Generative AI (artificial intelligence) service companies are entering the search advertisement market
Generative AI service companies are making their way into the search advertisement market, following in the footsteps of pioneers like Google and Purple Lexity. The surge in interest in this area has also caught the attention of ChatGPT operator OpenAI, which recently announced its plans to join the competition.
Despite the challenges of achieving profitability in the current landscape of AI search service subscriptions, OpenAI is determined to explore new avenues for revenue generation. In a recent interview with the Financial Times (FT), OpenAI's Chief Financial Officer, Sarah Pryor, hinted at the possibility of adopting an advertising business model.
OpenAI's Strategic Move
While the specific details of OpenAI's advertising service remain undisclosed, industry experts speculate that it may revolve around "ChatGPT Search," a cutting-edge AI search service that was introduced by the company not long ago.
With the recruitment of advertising experts from tech giants like Meta and Google, OpenAI is gearing up to disrupt the advertising market. The company's decision to diversify its revenue streams aligns with the growing costs associated with AI development.
Revenue Projections
OpenAI's ChatGPT platform boasts more than 250 million weekly active users, with a significant portion being paid subscribers. The company is expected to generate a substantial sum of $3.4 billion in subscription sales this year, marking a significant increase from the previous year.
However, the escalating expenses linked to AI model development are driving OpenAI to consider revising the pricing of its ChatGPT Plus subscription service. Plans are underway to raise the monthly fee from $20 to $44 by the year 2029 to offset the rising costs.
Competition in the Market
Other players in the AI search service sector, such as Purple Lexity, have already ventured into the realm of advertising to bolster their revenue streams. Purple Lexity's foray into advertising, marked by sponsored follow-up questions during searches, aims to create a sustainable business model.
Google, a dominant force in the global search and online advertising space, has also introduced AI Overview advertisements that cater to commercial content within search results. The industry anticipates further expansion of these advertising services on a global scale, following Google's recent announcements.
Industry Implications
As OpenAI prepares to challenge Google's dominance in the search advertising arena, concerns have surfaced regarding the impact on service quality. There are apprehensions that integrating advertisements into AI search results may compromise neutrality and favor certain brands.
Nevertheless, companies like Purple Lexity emphasize that advertising does not influence search results directly. They assure users that sponsored content is generated independently by AI algorithms and not influenced by the sponsoring brands.
