OpenAI's Shift to Personalized Ads Challenges Internet Advertising

Key Quotes

"It's not official yet but it's my not so hot hot take that personalized ads based on your chat history are coming to chatgbt very soon you could almost say that's a given but this is hot take tuesday so here's my hot take I'm actually looking forward to personalized chatgbt ads and I think they'll ultimately be better for not only consumers but also for businesses and I'm obviously not making this proclamation empty handed obviously so on today's show I'm going to lay out the nine very convincing reasons personalized ads are coming to chatgbt soon and also prepare you for what that means because I think it's going to be a seismic shift that we all have to be ready for because the future of the internet will be based on not traditional advertising the ecosystem that google and meta have dominated for a decade plus now the future of the internet it's going to be based on conversational commerce and I think that openai is in prime position to be the leader"

The speaker, Jordan Walson, presents a bold prediction that personalized ads are imminent for ChatGPT. He argues that this shift will not only benefit businesses but also consumers, fundamentally altering the internet's advertising landscape and ushering in an era of conversational commerce where OpenAI is positioned to lead.

"well what's different than a year ago or early 2024 when these comments first came is well now uh openai has raised tens of billions of dollars and guess what happens when you raise tens of billions of dollars as an example softbank one company reportedly 30 billion they've invested in openai you know what happens when you have many companies that have invested millions of many of billions of dollars into your company that is losing money well you gotta have a plan and you have to say here's how we're going to start uh monetizing and that plan which i'm going to get to later involves a number that number is 700 plus million that is the number of free openai or chatgbt subscribers that i think are going to be seeing personalized ads soon"

Walson explains that OpenAI's substantial fundraising, totaling tens of billions of dollars, necessitates a clear monetization strategy. He posits that this financial pressure, coupled with a large user base of over 700 million free subscribers, makes the introduction of personalized ads a logical and inevitable step for the company to recoup its investments.

"number one the burn rate openai admittedly and reportedly according to reports is burning money uh up to uh certain publications have said 8 5 billion that they're burning through each year also just kind of referenced sam altman's 180 degree turn on ads that's number two number three is yeah the number of users they are straight up dominating the ai chatbot game with 800 million weekly active users number four uh the chatgbt memory personalization engine number five the metification of openai staff we're going to talk about that information report that just came out uh number six the atlas browser having control of the data number seven chatgbt apps being able to bring in new data and services uh number eight the agent uh kind of checkout protocol and the instant checkout and then number nine proactive delivery via chatgbt pulse"

Walson outlines nine key reasons supporting his prediction of personalized ads on ChatGPT. These reasons include OpenAI's significant financial burn rate, a shift in CEO Sam Altman's stance on advertising, the massive user base, and the development of new features like memory personalization, the Atlas browser, and ChatGPT apps, all of which create an infrastructure ripe for advertising integration.

"the metification of openai's dna so a recent report from the information which we shared about both on our ai news recap show yesterday and in our newsletter last week that's why they got to be it's why you got to be reading y'all so the information reported that almost 20 of openai's current staff that's more than 600 employees are former meta employees and a key hire who i think she is super super sharp by the way fiji simo the ex facebook ad lead yeah she's kind of responsible for bringing ads to facebook's news feed yeah so now she's openai ceo of applications and i do expect that she's going to be making some huge moves and according to reports she's actively hiring a chief of monetization now to build this ad platform"

Walson highlights the "metification" of OpenAI's staff as a significant factor, noting that a substantial portion of their employees, including key leadership like the former head of Facebook's ad lead, Fiji Simo, come from Meta. He suggests this influx of talent with deep experience in advertising platforms indicates a strategic move towards building a robust ad system within OpenAI.

"so the thought is many people are going to be mad right when personalized ads come to chatgpt and it's like all right well if you want out of it upgrade right whether the 20 tier won't have ads i don't know i'm not privy to that information a lot of times i you know get get you know some information from my contacts at big companies this is not one of those this is all just my own thoughts and beliefs from you know obviously talking about chatgpt almost every single day for many years but there's no other path to true monetization when you're already number one burning money it's not a user problem you got all the users but this was intentional right openai smart play by the way we mentioned this in our newsletter i think last week openai and anthropic two years ago you know year and a half ago 20 months ago were very much could have gone down a similar path i think anthropic prioritized being more profitable per user and openai prioritized users which is the right move right because when you have 800 million users weekly active users you can do what you want you can turn a switch and by that point everyone's worked it into into their daily processes"

Walson anticipates user backlash to personalized ads on ChatGPT but suggests that paid tiers will offer an ad-free experience as a solution. He emphasizes that OpenAI's strategic prioritization of user acquisition over immediate per-user profitability has built a massive user base, enabling them to implement monetization strategies like advertising now that the platform is deeply integrated into users' daily routines.

"the trade off is privacy versus utility right it's these personalized experiences that rely on deep user data but you also get into ethical concerns because like i said and i'm going to wrap this up here quickly not everyone's like me but this is where as a society i think this is almost going to be a small little turning point at least in the digital world right we're going to have to start looking at these ai chatbots and openai's not going to be alone this is going to become the norm for monetizing we're going to have to say is this okay what um what permissions should be in place what restrictions should be in place or should there be none because i think the first version is going to be kind of the wild west and openai is going to be a driver and this is is so much more it means so much more for our personal