Sam Altman Couldn’t Escape What He Hates: Ads

Fidji Simo comes with a very particular set of skills.

At Facebook, she led the team that monetised mobile and turned the News Feed into an advertising machine—now the app’s primary revenue source.

As CEO of US grocery delivery platform Instacart, she drove the company’s advertising model to 5,500 brand partners. The campaigns delivered an average 15% incremental sales lift, a figure Sequoia Capital called “almost unheard-of”.

When OpenAI announced in May 2025 that Simo would join as CEO of Applications, the writing was on the wall.

The Inevitable Turn

In January, OpenAI announced that it would run advertisements in ChatGPT’s free and lower-priced Go tiers. The move represents a stark reversal for a company whose CEO, Sam Altman, once called advertising in AI products “sort of uniquely unsettling to me” and “a last resort”.

This decision comes amid mounting financial pressure. Despite massive revenue growth, OpenAI continues to burn cash at an alarming rate. The AI giant burned $2.5 billion in the first half of 2025, largely due to R&D costs.

This raises concerns about long-term sustainability beyond API pricing and Pro and Plus subscriptions. Currently, around 5% of users have subscribed to the $20 Plus or the $200 Pro versions of ChatGPT, according to The Information. Some analysts even suggested the company could exhaust its reserves within 18 months.

But OpenAI has made assurances.

Ads will be clearly distinguished from responses; users can dismiss them, they will not appear in conversations about sensitive health or political topics, and the company will not sell private conversations. Users will retain control over optional data sharing. However, the company has not yet revealed its ad providers or the full mechanics of the system.

“Advertising has been a proven model,” Leslie Joseph, principal analyst focusing on AI at Forrester Research, tells AIM.

Meta accumulated roughly 3.4 billion daily active users by early 2025, and its ad revenue crossed $160 billion in 2024. In 2024, Google’s advertising business (through parent Alphabet) generated about $265 billion in ad revenue globally.

OpenAI currently has around 800 million users, with the number expected to cross one billion soon.

“A path to generating several billion dollars in ad revenue in 2026, going to $25+ billion by 2030, seems reasonable,” Mark Mahaney, senior managing director who heads Evercore’s Internet research team, wrote in a Deutsche Bank report.

The Privacy Paradox

While the ad revenue may pave the path to a smoother public listing, it nonetheless evokes concerns over what user data will be accessible to advertisers.

“The question is—how prevalent will OpenAI be around areas like user profiling and data retention?” Joseph ponders. “The fact that people are using ChatGPT and confiding in it in a much more personal way than they were ever doing so with any other form of social media places a lot of responsibility on OpenAI.”

Several users on social media have raised concerns about the tool’s privacy policy. While OpenAI has explicitly stated that it would “never sell data to advertisers”, it also specified that ads will appear “based on your current conversations”.

One privacy researcher posted on X that OpenAI’s claim that ads will not influence the answers it gives you is “unverifiable”. “ChatGPT isn’t open source. There’s no independent audit,” he said.

He pointed to another ambiguity: OpenAI collects the very prompts and other content that users upload to improve and develop its services, but it is unclear whether that data will be used to customise advertisements.

“Their ad principles also state you can ‘turn off personalisation’ and ‘clear the data used for ads at any time’. This means they’re storing ad personalisation data by default. Advertisers don’t need to see your raw conversations. OpenAI builds the targeting internally,” he stated.

However, Gemini is following a markedly different approach to ads.

In a recent interview with Business Insider, Dan Taylor, VP of global ads at Google, explained why it is deliberately holding back on ads in Gemini. Taylor argued that advertising works best in environments designed for commercial discovery, like search, where users are actively looking for products or services. Gemini, by contrast, is positioned as an assistant for creating, analysing, and problem-solving—contexts where ads risk feeling conceptually out of place.

He also noted that user interaction with AI assistants has been a relatively recent phenomenon and that they are not yet ready for ads that could be intrusive and potentially damaging to trust. Ads only make sense much later in the intent arc.

Another concern is how it might drive the wrong incentives for OpenAI to improve engagement, whether through the number of responses or the response length.

AIM reached out to OpenAI for more clarity, but the queries went unanswered.

The Marketing Opportunity

For business and marketing professionals, however, this opens up a whole new avenue.

Sumukh Rao, a marketing professional from Bengaluru who has worked with popular D2C brands, tells AIM, “Brands with fat marketing budgets will appreciate the move, since they can now diversify their resources across platforms instead of being overly reliant on the duopoly of Meta and Google.”

Rao also underlines the challenge that OpenAI will have to navigate in distinguishing organic results from ads.

Supreeth Kashyap, founder of Wellbi, a D2C clothing brand in India, adds, “Over the last few years, we have reached a saturation in the return on ad spend on platforms like Meta. So ChatGPT is a good, additional avenue to diversify our marketing investments on.”

OpenAI has also integrated various shopping features, such as in-chat buying called “Instant Checkout”, where users ask for a product on ChatGPT and the platform returns relevant products with prices and buy buttons. Joseph suggests that ChatGPT could now create an end-to-end commerce platform—enabling purchases directly within the chat, then using that sales data to work backwards through the customer journey.

By tracking which ads led to actual purchases, OpenAI could refine its targeting and optimise every touchpoint from initial impression to final sale, monetising the entire funnel for advertisers and sellers.

“This isn’t the standard tactic that everybody has done, so it places a huge onus on OpenAI to make sure that they prove that the systems that they are building are trustworthy, respectful of customers’ privacy and identity, and are traceable, trackable, and explainable,” he adds.

Source: Bryan Kim, X.

Beyond individual brand strategies, however, lies a structural truth about platforms at scale.

Eric Seufert, an analyst, shared in a memo online that despite how it is “tempting to view” ads as a “user-hostile product design choice”, it was inevitable. “Direct response advertising is the only business model that has reliably proven capable of sufficiently and optimally supporting a digital consumer product at humanity scale,” he said.

So even though Altman may not want ads, he needs them to address the cash burn. “If I were Sam Altman, I would be experimenting with every single possible option to monetise ChatGPT,” remarks Joseph.

The Timing Question

But even acknowledging their inevitability, the question remains: has OpenAI waited three years too long to tap this revenue stream?

This isn’t a concern for a company like Google, where revenue from Gemini can be offset by the colossal share of profits it earns from its other divisions. Nor is it a concern for Anthropic, whose core focus has been enterprise AI solutions andis already reportedly on track to break even and turn a profit in the coming months.

A few days before OpenAI announced ads—when there were speculations about how and when they would do it—AIM had spoken to multiple analysts and VCs about whether OpenAI was too late to the game.

“Implementing ads is a function of how much adoption you want and how much friction you can reduce. So long as everyone’s okay being able to raise enough money, not having to worry about revenue, ads would not come,” said Jasnoor Gill, director of India investments at Antler, in an interaction with AIM.

He stated that the delay might be to prevent user loss. “Maybe no one wants to be first because they’re afraid of losing users,” he said.

In one sense, OpenAI isn’t introducing anything unique. But its survival may depend on it.

The post Sam Altman Couldn’t Escape What He Hates: Ads appeared first on Analytics India Magazine.