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OpenAI is discussing plans to introduce advertising into its artificial intelligence products, as the maker of ChatGPT seeks new revenue streams as it restructures as a for-profit company.
Sarah Friar, financial director of OpenAItold the Financial Times in an interview that the $150 billion AI startup was evaluating an advertising model, adding that it planned to “think about when and where we put them implemented (advertising)”.
The San Francisco-based group, which secured $6.6 billion in new funding in October, has been recruiting advertising talent from big tech rivals such as Meta and Google, according to several people familiar with the matter and an analysis of LinkedIn accounts of the FT.
In a statement following the interview, Friar added: “Our current business is growing rapidly and we see significant opportunities within our existing business model. Although we are open to exploring other sources of revenue in the future, we have no active plans to pursue advertising.
OpenAI is stepping up efforts to generate revenue from its products, such as its AI-powered search engine, as it seeks to capitalize on its early lead in the booming AI sector. Its small rival Perplexity already drives advertising in its AI-powered search engine.
Friar, who previously held leadership roles at companies including Nextdoor, Square and Salesforce, noted the depth of advertising experience between her and Kevin Weil, the company’s chief product officer.
Weil was previously responsible for building ad-supported products on major tech platforms, including Instagram and X. “The good news with Kevin Weil driving the product is that it comes from Instagram. He knows how it (presenting commercials) works,” Friar said.
In May, OpenAI also hired Shivakumar Venkataraman, who previously led Google’s search advertising team, as vice president.
Advertising is a very effective way for big tech companies like Google and Meta to monetize their huge online audiences. But OpenAI executives are divided on what advertising on their platform could look like, according to two people familiar with the discussions.
General manager Sam Altman is enthusiastic about the idea, according to a person familiar with his thinking.
The fast-growing group, which is now one of the most valuable private companies in Silicon Valley with a valuation of $150 billion, is in the midst of restructuring as a company. for-profit companyration.
The high costs of training new models mean that AI start-ups, including OpenAI, Anthropic and Elon Musk’s xAI, are looking for new ways to commercialize their technology and engaging in frequent fundraising efforts.
OpenAI’s revenue has soared to around $4 billion on an annualized basis thanks to the runaway success of ChatGPT, placing it among the fastest-growing startups of all time. The chatbot, launched two years ago, now has more than 250 million weekly active users.
But the enormous costs associated with developing “frontier” AI models mean that OpenAI plans to spend far more than the company spends each year in the near term. It is on track to burn through more than $5 billion in cash.
One of OpenAI’s largest sources of revenue comes from access to its application programming interface (API), which allows companies and developers to develop its technology, as well as from the sale of individual licenses and of ChatGPT.
“They are looking for consumer productivity and consumer research. API is not a high-margin business,” the person added.
Friar pointed out that advertising models have drawbacks, including that they are sensitive to fluctuations in the broader business cycle and that they tend to shift a company’s focus from satisfying its users to its advertisers .
“I don’t rule out (ads),” she said. “But for now, there’s a lot of low-hanging fruit in the way we’re doing things.”