OpenAI Ad Revenue Surges to $1B, Threatening Google and Meta
OpenAI's advertising business has been growing rapidly, reaching a $1 billion annualized revenue run rate in just six months. According to Gil Luria, head of technology research at D.A. Davidson, this is a significant milestone for the company.
Luria believes that OpenAI could eventually build an advertising business worth tens of billions of dollars as it shifts its consumer monetization mix toward advertising and away from subscriptions. Currently, OpenAI generates roughly 90-95% of its revenue from subscriptions and only a small portion from ads.
As OpenAI scales its ad business, Luria expects it to take share from Google, Meta, and TikTok. He sees Google Search as the most exposed because advertisers can use ChatGPT ads in a way that most closely resembles search advertising.