6 ms·

The LLM usage will generate hundreds of billions of dollars in ad revenue, which will be wildly lucrative in terms of margins (not as good as Google search used

The LLM usage will generate hundreds of billions of dollars in ad revenue, which will be wildly lucrative in terms of margins (not as good as Google search used to be). If GPT is a leader in that, they'll take a sizable share of that pot. There's a lot more money in being Google -> consumer ads, or Amazon -> consumer ads, or Meta -> consumer ads, than there is in being Anthropic -> enterprise. Just take a look at the enterprise. Amazon's ad business alone is already a better business than Oracle or SAP or Salesforce, with superior margins, and it's growing faster too. And of course everybody knows the Google & Meta ad monsters. The only question remaining is who is going to extract all those LLM ad dollars, how will that break out. Right now it's Gemini and GPT in the obvious lead, with Anthropic in third, and Meta & Grok nowhere to be found (permanent situation for those).

cmiles8 6mo ago
“The LLM usage will generate hundreds of billions of dollars in ad revenue” And yet every attempt to extract even minimal ad revenue has been canned to date as something nobody wants with AI providers retreating in failure. I don’t doubt that there’s “some” ad revenue to be had but there’s little evidence that ads are going to save the day here.
- bdangubic 6mo ago
  These exact words were said tens of thousands of times about Facebook (am old enough to remember those discussions :) ), “no way they can monetize on mobile” (this was the most fun). rules are simple, if you have Xbn or XXXm users on your system, you will make big bank in ads eventually
  - iAMkenough 6mo ago
    At that time, Facebook provided a free service without any real competitors. The masses will switch to Meta AI or Gemini or Claude at the drop of an ad that annoys them enough.
    - adventured 6mo ago
      Gemini, GPT and Claude will all have ads on the consumer side. They will go together in quasi lock-step into the ad future, because that money is gigantic and they're going to need it. The masses will have no say in the matter. Just as they had no say in the matter with Google's ads getting ever more intrusive, or cable prices previously, or streaming prices going perpetually higher in the present, or YouTube ads, or anything else. Consumers will have no say in the matter, they'll take it and that's that. With only three relevant competitors (maybe Mistral in Europe), there will be nowhere to flee the deployment of ads.
      - bdangubic 6mo ago
        amazing this is even a debate, we have now decades of this across everything that reaches enough users, it is a certainty as much that the Sun will rise tomorrow morning. as probably many people here on HN I am designated computer-fixer for all my family so any family gathering I have to look at someone's computer about something. years ago I started checking whether browser(s) anything ad-blocking in place and I am 0 for million by now. while HN crowd might be theoretically pushing back on ads (even with like "I won't use this if there are ads" nonsense) general public is so used to ads that I sometimes feel it is welcomed change when some new service etc gets ads. I remember the first time I saw an ad on Amazon Prime Video and my daughter and I were like "no f'ing way!!!" and my wife was like "oh, ____ is on sale this weekend, cool!" :)
  - harmonic18374 6mo ago
    It's tempting to look at trends and assume there must be a rule behind them, but it's also intellectually lazy. Please do the hard work of justifying your stance like GGP did.
    - bdangubic 6mo ago
      it is a simple stance - if you have a product that is used by hundreds of millions of people ad monetization strategy will be found cause there are people a lot smarter than you and me that will get it done. here’s intellectual challenge - find a business with comparable number of users to openai which is not swimming in ad revenue - one will do
      - harmonic18374 6mo ago
        Snapchat
        bdangubic 6mo ago
        Total Quarterly Revenue (Q4 2024): $1.55 billion in total revenue, with $1.41 billion coming from advertising Basically all their revenue is ad revenue and not too bad
      - flextheruler 6mo ago
        A counterpoint is that there are many products with significant usage that fail or never attempt advertising monetization. They just increase the cost of the product.
        satvikpendem 6mo ago
        Such as?
        flextheruler 6mo ago
        I apologize, but I thought it was self-evident. The majority of enterprise professional software. I would argue that comparing OpenAI to social media companies is an awful comparison. A much better comparison would be to Microsoft Office.
- adventured 6mo ago
  For several early years search was thought to have no great business model (banner ads and similar). And then it did. GoTo.com -> Google -> $$$
operatingthetan 6mo ago
>The LLM usage will generate hundreds of billions of dollars in ad revenue, which will be wildly lucrative in terms of margins (not as good as Google search used to be). This seems like ... not the situation we are in. LLMs are great for coding now but their text generation capabilities aren't exactly capturing the masses or replacing their jobs yet. People are already tired of the deluge of fake content on the internet, it's not going to drive a second revolution in web ads. The $20-200 LLM plans are all subsidized and aren't paying for themselves. Something has to give here.
- adventured 6mo ago
  LLM usage will largely replace traditional search, and that's stage one. To be specific, search will be consumed by the LLMs, it'll be merely an aspect of what they do for the user, and that'll include handling the more intricate details of the search, refining the search, understanding the results of search, etc. The age of the typical user handling any of that is about to end. Search will more be a feature of Gemini in the not very distant future, rather than Gemini being bolted onto/into search. Fuller integration into the user's life will bring ever more ad opportunities (and it doesn't matter if the HN base hates that notion, it's going to happen regardless). That'll happen over the next decade gradually. Shopping, home management, tasks (taxes, accounting, lifestyle, reminders, homework, work work, 800 other things), travel (obvious), advice & general conversation (already there), search (being consumed now), gaming (next 3-5 years to start), full at-work integration (gradual spread across all industries, with more narrow expertise), digital world building (10-15+ years out for mass user adoption). And on the list goes. It's pretty much anything the user can or does touch in life.
  - operatingthetan 6mo ago
    > To be specific, search will be consumed by the LLMs, it'll be merely an aspect of what they do for the user, and that'll include handling the more intricate details of the search, refining the search, understanding the results of search, etc. The age of the typical user handling any of that is about to end. We already have the tech for that, why hasn't it happened? People are revolted by the AI results in Google. AI isn't going to make people use their computers more. It's not opening up a new consumer market. This is just making each search infinitely more expensive.
iAMkenough 6mo ago
Not interested in a service with ads throughout my workday, which is why I switched to Anthropic. Billions in projected revenue is nothing but hype/cope. Google and Meta got their edge because their product was offered for "free" to the masses.
- bdangubic 6mo ago
  absolutely not the case. there isn’t a single nerve in human brains that goes “oh imma tolerate ads cause this shit’s free but if I pay a few bucks no way” - if the product you use has utility to you, you will tolerate ads provided no other acceptable alternative. not to tell you something you don’t already know but anthropic is getting ads, eventually, it is a given. so while today you may have an alternative (arguably better even if no ads in the equation) at some point you won’t have an alternative (other than running local) and you’ll tolerate ads. the thing with LLM ads is that companies can make $$$$ from “ads” you don’t see, i.e. I can (not now but in the future) companies to push my product, e.g. claude is setting up architecture and proposes upstash (which I own and am paying anthropic a lot of money) instead of any competitor. or even more silently adding dependencies on my NPM library which has free and commercial offering…
  - iAMkenough 6mo ago
    Yeah sure, but for me the common man OpenAI doesn't add any value that Claude, Gemini or Meta AI doesn't also provide. If they want to out-ad those companies to the tune of billions, I'll go with the least annoying. OpenAI hasn't earned any loyalty.
    - bdangubic 6mo ago
      to me and you sure, but what do you reckon how many of their MAU are just people for whom “AI” is ChaptGPT? 90+%?
  - zozbot234 6mo ago
    Anthropic is already an ad - for Anthropic. The uniquely "friendly" personality of their user-facing AI chatbot is far from accidental.
steveBK123 6mo ago
> Just take a look at the enterprise. Amazon's ad business alone is already a better business than Oracle or SAP or Salesforce, with superior margins, and it's growing faster too. You can say the same about AWS and then prove the b2b case instead of ad case as well
- adventured 6mo ago
  AWS is legitimately a giant and it should be considered in enterprise broadly. It's infrastructure more than enterprise software of course, which is where Anthropic is at. Anthropic is not trying to host the world's databases and services (at present anyway). Anthropic will however help you write software to compete with Salesforce, Oracle, SAP, et al. Google's ad business remains far larger and more profitable than AWS. And the advertising segment is drastically larger than the segment AWS is in. Just Google + Meta = nearing $600 billion in ad sales. Amazon will soon have their own $100 billion in ad sales.
  - steveBK123 6mo ago
    I guess the question is how many more $100B of ad sales slots are available, aside from just stealing share from incumbents (who already took it from traditional media channels over last 20 years). At some point someone needs to add value to the real economy, not just take an ad tax off the top.
    - bombcar 6mo ago
      I don't think advertising is entirely a zero-sum game (there is real value to everyone for steveBK123 to learn of a product that actually solves a real need or saves money, etc) - but it has to be something akin to it - the economy can't support five hundred trillion dollars in advertising spend.
rchaud 6mo ago
Google launched in 1998 and were running ads by 2000. Considering how much more access to adtech product talent there is for OAI a quarter of a century on, what explains their hesitation to pick that route and make billions? After all they had billions avaiable to acquire designer bauble maker Jony Ive's company.
- delecti 6mo ago
  The first AI company to cram their product full of ads will get roasted over the coals for it. My guess is they're all playing chicken and waiting to be the second to do it. I'd also guess that they're all already thinking about ways to introduce it that will generate the least backlash. Google could do it in 2000 because their search was legitimately so much better, and also because their ads were comparatively more relevant and unobtrusive than modern ads. In comparison, LLMs are relatively similar in performance unless you're picky enough that you're probably already paying and thus wouldn't be in the ad-supported tier. That said, I wonder if ads are even lucrative enough to move the needle relative to how much training costs are increasing with each generation.
  - bombcar 6mo ago
    People forget it took Google years of frog-boiling to get us to where we are now. The first AI to insert blatant ads will be dumped for some other model overnight. Look at the Copilot "backlash" over their "product announcements".
    - df2sdf 6mo ago
      Yep. Finally someone who knows how to think straight. Google built up immense surplus and ate into it slowly. OAI can't suddenly start cramming Ads as it fights to survive. Im sure they are employing questionable tactics to keep users hooked. Won't really work on a large enough user base to make the economics viable given the competition they face.
bandrami 6mo ago
It will not be lucrative if the hundreds of billions of dollars in ad revenue cost the providers trillions in compute. That's still the big question.
- aworks 6mo ago
  I think this is the right question. My search/chat is now 50% ChatGPT, 30% Google, and 20% Gemini. I have no idea the business implications of this. For that matter, I don't know the bandwidth and compute cycle tradeoffs between traditional search and AI.

cmiles8 6mo ago

“The LLM usage will generate hundreds of billions of dollars in ad revenue” And yet every attempt to extract even minimal ad revenue has been canned to date as something nobody wants with AI providers retreating in failure. I don’t doubt that there’s “some” ad revenue to be had but there’s little evidence that ads are going to save the day here.

bdangubic 6mo ago
These exact words were said tens of thousands of times about Facebook (am old enough to remember those discussions :) ), “no way they can monetize on mobile” (this was the most fun). rules are simple, if you have Xbn or XXXm users on your system, you will make big bank in ads eventually
- iAMkenough 6mo ago
  At that time, Facebook provided a free service without any real competitors. The masses will switch to Meta AI or Gemini or Claude at the drop of an ad that annoys them enough.
  - adventured 6mo ago
    Gemini, GPT and Claude will all have ads on the consumer side. They will go together in quasi lock-step into the ad future, because that money is gigantic and they're going to need it. The masses will have no say in the matter. Just as they had no say in the matter with Google's ads getting ever more intrusive, or cable prices previously, or streaming prices going perpetually higher in the present, or YouTube ads, or anything else. Consumers will have no say in the matter, they'll take it and that's that. With only three relevant competitors (maybe Mistral in Europe), there will be nowhere to flee the deployment of ads.
    - bdangubic 6mo ago
      amazing this is even a debate, we have now decades of this across everything that reaches enough users, it is a certainty as much that the Sun will rise tomorrow morning. as probably many people here on HN I am designated computer-fixer for all my family so any family gathering I have to look at someone's computer about something. years ago I started checking whether browser(s) anything ad-blocking in place and I am 0 for million by now. while HN crowd might be theoretically pushing back on ads (even with like "I won't use this if there are ads" nonsense) general public is so used to ads that I sometimes feel it is welcomed change when some new service etc gets ads. I remember the first time I saw an ad on Amazon Prime Video and my daughter and I were like "no f'ing way!!!" and my wife was like "oh, ____ is on sale this weekend, cool!" :)
- harmonic18374 6mo ago
  It's tempting to look at trends and assume there must be a rule behind them, but it's also intellectually lazy. Please do the hard work of justifying your stance like GGP did.
  - bdangubic 6mo ago
    it is a simple stance - if you have a product that is used by hundreds of millions of people ad monetization strategy will be found cause there are people a lot smarter than you and me that will get it done. here’s intellectual challenge - find a business with comparable number of users to openai which is not swimming in ad revenue - one will do
    - harmonic18374 6mo ago
      Snapchat
      - bdangubic 6mo ago
        Total Quarterly Revenue (Q4 2024): $1.55 billion in total revenue, with $1.41 billion coming from advertising Basically all their revenue is ad revenue and not too bad
    - flextheruler 6mo ago
      A counterpoint is that there are many products with significant usage that fail or never attempt advertising monetization. They just increase the cost of the product.
      - satvikpendem 6mo ago
        Such as?
        flextheruler 6mo ago
        I apologize, but I thought it was self-evident. The majority of enterprise professional software. I would argue that comparing OpenAI to social media companies is an awful comparison. A much better comparison would be to Microsoft Office.
adventured 6mo ago
For several early years search was thought to have no great business model (banner ads and similar). And then it did. GoTo.com -> Google -> $$$

operatingthetan 6mo ago

>The LLM usage will generate hundreds of billions of dollars in ad revenue, which will be wildly lucrative in terms of margins (not as good as Google search used to be). This seems like ... not the situation we are in. LLMs are great for coding now but their text generation capabilities aren't exactly capturing the masses or replacing their jobs yet. People are already tired of the deluge of fake content on the internet, it's not going to drive a second revolution in web ads. The $20-200 LLM plans are all subsidized and aren't paying for themselves. Something has to give here.

adventured 6mo ago
LLM usage will largely replace traditional search, and that's stage one. To be specific, search will be consumed by the LLMs, it'll be merely an aspect of what they do for the user, and that'll include handling the more intricate details of the search, refining the search, understanding the results of search, etc. The age of the typical user handling any of that is about to end. Search will more be a feature of Gemini in the not very distant future, rather than Gemini being bolted onto/into search. Fuller integration into the user's life will bring ever more ad opportunities (and it doesn't matter if the HN base hates that notion, it's going to happen regardless). That'll happen over the next decade gradually. Shopping, home management, tasks (taxes, accounting, lifestyle, reminders, homework, work work, 800 other things), travel (obvious), advice & general conversation (already there), search (being consumed now), gaming (next 3-5 years to start), full at-work integration (gradual spread across all industries, with more narrow expertise), digital world building (10-15+ years out for mass user adoption). And on the list goes. It's pretty much anything the user can or does touch in life.
- operatingthetan 6mo ago
  > To be specific, search will be consumed by the LLMs, it'll be merely an aspect of what they do for the user, and that'll include handling the more intricate details of the search, refining the search, understanding the results of search, etc. The age of the typical user handling any of that is about to end. We already have the tech for that, why hasn't it happened? People are revolted by the AI results in Google. AI isn't going to make people use their computers more. It's not opening up a new consumer market. This is just making each search infinitely more expensive.

iAMkenough 6mo ago

Not interested in a service with ads throughout my workday, which is why I switched to Anthropic. Billions in projected revenue is nothing but hype/cope. Google and Meta got their edge because their product was offered for "free" to the masses.

bdangubic 6mo ago
absolutely not the case. there isn’t a single nerve in human brains that goes “oh imma tolerate ads cause this shit’s free but if I pay a few bucks no way” - if the product you use has utility to you, you will tolerate ads provided no other acceptable alternative. not to tell you something you don’t already know but anthropic is getting ads, eventually, it is a given. so while today you may have an alternative (arguably better even if no ads in the equation) at some point you won’t have an alternative (other than running local) and you’ll tolerate ads. the thing with LLM ads is that companies can make $$$$ from “ads” you don’t see, i.e. I can (not now but in the future) companies to push my product, e.g. claude is setting up architecture and proposes upstash (which I own and am paying anthropic a lot of money) instead of any competitor. or even more silently adding dependencies on my NPM library which has free and commercial offering…
- iAMkenough 6mo ago
  Yeah sure, but for me the common man OpenAI doesn't add any value that Claude, Gemini or Meta AI doesn't also provide. If they want to out-ad those companies to the tune of billions, I'll go with the least annoying. OpenAI hasn't earned any loyalty.
  - bdangubic 6mo ago
    to me and you sure, but what do you reckon how many of their MAU are just people for whom “AI” is ChaptGPT? 90+%?
- zozbot234 6mo ago
  Anthropic is already an ad - for Anthropic. The uniquely "friendly" personality of their user-facing AI chatbot is far from accidental.

steveBK123 6mo ago

> Just take a look at the enterprise. Amazon's ad business alone is already a better business than Oracle or SAP or Salesforce, with superior margins, and it's growing faster too. You can say the same about AWS and then prove the b2b case instead of ad case as well

adventured 6mo ago
AWS is legitimately a giant and it should be considered in enterprise broadly. It's infrastructure more than enterprise software of course, which is where Anthropic is at. Anthropic is not trying to host the world's databases and services (at present anyway). Anthropic will however help you write software to compete with Salesforce, Oracle, SAP, et al. Google's ad business remains far larger and more profitable than AWS. And the advertising segment is drastically larger than the segment AWS is in. Just Google + Meta = nearing $600 billion in ad sales. Amazon will soon have their own $100 billion in ad sales.
- steveBK123 6mo ago
  I guess the question is how many more $100B of ad sales slots are available, aside from just stealing share from incumbents (who already took it from traditional media channels over last 20 years). At some point someone needs to add value to the real economy, not just take an ad tax off the top.
  - bombcar 6mo ago
    I don't think advertising is entirely a zero-sum game (there is real value to everyone for steveBK123 to learn of a product that actually solves a real need or saves money, etc) - but it has to be something akin to it - the economy can't support five hundred trillion dollars in advertising spend.

rchaud 6mo ago

Google launched in 1998 and were running ads by 2000. Considering how much more access to adtech product talent there is for OAI a quarter of a century on, what explains their hesitation to pick that route and make billions? After all they had billions avaiable to acquire designer bauble maker Jony Ive's company.

delecti 6mo ago
The first AI company to cram their product full of ads will get roasted over the coals for it. My guess is they're all playing chicken and waiting to be the second to do it. I'd also guess that they're all already thinking about ways to introduce it that will generate the least backlash. Google could do it in 2000 because their search was legitimately so much better, and also because their ads were comparatively more relevant and unobtrusive than modern ads. In comparison, LLMs are relatively similar in performance unless you're picky enough that you're probably already paying and thus wouldn't be in the ad-supported tier. That said, I wonder if ads are even lucrative enough to move the needle relative to how much training costs are increasing with each generation.
- bombcar 6mo ago
  People forget it took Google years of frog-boiling to get us to where we are now. The first AI to insert blatant ads will be dumped for some other model overnight. Look at the Copilot "backlash" over their "product announcements".
  - df2sdf 6mo ago
    Yep. Finally someone who knows how to think straight. Google built up immense surplus and ate into it slowly. OAI can't suddenly start cramming Ads as it fights to survive. Im sure they are employing questionable tactics to keep users hooked. Won't really work on a large enough user base to make the economics viable given the competition they face.

bandrami 6mo ago

It will not be lucrative if the hundreds of billions of dollars in ad revenue cost the providers trillions in compute. That's still the big question.

aworks 6mo ago
I think this is the right question. My search/chat is now 50% ChatGPT, 30% Google, and 20% Gemini. I have no idea the business implications of this. For that matter, I don't know the bandwidth and compute cycle tradeoffs between traditional search and AI.