5 ms·

OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

72 points by EvgeniyZh 3mo ago

d--b 3mo ago
What a shitty title. “An analyst thinks OpenAI may miss its 2030 ad revenue target by 90%” is what the article says.
onetokeoverthe 3mo ago
the ad business is dead and openai's brand is toxic.
- dyauspitr 3mo ago
  The ad business will never die. It’s capitalisms air and water.
  - ath3nd 3mo ago
    [dead]
  - animuchan 3mo ago
    True, but the current state of advertising is, charitably, kinda goofy. I'm not surprised the iteration we're seeing now is perceived as failing: on the few remaining screens where ads are still present for me, they're between highly irrelevant to flat out repulsive. There are a few brands I will never touch with a long stick, purely as a result of their disturbing, disgusting ads -- again, charitably, a negative-sum game.
    - ozlikethewizard 3mo ago
      As someone who doesnt really see ads either, we are in the minority. The vast majority of people are bombarded with ads from their TVs, streaming platforms, and unadblocked browsers. Try using a relatives iPhone or something its mad.
  - deleted 3mo ago
    [deleted]
  - onetokeoverthe 3mo ago
    [dead]
feverzsj 3mo ago
People heavily relying on LLM literally live in a Truman show.
- solid_fuel 3mo ago
  A simulacrum, simultaneously more detailed than the ones built by Meta and Instagram and Tik Tok, but even more shallow, without even the illusion of human connection. An endless forest of mirrors reflecting no one but the user.
moezd 3mo ago
So, how do their overall financials look these days?
- thg 3mo ago
  Will Locket wrote about it last month: https://www.planetearthandbeyond.co/p/openai-is-in-a-far-worse-position-d8a https://www.planetearthandbeyond.co/p/openai-is-in-a-far-wor... tldr is: They either get a successful IPO to stave off bankruptcy for a couple more months, or they're going to be bankrupt by the beginning of next year.
  - xattt 3mo ago
    Any particular preparations to do before this ship hits the sand?
    - rf15 3mo ago
      Extract as much liquidity as you can and don't have any commitments to them.
  - ralph84 3mo ago
    Or they stay private and raise more capital. Until they have a failed round people predicting bankruptcy are getting way ahead of how this would actually play out. Some of us are old enough to remember the "Amazon can never make a profit and will go bankrupt" predictions of 25 years ago.
    - IsTom 3mo ago
      The scale current of money-burning is just wild. I'm not sure you can compare it to anything else this century.
      - esseph 3mo ago
        The tech industry is currently spending more on AI infrastructure every single year than the United States spent during the absolute peak annual years of the post-9/11 wars. That said, $2T was spent during GWOT with another $8T in veteran care, DHS, interest in debt. Current AI spend this year is expected to be $2.59T (chips, infra, etc)
ArtTimeInvestor 3mo ago
Emarketer’s data finds that standalone chatbots like ChatGPT, Microsoft Copilot app, Google AI Mode, and Amazon Alexa for Shopping (formerly Rufus) in U.S, will generate less than $1 billion in ad revenue this year, and just $5.41 billion by 2030. How would that be possible? In the past I used Google maybe 10 times a day with a short query. From which Google had to guess my intent. Now I babble with Gemini all day about everything. And Gemini can ask questions what exactly I mean. Why wouldn't Alphabet be able to generate more revenue from this than from search? And Google's ad revenue from search is over $100B per year. Just because there are no ads now does not mean there never will be. Google search was run without ads for the first years too.
- zpeti 3mo ago
  Because writing a headline with 90% miss in it will get more clicks than actually thinking through business strategy and realistic projections.
  - adventured 3mo ago
    The same kind of speculation questioned whether Facebook would ever have a significant business. Before that, the same was asked about Google's business. If GPT can maintain or grow usage, the ad dollars will be there given the enormous scale. There is a hundred billion dollars plus worth of advertising waiting in the LLM space. It would be surprising if Facebook doesn't contract for example, losing ground to LLMs on advertising over the coming decade.
    - hsb3 3mo ago
      They have to build out all the backend ad tech crap that google and fb have built over decades. As in the campaign tools, scheduling, targeting, analytics, auctions, exchanges etc. Advertisers and publishers have already deeply integtated into that eco system. Also the google and fb system has created a content generating army that is incentivized to fight tooth and nail for eyeballs. OpenAI doesnt reduce the activities of the eyeball capture army, it just freaks them out and pushes them into overdrive.
rswail 3mo ago
Using "on pace to miss its own forecast" is a weird way of phrasing "OpenAI made it up to bullshit the rubes". Not to mention that being "on pace" is usually a term that means "keeping pace with".
ChicagoDave 3mo ago
Does anyone at OpenAI know how to run a business?
- khoury 3mo ago
  Sam Altman worked at the same incubator that runs this website.
  - romanovcode 3mo ago
    But how many companies did he actually launched? lol The only actual product was "Loopt", some bs location sharing app that nobody used or ever heard about.
  - this_user 3mo ago
    Founding a start-up with VC money, dumping the bag into someone else's lap, and then riding off into the sunset is a very different skill set from actually growing and running a company that is no longer early stage. Look at Zuckerberg. He may have been good as a founder, but if he didn't have super voting shares, and if Meta's cash flow from their ad business wouldn't mask how poor his strategic decision making has been, he would have been pushed out as CEO years ago.
    - ChicagoDave 3mo ago
      I’m still amused at how many people will lick the boots of any oligarch/startup toad.
  - grebc 3mo ago
    What’s the business? If it’s anything other than raising equity then you didn’t answer the question.
- yihtserns 3mo ago
  They should poach Neal Mohan.
dependsontheq 3mo ago
There are only two successful ad business forms in the digital world, attention or intent. Meta is built on attention and Google and others like amazon are built on intent. Everything else is optimizing the targetting data in some kind of behavioral way to get better intent data or to reach the right users. I have no idea where something like Chatgpt stands on that axis, it has actually very little attention (in hours per day) for most people and I am not sure that it has enough intent signals.
- JumpCrisscross 3mo ago
  > Meta is built on attention and Google and others like amazon are built on intent I'm having trouble seeing the difference. They both capitalise on attention, i.e. eyeballs. And they both try to predict what you're likely to click on so they can show you the most-relevant ads.
  - m4tthumphrey 3mo ago
    When you use Google you are generally actively looking for something. When you use Facebook you get ads for things you aren't looking for.
    - JumpCrisscross 3mo ago
      I get that from the product perspective. I'm just not seeing it from the ad side. Attention is a prerequisite to serving an ad. Correctly predicting intent is how you maximise its value.
      - ethbr1 3mo ago
        Parent is presumably making the case (and I'm assuming this extends to their respective ad pricing models) that it's revenue equivalent but profitable either way. Either you have intent but little attention (Google et al.) and so can charge a decent amount. Or you have lots of attention but little intent (Facebook et al.) and so can charge a decent amount. You can't charge a decent amount if you have little intent and little attention. OpenAI presumably has intent, but hasn't done all the Google-esque adtech sausage making to expose that to ad space buyers.
TokenLat 3mo ago
[flagged]
Havoc 3mo ago
Wouldn't be surprised if there is utter panic behind the scenes. They somehow need to corner many billions of business meanwhile chinese labs reckon they'll have fable class models by end of the year. [0] That does not leave a lot of room for mistakes. I reckon they'll get government to block chinese models just like the US car industry did with EVs. https://www.tomshardware.com/tech-industry/artificial-intelligence/elon-musk-says-that-china-will-have-a-fable-5-class-ai-model-probably-q1-next-year-ceo-of-chinese-anthropic-rival-says-it-wont-take-that-long https://www.tomshardware.com/tech-industry/artificial-intell...
- esseph 3mo ago
  > I reckon they'll get government to block chinese models just like the US car industry did with EVs. This is more or less already the case. Not that they're blocked, but... it may limit who you can work with and what insurance companies will cover you.
nttylock 3mo ago
[flagged]
ozlikethewizard 3mo ago
Ignoring whether or not OpenAI can reach this, do we think a massive expansion of ad revenue is fruit of the poisonous tree for GPTs? Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? I suppose if the platforms become super entrenched and we boil slowly then they'll get away with it
- netdevphoenix 3mo ago
  > Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? It depends on the economics and usefulness of the tool. Google Search got away with it because it was useful AND trading zero cost of usage for ads was worth it for most. Whether LLMs can get away with it seems very unclear now as they don't seem as popular as search engines.
  - xdertz 3mo ago
    > as they don't seem as popular as search engines. Anecdotal evidence that I observe is that people stopped using google and only ask LLMs nowadays for their everyday queries.
  - fragmede 3mo ago
    LLMs don't seem as popular as search engines? We are all living in our own bubbles, so I'll tell you about mine. In mine, LLMs have replaced search engines. Not just the query itself, but how it's used. I don't use Google to find a site that tells me what to do after I've spilled some red wine kny the carpet, I use ChatGPT to tell me directly what to do about it. That's foundational.
  - deleted 3mo ago
    [deleted]
sauercrowd 3mo ago
Why does it have to be ad revenue though? A forecast of ad revenue alone being below expectations really doesn't say much about a company like openAi

72 points by EvgeniyZh 3mo ago

d--b 3mo ago

What a shitty title. “An analyst thinks OpenAI may miss its 2030 ad revenue target by 90%” is what the article says.

onetokeoverthe 3mo ago

the ad business is dead and openai's brand is toxic.

dyauspitr 3mo ago
The ad business will never die. It’s capitalisms air and water.
- ath3nd 3mo ago
  [dead]
- animuchan 3mo ago
  True, but the current state of advertising is, charitably, kinda goofy. I'm not surprised the iteration we're seeing now is perceived as failing: on the few remaining screens where ads are still present for me, they're between highly irrelevant to flat out repulsive. There are a few brands I will never touch with a long stick, purely as a result of their disturbing, disgusting ads -- again, charitably, a negative-sum game.
  - ozlikethewizard 3mo ago
    As someone who doesnt really see ads either, we are in the minority. The vast majority of people are bombarded with ads from their TVs, streaming platforms, and unadblocked browsers. Try using a relatives iPhone or something its mad.
- deleted 3mo ago
  [deleted]
- onetokeoverthe 3mo ago
  [dead]

feverzsj 3mo ago

People heavily relying on LLM literally live in a Truman show.

solid_fuel 3mo ago
A simulacrum, simultaneously more detailed than the ones built by Meta and Instagram and Tik Tok, but even more shallow, without even the illusion of human connection. An endless forest of mirrors reflecting no one but the user.

moezd 3mo ago

So, how do their overall financials look these days?

thg 3mo ago
Will Locket wrote about it last month: https://www.planetearthandbeyond.co/p/openai-is-in-a-far-worse-position-d8a https://www.planetearthandbeyond.co/p/openai-is-in-a-far-wor... tldr is: They either get a successful IPO to stave off bankruptcy for a couple more months, or they're going to be bankrupt by the beginning of next year.
- xattt 3mo ago
  Any particular preparations to do before this ship hits the sand?
  - rf15 3mo ago
    Extract as much liquidity as you can and don't have any commitments to them.
- ralph84 3mo ago
  Or they stay private and raise more capital. Until they have a failed round people predicting bankruptcy are getting way ahead of how this would actually play out. Some of us are old enough to remember the "Amazon can never make a profit and will go bankrupt" predictions of 25 years ago.
  - IsTom 3mo ago
    The scale current of money-burning is just wild. I'm not sure you can compare it to anything else this century.
    - esseph 3mo ago
      The tech industry is currently spending more on AI infrastructure every single year than the United States spent during the absolute peak annual years of the post-9/11 wars. That said, $2T was spent during GWOT with another $8T in veteran care, DHS, interest in debt. Current AI spend this year is expected to be $2.59T (chips, infra, etc)

ArtTimeInvestor 3mo ago

Emarketer’s data finds that standalone chatbots like ChatGPT, Microsoft Copilot app, Google AI Mode, and Amazon Alexa for Shopping (formerly Rufus) in U.S, will generate less than $1 billion in ad revenue this year, and just $5.41 billion by 2030. How would that be possible? In the past I used Google maybe 10 times a day with a short query. From which Google had to guess my intent. Now I babble with Gemini all day about everything. And Gemini can ask questions what exactly I mean. Why wouldn't Alphabet be able to generate more revenue from this than from search? And Google's ad revenue from search is over $100B per year. Just because there are no ads now does not mean there never will be. Google search was run without ads for the first years too.

zpeti 3mo ago
Because writing a headline with 90% miss in it will get more clicks than actually thinking through business strategy and realistic projections.
- adventured 3mo ago
  The same kind of speculation questioned whether Facebook would ever have a significant business. Before that, the same was asked about Google's business. If GPT can maintain or grow usage, the ad dollars will be there given the enormous scale. There is a hundred billion dollars plus worth of advertising waiting in the LLM space. It would be surprising if Facebook doesn't contract for example, losing ground to LLMs on advertising over the coming decade.
  - hsb3 3mo ago
    They have to build out all the backend ad tech crap that google and fb have built over decades. As in the campaign tools, scheduling, targeting, analytics, auctions, exchanges etc. Advertisers and publishers have already deeply integtated into that eco system. Also the google and fb system has created a content generating army that is incentivized to fight tooth and nail for eyeballs. OpenAI doesnt reduce the activities of the eyeball capture army, it just freaks them out and pushes them into overdrive.

rswail 3mo ago

Using "on pace to miss its own forecast" is a weird way of phrasing "OpenAI made it up to bullshit the rubes". Not to mention that being "on pace" is usually a term that means "keeping pace with".

ChicagoDave 3mo ago

Does anyone at OpenAI know how to run a business?

khoury 3mo ago
Sam Altman worked at the same incubator that runs this website.
- romanovcode 3mo ago
  But how many companies did he actually launched? lol The only actual product was "Loopt", some bs location sharing app that nobody used or ever heard about.
- this_user 3mo ago
  Founding a start-up with VC money, dumping the bag into someone else's lap, and then riding off into the sunset is a very different skill set from actually growing and running a company that is no longer early stage. Look at Zuckerberg. He may have been good as a founder, but if he didn't have super voting shares, and if Meta's cash flow from their ad business wouldn't mask how poor his strategic decision making has been, he would have been pushed out as CEO years ago.
  - ChicagoDave 3mo ago
    I’m still amused at how many people will lick the boots of any oligarch/startup toad.
- grebc 3mo ago
  What’s the business? If it’s anything other than raising equity then you didn’t answer the question.
yihtserns 3mo ago
They should poach Neal Mohan.

dependsontheq 3mo ago

There are only two successful ad business forms in the digital world, attention or intent. Meta is built on attention and Google and others like amazon are built on intent. Everything else is optimizing the targetting data in some kind of behavioral way to get better intent data or to reach the right users. I have no idea where something like Chatgpt stands on that axis, it has actually very little attention (in hours per day) for most people and I am not sure that it has enough intent signals.

JumpCrisscross 3mo ago
> Meta is built on attention and Google and others like amazon are built on intent I'm having trouble seeing the difference. They both capitalise on attention, i.e. eyeballs. And they both try to predict what you're likely to click on so they can show you the most-relevant ads.
- m4tthumphrey 3mo ago
  When you use Google you are generally actively looking for something. When you use Facebook you get ads for things you aren't looking for.
  - JumpCrisscross 3mo ago
    I get that from the product perspective. I'm just not seeing it from the ad side. Attention is a prerequisite to serving an ad. Correctly predicting intent is how you maximise its value.
    - ethbr1 3mo ago
      Parent is presumably making the case (and I'm assuming this extends to their respective ad pricing models) that it's revenue equivalent but profitable either way. Either you have intent but little attention (Google et al.) and so can charge a decent amount. Or you have lots of attention but little intent (Facebook et al.) and so can charge a decent amount. You can't charge a decent amount if you have little intent and little attention. OpenAI presumably has intent, but hasn't done all the Google-esque adtech sausage making to expose that to ad space buyers.

TokenLat 3mo ago

[flagged]

Havoc 3mo ago

Wouldn't be surprised if there is utter panic behind the scenes. They somehow need to corner many billions of business meanwhile chinese labs reckon they'll have fable class models by end of the year. [0] That does not leave a lot of room for mistakes. I reckon they'll get government to block chinese models just like the US car industry did with EVs. https://www.tomshardware.com/tech-industry/artificial-intelligence/elon-musk-says-that-china-will-have-a-fable-5-class-ai-model-probably-q1-next-year-ceo-of-chinese-anthropic-rival-says-it-wont-take-that-long https://www.tomshardware.com/tech-industry/artificial-intell...

esseph 3mo ago
> I reckon they'll get government to block chinese models just like the US car industry did with EVs. This is more or less already the case. Not that they're blocked, but... it may limit who you can work with and what insurance companies will cover you.

nttylock 3mo ago

[flagged]

ozlikethewizard 3mo ago

Ignoring whether or not OpenAI can reach this, do we think a massive expansion of ad revenue is fruit of the poisonous tree for GPTs? Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? I suppose if the platforms become super entrenched and we boil slowly then they'll get away with it

netdevphoenix 3mo ago
> Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? It depends on the economics and usefulness of the tool. Google Search got away with it because it was useful AND trading zero cost of usage for ads was worth it for most. Whether LLMs can get away with it seems very unclear now as they don't seem as popular as search engines.
- xdertz 3mo ago
  > as they don't seem as popular as search engines. Anecdotal evidence that I observe is that people stopped using google and only ask LLMs nowadays for their everyday queries.
- fragmede 3mo ago
  LLMs don't seem as popular as search engines? We are all living in our own bubbles, so I'll tell you about mine. In mine, LLMs have replaced search engines. Not just the query itself, but how it's used. I don't use Google to find a site that tells me what to do after I've spilled some red wine kny the carpet, I use ChatGPT to tell me directly what to do about it. That's foundational.
- deleted 3mo ago
  [deleted]

sauercrowd 3mo ago

Why does it have to be ad revenue though? A forecast of ad revenue alone being below expectations really doesn't say much about a company like openAi