The News
OpenAI is rapidly expanding its global advertising business to attract more users to its platform amid its push to meet ambitious revenue targets.
“The revenue that we make from the ads offering is going to subsidize and grow access to information,” OpenAI advertising chief David Dugan told reporters on Monday at the Cannes Lions International Festival of Creativity.
After years swearing off of advertising, the company now hopes its sprint into the ad business will help it generate $100 billion by the end of the decade. That’s about half of Meta’s current ad revenue. ChatGPT launched ads in February for users of its free and “go” tiers, making ads populate in queries and conversations. The AI giant said it already has thousands of advertisers in its seven test markets, including in the US, Canada, UK, Australia, New Zealand, Japan and South Korea. OpenAI said it plans to launch in Brazil and Mexico in the coming weeks, and eventually in India.
But while ChatGPT astounded users for years when it burst onto the scene writing essays in seconds and rap verses instantaneously, its advertising offering is less transformational. Users see ads targeted to them based on what, when and how they are researching, said Dugan.
While the company remained mum about the specific revenue that advertising was bringing in, it said there were some signs that current users weren’t alienated by new AI ads in test markets. Dugan said the frequency that users were seeing an ad and clicking away - was “far lower” than when the company began testing ads.
Max’s view
OpenAI and other AI platforms have already terrified graphic designers, visual artists and anyone who has been involved in the production of creative work. And during Monday’s press briefing, OpenAI Creative Specialist Chad Nelson showed how tools he built in OpenAI’s Codex for a fictional car brand could be used to create an entire visual campaign for a local car dealership in Seattle.
“Two and a half days for a creative director working by myself, I don’t even know how to code - I can build this and deploy this to my entire organization,” he said.
Nelson dismissed questions about whether the tools that have delighted AI companies should threaten the creatives who invented the Cannes Lions event to celebrate creative ad work. He argued it is simply another tool to make more advertising. While the potential disruption to the creative industry remains the primary concern of many Cannes-goers, it’s the company’s four month-old query-based ad business that has the potential for the most industry disruption as AI cannibalizes the search business.
AI turned searches into AI queries, and now, OpenAI now wants the old search revenue model as well. In the short term, it won’t look all that different.
“It’s the best model in the history of the internet, maybe in the history of business,” Yahoo CEO Jim Lanzone told Semafor an interview last week about the company’s own AI advertising strategy. “That model totally works. The only thing about AI answer engines that is different is the [user interface]. You’ve gone from a list of blue links to paragraphs, in our case.”
Monday’s press briefing showed an emergent technology powerhouse at a moment of awkward transition. Its powerful creative tools and challenge to the search business have its new competitors on high alert. But the event itself looked like one hosted by a new company.
Nelson joked about his uncertainty around the correct pronunciation of Cannes. The press briefing was a relatively limited affair hidden behind some bushes, 15 minutes walking away from the action with the big tech and ad players.
It seems hard to imagine the company will be tucked away for much longer.