OpenAI's ChatGPT is set to explore advertising, signaling a shift in its business model to enhance accessibility and address profitability concerns. The move comes as the company faces increasing pressure from investors to monetize its AI models, especially given the substantial infrastructure costs and operating losses.
New Strategies and Changes
OpenAI is introducing advertisements to ChatGPT in a trial phase for select users in the U.S.. The ads will initially appear on the free and the newly launched "Go" tiers. The "Go" tier, priced at $8 per month, provides users with expanded features but includes ads. Subscriptions to "Plus", "Business", and "Pro" tiers will remain ad-free.
The advertisements will be displayed as banners at the bottom of ChatGPT's replies in chats and are designed to be contextually relevant to the ongoing conversation. For example, a conversation about travel might trigger travel-related ads, while discussions about fashion choices could lead to clothing ads. OpenAI emphasizes that user data will inform the ads, but it will not be shared with advertising companies. Users will be able to learn why they are seeing a particular ad and have the option to dismiss ads and provide feedback. Furthermore, users can turn off ad personalization and clear data used for ads at any time.
Principles and Guardrails
OpenAI has outlined several principles to guide its approach to advertising, aiming to avoid disrupting user experience and maintain trust in its models: * Answer Independence: Advertisements will not influence the answers ChatGPT provides. The AI's responses will be based on what is objectively useful, not driven by advertising. * Conversation Privacy: User conversations with ChatGPT will remain private from advertisers, and user data will not be sold to advertisers. * Choice and Control: Users will have control over how their data is used for advertising. They can turn off personalization and clear the data used for ads. * Long-term Value: OpenAI will prioritize user trust and experience over revenue, and will not optimize for time spent in ChatGPT.
The company is also implementing guardrails to ensure responsible advertising. Ads will not be shown to users under 18 or appear near sensitive topics like health, mental health, or politics.
Financial Imperative
This exploration of advertising is driven by the need to offset the high costs associated with running ChatGPT. OpenAI has committed approximately $1.4 trillion in infrastructure spending over the next eight years. The company is projected to burn through $115 billion cumulatively through 2029, with operating losses of roughly $74 billion projected for 2028 alone. Despite having hundreds of millions of users, only a small percentage (around 5%) pay for subscriptions.
Industry Impact
The move into advertising positions OpenAI to compete directly with search advertising giants like Google and Meta. By integrating ads into AI-generated responses, OpenAI creates a new channel for reaching users seeking information. This could potentially disrupt existing ad models and reshape how people discover products and services.
Alternative Monetization Strategies
Besides advertising, OpenAI is also exploring other avenues for monetization. Developers building ChatGPT apps can use external checkouts, where users complete purchases on the developer's own domain. OpenAI is also enabling Instant Checkout in ChatGPT apps for select marketplace partners. Moreover, ChatGPT can be used for various business applications such as writing and reviewing code, generating marketing copies, and improving customer service, which can indirectly contribute to revenue generation. Individuals are also finding ways to monetize ChatGPT by offering services such as content creation, translation, and AI consulting.
