OpenAI hints at advertisements while Google brings ads to AI Mode

The news: OpenAI continues hinting at adding advertisements to its artificial intelligence products as it looks for new ways to generate revenues in its shift from non-profit to for-profit.

• The platform is exploring advertising as a potential revenue stream, per a statement from CFO Sarah Friar in a Financial Times interview—though she later claimed that there were no immediate plans to implement advertising in conversation with The Register.
• Still, OpenAI is continuing its hiring spree of advertising professionals, including talent from key competitors like Shivakumar Venkataraman, previous vice president of Google’s search advertising team—indicating that advertising might indeed be in its future.

Competition heats up: The move comes as Google begins testing ads in AI Mode, which came out in beta on Wednesday and aims to “leverage learnings” from built-in ad products in AI Overviews to guide its approach, per Adweek.

Other AI search engine competitors, like Microsoft Copilot and Perplexity, have already begun including advertisements in search results.

Zooming out: AI leaders have already experienced some success with ad incorporation—take Google, which increased user satisfaction by including relevant ads in AI Overviews, per a company blog post. The outlook is generally positive—brands’ willingness to advertise alongside AI-generated content is already increasing, and users are relatively comfortable sharing certain personal information in exchange for AI-assisted personalized ads.

Branching off into advertising could be a way for OpenAI to gain consumer trust and confidence in the quality of search results through advertising products relevant to the user’s search. Given that OpenAI has the largest share of the AI market at 22%, it could hold significant appeal to advertisers.

Our take: While OpenAI hasn’t confirmed the extent of its investment in advertising, the fact that its competitors are already debuting ads indicates that advertising will become a key component of how AI search engines generate revenue in the future.

But while it could be a promising revenue source, an advertising strategy only works if the ads are relevant. Unrelated, intrusive ads could cause negative consequences, like decreasing user adoption and consumer trust, that an ad revenue boost can’t completely offset—meaning a careful and strategic approach is essential.