Abstract:
This year, OpenAI and Anthropic have continued to launch new models and tools to compete for the developer base. In the process, its advertising business once seemed to be incidental. But that has changed.
In the past few months, the company has launched a number of new products and tools to attract advertisers, while also lowering advertising prices. The latest data shows that this move has helped it attract a large number of new advertisers. OpenAI is still hiring on a large scale. Data from Crustdata, an employee profile tracking platform, shows that nearly half of OpenAI’s approximately 140 advertising business employees joined the company between July and September; Dave Dugan, the head of advertising business, has worked at Meta for 12 years, and Meta is also its largest source of talent.
Large-scale recruitment and the resignation of some senior executives have triggered many changes within the company. Two people familiar with the matter revealed that since the advertising business was launched in February this year, the OpenAI advertising team has undergone seven reorganizations.
Compared to the company's other businesses, the advertising business is still small, but OpenAI is trying to build it into an important growth engine. Since the launch of advertising in February, annualized advertising revenue reached US$1 billion at the end of August. By comparison, OpenAI's overall business annualized revenue at the end of September was close to US$50 billion, mainly relying on ChatGPT subscriptions, Codex agents and other related products, as well as direct model sales.
Despite growth in advertising revenue, OpenAI is unlikely to achieve the ambitious goals it outlined to investors earlier this year. At that time, the company predicted that total advertising revenue in 2026 would reach US$2.4 billion.
Attracting more advertisers can help drive further business growth. Dan Salmon, a partner at New Street Research, a Wall Street research firm, said that there were about 60,000 advertisers on the OpenAI platform at the beginning of October, much higher than the 20,000 at the end of August.
Sensor Tower, an application and advertising monitoring agency, estimates that ChatGPT advertising spending in the U.S. market will increase by 40% in October compared with September. OpenAI’s advertising business has now expanded to more than 60 countries.
The rapid growth of the business has also made advertisers and agency executives curious about this business. A special event held jointly with client Home Depot during Advertising Week in New York last Thursday was sold out. After the event, dozens of people lined up, hoping to have a brief chat with Dave Dugan, OpenAI’s vice president of global advertising solutions.
Duggan then said: "We are building the fastest-growing advertising business in the world, attracting talents from various companies in the industry, rather than just focusing on a single company. The diverse talent background allows us to maintain rapid iteration and transform advertiser feedback into better products."
The digital advertising market is dominated by Google, Meta and Amazon. It is destined to be a tough battle for OpenAI to get a piece of the pie. Several people who work directly with advertisers said that most advertisers are still only putting out test budgets, which usually account for 1% to 5% of annual advertising expenditures, on ChatGPT, and only a few customers have significantly increased their investment.
Kate Scott-Dawkins, head of global research business at GroupM, a media investment group under WPP, said: “It takes time to sign contracts, acquire new advertisers, and seize market share.” She believes that Google will still be a major player in the field of AI chatbots and AI search advertising for some time to come. However, she also mentioned that she has never seen any advertising channel grow as fast as OpenAI.
Recruit talents from Google and Meta
Feige Simo has more than ten years of experience at Facebook. He joined OpenAI in 2025 and stopped holding a full-time position in early July this year. After that, Dugan reorganized the advertising team into vertical business groups, responsible for different industries such as retail, tourism, and finance, and established a separate team to connect with advertising agencies. People familiar with the matter said that this structure is similar to the organization of mature advertising sales teams such as Meta and Google. A Meta spokesman declined to comment.
There are many sales talents from Meta and its competing products among the senior management of the advertising business. For example, Vijay Raj, after working at Meta for 10 years, became the chief technology officer of OpenAI applications a year ago; Mitch Pilar, who has 12 years of experience in Google, and Andy Zinn, who has worked at Meta for about ten years, joined in July and are responsible for selling advertising to brands and agencies in Australia and New Zealand; at the end of September, Mark Bunbury, who has more than ten years of experience in the X platform, became the head of OpenAI's advertising business in Europe, the Middle East and Africa.
Test budget delivery phase
When OpenAI launched its advertising pilot in February, it first focused on large brands and agencies that purchase advertising for brands, including Ecoline, Target, Ford, and advertising groups such as Omnicom, WPP, and Dentsu. Recently, OpenAI has begun to more actively pursue small and medium-sized enterprises - it is these customers that have built the Meta advertising empire.
In order to attract small and medium-sized advertisers, OpenAI relies on outsourcing companies to assist in advertising sales and help advertisers set up promotion activities. Its partners include TP (formerly Teleperformance), Kangda Synology and consulting giant Accenture.
Nine agencies and technology companies that place ads on ChatGPT said that as advertisers gradually become familiar with the platform, they are slowly increasing their advertising budgets on ChatGPT.
One of the major attractions is that ChatGPT advertising prices have dropped since its launch. In the early days of the project, the platform charged premiums to some large customers. Cole Furr, founder of the marketing agency InterTeam Marketing, said: For similar commercial software customers, a single ad click on ChatGPT costs about US$5, while Google's click cost is between US$30 and US$50.
Philip Nakoff, head of agency Nakora, serves clients selling cybersecurity, AI and legal tech tools. He said that the advertising effect far exceeded expectations: for every $1,000 invested, customers can get about 10 customers on ChatGPT, 5 on Meta, and only 1 on Google. Some customers have daily advertising budgets ranging from US$1,000 to US$30,000, with up to 40% of the budget invested in ChatGPT.
Marcos Ciarorochi, co-founder of Graphite Agency, said: "Once ChatGPT advertising runs through, the scale of advertising can increase to hundreds of thousands of dollars or even higher."
At the same time, OpenAI is also expanding the advertising formats displayed to users.
The first batch of ads launched in February will be marked as sponsored ads and appear below the Q&A responses. They are similar to Google search ads. They are last-click ads and are targeted at users who have already made a purchase. Dugan said last week that currently about 20% of ChatGPT users’ questions have the intention to purchase products or services.
Recently, the ChatGPT advertising team has focused on reaching potential users who have not yet searched for purchasing information within the robot. Two people familiar with the matter revealed that OpenAI launched a picture advertising format last week, using pictures to show how products and services can be integrated into daily life, and has informed agencies that it plans to test more picture and video advertising materials.
OpenAI is also launching performance tracking tools that advertisers need. Last week, it announced cooperation with a number of third-party monitoring agencies to track users’ subsequent behavior after clicking on ads. However, advertisers still have more demands, such as the need for tools to compare the effectiveness of ChatGPT and Google advertising, said two people who have contacted OpenAI.
Advertisers also complained about not being able to see exactly which conversations triggered their ads. Farhad Difcha, CEO of marketing company Accuracast, said: "This is a black box with no visibility at all. This results in advertisers having to make guesses when setting instructions and specifying ChatGPT ad display scenarios."
Data from Adthena, a search and AI advertising monitoring agency, shows that some ad placements do not match. The agency analyzed about 187,000 advertising records and found that about one-ninth of the ads had nothing to do with user questions. A handful of ads also appeared inappropriately next to sensitive issues: an ad for a push-up bra appeared next to a breast cancer-related search, and an ad for short-term loans appeared under a question about debt relief.
An OpenAI spokesperson said that the company is carefully listening to feedback from advertisers and agencies, continues to optimize products, and launches new features based on feedback.
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