OpenAI’s bold vision for its AI-powered chatbot, ChatGPT, is poised to bring a familiar business model into the fold: advertising. The company’s acquisition of former Apple designer Jony Ive’s design firm has led to plans to ship 100 million units of its sleek AI companion device, with investors expecting significant returns.
However, this growth comes at a cost, as OpenAI estimates it won’t turn a profit until 2029 and expects to lose $44 billion along the way. To mitigate this, advertising is being explored as a high-margin business that can absorb the costs of scaling both AI and hardware.
OpenAI’s addition of Instacart CEO Fidji Simo to its team suggests that ads will be a key focus for the company. The company’s existing subscription model for ChatGPT has seen only 4% of users pay, leaving the majority open to advertising. This shift in strategy aims to capitalize on the attention users provide.
Industry experts point out that this is a familiar pattern, with dominant platforms like Netflix and Amazon Prime Video adopting ad revenue as their primary source of income. As the market becomes increasingly saturated, OpenAI’s AI-powered platform is seen as an opportunity for advertisers to target fresh contexts and untapped inventory.
The company’s approach to advertising is still in its early stages, with potential formats including sponsored answers, priority product placements, and affiliate models. However, experts predict that a native integration will be key to unlocking the full value of OpenAI’s ecosystem while preserving user experience.
As the industry continues to evolve, OpenAI’s entry into commerce and Perplexity’s ads business expansion are redefining the advertising landscape. With Google aggressively rewriting its ad stack around AI, the future of online marketing is taking shape.
Source: https://digiday.com/marketing/openais-bold-vision-for-chatgpt-seems-poised-for-a-familiar-business-model-ads