$60 per thousand impressions! OpenAI opens the curtain on "AI advertising" with high prices

OpenAI CEO Sam Altman, who has previously expressed discomfort with advertising, is making significant compromises in the face of commercial realities. To support the currently high valuation of its AI platform and cover substantial capital expenditures, OpenAI officially launched advertising tests on ChatGPT this week. This move not only marks a fundamental shift in the company's business model but also signals an impending reshuffle in the global digital advertising market driven by generative AI.

According to the Financial Times, OpenAI has set a high threshold for advertisers, with a starting price of $60 per thousand impressions (CPM) and a minimum investment requirement of $200,000. This aggressive pricing strategy is comparable to the level at which Netflix launched its advertising service at the end of 2022, indicating that OpenAI is attempting to position its platform as a premium advertising channel and plans to generate billions of dollars in revenue from this business this year.

Currently, top global advertising agency groups, including WPP, Omnicom, and Dentsu, have become its first partners, involving clients from various industries such as retail, software, and travel. For advertisers, the commercialization of ChatGPT opens up a whole new realm, as marketers are eager to capture consumer attention the moment they seek answers through conversational AI. This shift from traditional search engines to "answer engines" is reshaping the landscape of digital marketing.

However, this transformation is not without risks. In attempting to monetize through advertising to counter fierce competition from rivals like Google and Anthropic, OpenAI must find a delicate balance between revenue growth and user trust; any misstep could undermine the value proposition of its core product.

Pricing Strategy and Business Compromise

For OpenAI, introducing advertising is a crucial step in its transition from a research lab to a commercial giant. Just 18 months ago, Altman explicitly stated during a speech at Harvard University that he "hated advertising," believing it fundamentally distorts the incentive mechanisms between users and service providers. However, in the face of rising computing power and infrastructure costs in this round of the AI arms race, finding new sources of revenue has become an urgent priority.

According to insiders, OpenAI is currently testing only in the U.S. for free users, and the pricing is highly "selective." James Denton-Clark, Chief Growth Officer for Stagwell in Europe, pointed out that due to the minimum investment threshold set in the six-figure range ($200,000) for the initial pilot, early demand is primarily coming from large, established advertisers. These ads will be displayed separately from the answers generated by ChatGPT, similar to traditional billboards, aimed at building brand awareness.

Jessica Tamsedge, CEO of Dentsu Creative UK&I, believes this presents an "obvious" opportunity for advertisers. She specifically mentioned the case of Walmart's stock price soaring after announcing a partnership with OpenAI, demonstrating market recognition of AI's commercial potential. Forrester's chief analyst Nikhil Lai stated that **OpenAI is engaging in a calculated gamble, betting that ChatGPT's high response rate will be sufficient for advertisers to accept the steep upfront costs **

Challenging Traditional Search Giants

OpenAI's entry directly threatens the digital advertising market, which has long been dominated by tech giants like Google and Amazon, with a market size exceeding $1 trillion. Kate Scott-Dawkins, President of Global Business Intelligence at WPP Media, pointed out that the search engines defining the previous generation of advertising models are being replaced by conversational AI. As AI platforms can provide highly accurate recommendations based on users' historical behaviors (such as translation records or shopping preferences), this could divert advertising revenue from traditional search and e-commerce platforms.

Although Google currently still dominates the industry with over $80 billion in quarterly advertising revenue and has introduced AI summary ads in its traditional search interface, it has not placed ads in its core chatbot Gemini. Analysts believe that Google's ability to remain passive is due to its large existing advertising business serving as a buffer, giving it an advantage in attracting users who dislike ads.

In contrast, OpenAI lacks this historical accumulation. Analysis from consulting firm Madison and Wall shows that nearly all internal cash flow of tech companies is being reinvested in AI infrastructure, leaving little room for buybacks or dividends. Luke Stillman, Managing Director of Madison and Wall, described OpenAI's current strategy as akin to "throwing spaghetti at the wall," trying to create more revenue through every possible avenue.

Competitors' Counterattack and Trust Concerns

While OpenAI actively embraces advertising, its main competitor Anthropic has taken a completely different stance. About 80% of Anthropic's expected revenue comes from enterprise clients, while OpenAI's proportion is only 40% to 50%. After OpenAI announced its advertising plans, Anthropic even ran an ad during the Super Bowl, explicitly stating: "Advertising is going to AI, but it won't come to Claude (its chatbot product)."

This differentiated strategy highlights industry concerns about user privacy and trust. Professor David Rand warned that if users are worried about their personal information being used for ad targeting, they may become more cautious during conversations with ChatGPT, which would directly reduce the practicality of AI. To alleviate these concerns, OpenAI has promised not to use private conversation records for ad targeting, but rather to match relevance based solely on users' current questions, allowing free users to opt out within certain limits.

Despite the controversies, advertising executives generally believe that as consumer habits change, chatbots will become the next frontier in marketing. Although WPP expects OpenAI's advertising revenue in its first year to be between $500 million and $800 million—still a gap from its internal multi-billion dollar grand target—it is seen as a strong start. As former WPP CEO Mark Read stated, logic suggests that a hybrid model of paid and advertising will work best in AI applications, as demonstrated by Netflix and Amazon