Key facts
- OpenAI's CFO Sarah Friar believes ChatGPT can become a powerful advertising platform.
- Friar compared the potential ad model to a combination of Google's search intent and Meta's social media context.
- OpenAI's current ad business is generating revenue at an annualized rate of $1 billion.
- The company plans to introduce more sophisticated, AI-native ad formats in the future.
- This advertising strategy represents a departure from earlier statements by CEO Sam Altman.
OpenAI's chief financial officer, Sarah Friar, outlined the company's ambitious plans for its advertising business on ChatGPT, likening its potential to a "baby" born from Google and Meta.
Speaking at Goldman Sachs' Communacopia + Technology Conference, Friar indicated that OpenAI's ad efforts, launched just seven months prior, are already generating revenue at an annualized rate of $1 billion. She attributed the core concept to former OpenAI executive Fidji Simo, who previously led the company's commercial operations.
Friar elaborated that ChatGPT's advertising model would leverage user data to combine the high intent of a Google search with the contextual understanding Meta possesses from its social media users. "It's high intent search, you're telling a lot, but with the context — it's not quite people like me, it's me, because it has all the memory of me," Friar explained, highlighting the potential for a potent ad platform.
Currently, OpenAI displays basic ads below ChatGPT's responses for users on free or Go subscription tiers. The company anticipates developing more sophisticated, AI-native ad formats as the platform scales. Friar expressed excitement about launching formats that are truly endemic to AI.
This strategic pivot towards advertising marks a significant departure from earlier sentiments expressed by CEO Sam Altman, who in 2024 found the idea of combining ads and AI "uniquely unsettling." The move also contrasts with rival Anthropic, which has publicly rejected the idea of ads within chatbot responses.
Both OpenAI and Anthropic are preparing for highly anticipated initial public offerings, which will serve as a test of Wall Street's appetite for AI companies and a referendum on their financial strength. Both companies submitted confidential S-1 filings in June, with Anthropic's public version expected soon. OpenAI has not provided a specific IPO timeline but has previously indicated a listing by the end of 2027.
OpenAI's valuation reached $852 billion following a March fundraise that brought in $122 billion. The company aims to leverage its substantial cash reserves, its 1 billion-user ChatGPT app, and its leading position in AI research to build a sustainable business. Friar faces the challenge of balancing the growth of OpenAI's consumer and enterprise segments with the significant expenses associated with AI inference, data center construction, and research.