OpenAI eyes advertising as revenue pressures mount amid restructuring

OpenAI, the $150 billion artificial intelligence company behind ChatGPT, is considering incorporating advertising into its AI products as it transitions into a for-profit entity. According to reports, Sarah Friar, its Chief Financial Officer, revealed the possibility, stating that the company intends to be “thoughtful about when and where we implement them [ads].”

The company is reportedly hiring advertising talent from industry giants like Meta and Google, according to the report and an analysis of LinkedIn profiles. Despite these moves, Friar clarified in a subsequent statement that the company has “no active plans to pursue advertising” at present, emphasising the rapid growth of its existing revenue streams.

As the tech company looks to monetise its AI-powered tools, including its search engine, it faces mounting operational costs associated with training advanced models. According to the report, OpenAI's revenues have surged to $4 billion annually, driven by products like ChatGPT, which boasts over 250 million weekly active users. However, it is projected to burn through over $5 billion in cash this year due to the steep costs of development.

Chief Product Officer Kevin Weil, who previously led ad-supported product development at Instagram and X, has extensive experience in integrating advertising models. Shivakumar Venkataraman, formerly of Google’s search advertising team, has also joined OpenAI as Vice President. These hires underscore OpenAI’s potential interest in exploring ads as a revenue stream, though Friar noted drawbacks, such as economic sensitivity and a potential shift in focus from users to advertisers.

The company's executives remain divided on the role advertising might play. Chief executive Sam Altman is reportedly warming to the idea, as the company seeks to capitalise on its leading position in the AI sector while addressing financial pressures.

The primary revenue for the company currently stems from its application programming interface (API) and ChatGPT licences, which cater to businesses, developers, and enterprises. While these offerings have propelled OpenAI into one of Silicon Valley’s fastest-growing start-ups, challenges persist in ensuring profitability while managing high development costs.

Friar acknowledged the complexity of adopting an ad-based model but indicated that the company’s current approach still offers significant opportunities.