens of advertisers, offering them early access to test the new ad service. Each of these advertisers has been asked to commit to spending less than $1 million during a trial period that lasts several weeks. However, specific pricing details or the number of impressions these advertisers will receive have not been disclosed yet.

Infrastructure and User Impact

During the testing phase, OpenAI is still building the infrastructure needed to support the ad service. For now, advertisers won’t have self-service tools to buy or manage their ads, as the technology is still under development. The company is carefully testing the system before making it widely available.

Ads will appear to users of the free ChatGPT service, but not to those subscribed to the premium tiers like ChatGPT Plus or ChatGPT Pro, or to enterprise customers. The company introduced a new $8/month plan called ChatGPT Go last week, which will be supported by ads. Interestingly, previous versions of ChatGPT showed suggestions that some users mistook for ads, but those were simply app features announced earlier this year.

OpenAI’s CEO, Sam Altman, has previously described ads as a “last resort” for funding the company. In a speech at Harvard Business School, he mentioned that while he’d prefer to avoid ads, they could be necessary if they are the only way to provide access to great services to everyone. The recent announcement of the ad feature, made before it was fully ready, has sparked speculation about the company’s funding strategies.

Financial Outlook and Company Growth

OpenAI’s CFO, Sarah Friar, responded to concerns over the company’s financial health by highlighting revenue growth. She noted that while compute costs are increasing rapidly—tripling each year—revenue is also rising significantly. She shared estimates that compute capacity will grow from 0.2 gigawatts in 2023 to an expected 1.9 gigawatts in 2025.

Friar also mentioned that the company’s annual recurring revenue (ARR) is projected to jump from around $2 billion in 2023 to over $20 billion by 2025. However, she did not clarify what exactly she meant by ARR, which could refer to different measures of revenue or recurring income. Still, her comments suggest that OpenAI’s business is expanding quickly, even as it explores new ways to monetize its services.

Overall, OpenAI’s move toward paid advertising indicates a shift in its business model. While the company remains committed to providing accessible AI tools, it appears to be exploring various revenue streams to support its growth and infrastructure costs. Whether ads will become a permanent feature or remain a temporary experiment remains to be seen, but the company seems to be balancing innovation with financial sustainability.

Inspired by

• https://www.computerworld.com/article/4119981/openai-advertising-paid-per-impression-will-launch-next-month-says-report.html

Sources

• theinformation.com
• techcrunch.com
• infoworld.com
• openai.com