OpenAI begins testing ChatGPT ads this month, following Meta's playbook for revenue growth

OpenAI faces long wait for bumper ad sales

LONDON, Feb 4 (Reuters Breakingviews) - Investors in OpenAI often marvel at how sticky ChatGPT, the tech startup's all-conquering chatbot, has become. That thesis may be tested as the company led by Sam Altman experiments with sponsored content and new ad-supported subscription tiers. Generating meaningful ad dollars from those interactions may take longer -- and prove trickier -- than expected. Investors and tech executives have seen this story before. Founders like Mark Zuckerberg and Altman himself started out sceptical of advertising, only to later embrace it. In 2004, the Facebook founder dismissed monetisation ideas, saying they made the site "more serious and less fun". Meta Platforms (META.O), opens new tab is now a $1.8 trillion advertising empire. Altman once called ads a "last resort, opens new tab," but has since likened, opens new tab them to a necessary "internet tax". That change in tone reflects necessity. Artificial Intelligence models like ChatGPT come with steep compute costs, while over 90% of its users remain non-paying. OpenAI's reported 800 million weekly active users would be a compelling base to monetise through advertising. Altman's hiring of Fidji Simo -- a Meta veteran who ran the Facebook app and helped scale Instacart -- signals a serious push. The Information reported, opens new tab that OpenAI, last valued at $500 billion, raised an internal 2030 revenue target that includes the advertising segment to nearly $50 billion - up from $30 billion previously. Some numbers demonstrate the potential. If OpenAI monetised half its 800 million users at Meta's 2025 average annual revenue per user of $58, it could theoretically generate around $23 billion a year. And OpenAI is looking to charge as much as $60 per 1,000 ad views, according to The Information, opens new tab, a rate in line with targeted streaming and premium TV inventory such as live NFL games. That's also roughly triple established ad players like Meta, where rates are typically, opens new tab under $20. Still, monetisation depends on more than just raw user counts. Even big, well-known products can take years to build an ad business, due to the complex work required to build sales teams, software systems to sell and place ads, and measurement standards that advertisers require. If performance lags, pricing will fall. Netflix's (NFLX.O), opens new tab ad rollout is instructive: after launching in 2022, it had to refund, opens new tab some advertisers after it fell short of viewership guarantees. Netflix's ad revenue grew from $310 million in 2023 to $1.5 billion in 2025, but it remains less than 5% of the group's $45 billion in overall sales. Meanwhile, it took Meta 11 years to grow average revenue per person fourfold to $58 in 2025. The challenge is even trickier with a chatbot. Traditional ad formats, like Google's sponsored search results, are predictable, clearly labelled, and easy for users to recognise. In AI-generated answers, by contrast, it's harder to insert brands without eroding trust in the chatbot's neutrality. Advertisers may want context about the user's question and the model's response, but ChatGPT prompts can be personal or sensitive - making users far less tolerant of intrusive targeting than they might be on a social media feed. If an ad pushes consumers out of the chat, the model looks like traditional search: traffic is the product, and advertisers pay per click. But OpenAI would probably prefer to keep users inside the conversation to book a flight or order shoes, so it can charge directly on sales - where Altman could, opens new tab charge merchants a 4% transaction fee. Yet eMarketer reckons that even though sales made from shoppers directly buying goods on AI platforms like ChatGPT or Google's AI Mode will grow to $28 billion by 2029, these kinds of expenditures will still account for less than 2% of the total outlay on U.S. retail commerce. Even where ad targeting is possible, the addressable opportunities may be scarce. OpenAI's own data suggests, opens new tab only 2% of ChatGPT prompts involve purchasable products. Rothschild & Co Redburn analysts also note that intent-heavy queries on ChatGPT skew toward a narrow set of high-profile items like iPhones or sneakers. Other players are cautious, too. Market intelligence firm GrowByData estimates, opens new tab that ads appear in only about 0.1% of Google's AI Overviews, an AI-generated summary shown in Search results that answers complex, multi-part queries while linking to sources. Ad agency WPP's Kate Scott-Dawkins estimates OpenAI could earn roughly $500 million to $800 million this year if it captures 0.1% to 0.3% of the $270 billion global search ad market. But advertisers now spread budgets across more channels from TikTok, Meta's Instagram to ChatGPT and traditional search. With more options, buyers could gain leverage and pricing might come under pressure -- making Altman's $60-per-1,000 target harder to reach. Altman, moreover, has an intimidating rival: Google. Google Search and YouTube together made up about 30% of 2024 global ad revenue, excluding China, according to data from Rothschild & Co Redburn. The company already has close links with advertisers and says it isn't planning to place ads in its AI chatbot Gemini -- at least for now. That restraint may help preserve consumer trust. Google is testing AI-driven ads where users already expect them: Search. AI Overviews and AI Mode blend traditional search results with conversational follow-ups. Ask where to iron clothes while travelling, for example, and users might see suggestions including portable steamers from consumer goods brands. That gives Google a head start in learning what works for both advertisers and users, without compromising Gemini's positioning as a clean, assistant-style experience. Advertisers can experiment with chatbot-style formats in a familiar setting, and Google can offer software to help them adapt. If AI chat advertising becomes a major market, Google may therefore be better placed to capture the spend, leaving CEO Sundar Pichai to vacuum up revenue before Altman gets a chance. Advertising, in other words, isn't just about having the best models. It requires trust from humans and time to build the measurement that makes marketers spend. Those are among the hardest problems to quickly solve -- even for the smartest chatbot. As Altman scrabbles around for sales, he shouldn't bet on instant bumper ad revenues. Follow Karen Kwok on LinkedIn, opens new tab and X, opens new tab. Editing by George Hay; Production by Streisand Neto * Suggested Topics: * Breakingviews Breakingviews Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time. Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on X @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors. Karen Kwok Thomson Reuters Karen is a columnist focusing on global technology and venture capital sectors, writing stories about artificial intelligence, fintech, and semiconductor companies. She also covers deals in the Middle East region and global metal mining sector. Prior to Breakingviews, she was a European gas and power reporter at S&P Global Platts in London and covered funds and equities at Morningstar UK. Karen also briefly worked at Bloomberg. Born and raised in Hong Kong, she is fluent in Mandarin and Cantonese.

OpenAI's Meta makeover

Why it matters: Facebook, now Meta, turned its billions of users' personal data into an advertising goldmine -- and that road looks like OpenAI's most likely path as it seeks to fund its fabulously expensive operations. Driving the news: OpenAI will begin testing ads on ChatGPT this month, the company recently announced. * The initial wave of advertising clients will be charged premium rates, per the Information. * The ad push means "more people can benefit from our tools with fewer usage limits or without having to pay," OpenAI said in a blog post. It promised to keep ChatGPT's responses "driven by what's objectively useful, never by advertising. " Between the lines: OpenAI's origins as a nonprofit research lab shaped a culture that long viewed ad-based revenue models with suspicion. * As recently as October 2024, CEO Sam Altman said he found advertising in AI chatbots "uniquely unsettling" and described it as "a last resort for us as a business model." Yes, but: More recently the company has filled out its ranks with Facebook/Meta veterans steeped in that company's ad-driven, engagement-at-all-costs mindset. * A study of LinkedIn postings by The Information found that roughly 20% of OpenAI's workforce list Facebook/Meta gigs on their resumes. The central figure is Fidji Simo, who was a key architect of Facebook advertising in the 2010s and was named OpenAI's CEO of applications last May. * Simo "reassured" OpenAI employees on her arrival there that she did not want to replay her Meta career and would "do things differently," per an Information report. * But you don't hire the executive famous for building Facebook's mobile-advertising juggernaut -- and then masterminding its "pivot to video" -- without some thought of putting that expertise to work. * As a former public-company CEO (of Instacart), Simo would also be a logical choice to take the helm at OpenAI if it chooses the IPO route. Altman has often expressed a reluctance to remain CEO in such a scenario. Zoom out: OpenAI is under intense pressure to boost revenue as it seeks hundreds of billions of dollars to build AI infrastructure and cover operating losses. * Most current OpenAI revenue comes from individual ChatGPT customers' subscription fees. * Markets have been spooked by reports that ChatGPT user growth has slowed, and analysts are debating whether OpenAI is a sure bet or a money sink. * A big new ad revenue stream would go a long way toward allaying those fears. The other side: Even in ChatGPT's ad-free youth, critics have decried the chatbot's tendency to tell users what they want to hear, to make up answers and to inspire psychosis-inducing rabbit-hole dives. * The introduction of ads will give OpenAI that much stronger an incentive to keep users chatting longer. * Early enthusiasm for OpenAI's Sora video-making app led some OpenAI employees to publicly question the company's push into social media. * Users who confide in an AI chatbot expect it to be working on their behalf, not for some paying third party. * As Altman himself put it in that October 2024 interview: "When I think of GPT writing me a response, if I had to go figure out, you know, exactly how much was who paying here to influence what I'm being shown, I don't think I would like that." Our thought bubble: Expect OpenAI's early ad forays to be low-key, as the firm seeks to preserve users' trust. * For instance, one mockup for the first ChatGPT ad pilots reportedly places sponsored material in a sidebar that only appears once a conversation has turned toward discussing purchases. * Over time, as users grow accustomed to the ads and OpenAI needs to goose growth, the ad placements and engagement farming are likely to become more aggressive. That would be a page from Google's playbook rather than Facebook's.