New Delhi: Six months into testing advertisements on ChatGPT in the US, artificial intelligence firm OpenAI on Thursday said it will start showing advertisements to a section of its users in India, the company’s second-largest market. The ads will go live immediately, as the country prepares to welcome its peak shopping season of festivals.
In an interview with Mint, Dave Dugan, vice-president and head of global ads solutions at OpenAI, said the company expects one in every five ChatGPT queries submitted by users in India to see advertisements. WPP and Omnicom are OpenAI’s first advertising partners in the country, and companies can start submitting their advertisements on the platform at a starting price of ₹725 per day, he said.
“Nearly 80% of user queries, which aren’t directly related to any product or commercial intent, will not see any ads even in the free tier. We have prioritized retaining user trust in ChatGPT. For this, we want to ensure that advertisements will not influence organic answers on ChatGPT, and vice versa,” Dugan said.
On 9 February, OpenAI announced a pilot plan for advertisements within ChatGPT, barely five days after cross-town rival Anthropic released a statement claiming that its ChatGPT counterpart, Claude, “is a space to think” and will remain ad-free.
On the other hand, Google, on 20 May, said its AI mode in search will start showing trials of advertisements, even though the Gemini app itself remains ad-free for the time being. Calling generative AI a “new era of Search,” a blog post by Google said, “As the Search experience becomes smarter and more conversational, we’re using Gemini models to experiment with new ad experiences designed to provide engaging, helpful answers that connect people with businesses.”
OpenAI will, however, be the first among top generative AI platforms to officially roll out full-scale advertisements in India.
The introduction of advertisements in ChatGPT comes at a time when OpenAI is preparing for an initial public offering () in its home market. On 19 August, a CNBC report said chief financial officer Sarah Friar had told employees that OpenAI “will be a public company in 2027”. The company filed its IPO papers with the US Securities and Exchange Commission (SEC) on 8 June. A Financial Times report had then said the IPO sought a valuation of “more than $1 trillion”.
Without a mention of the IPO, Dugan told Mint that the launch of ads on ChatGPT in India is a bid to retain a free tier, as well as the low-cost ‘Go’ subscription tier, which the executive said is OpenAI’s “cheapest paid plan in the world”.
“We’re doing ads to bring the benefits of artificial general intelligence (AGI) to as many people as possible, as cheaply as possible,” Dugan said. “The ads business can subsidize access to AI probably for the entire world. We have over 1 billion weekly active users worldwide.”
On 15 February, chief executive Sam Altman said now has over 100 million monthly active users in India.
A ‘no-brainer’
Industry stakeholders believe generative AI platforms can potentially offer high returns to advertisers. A report on digital advertising in AI, published by analysis and consultancy firm Redseer earlier this month, said the ‘conversion rate’ on platforms such as ChatGPT and Gemini is four times superior to conventional search engines.
“AI-native formats combine strong purchase intent with personalized recommendations, bringing brands closer to the point of decision. Their (conversational AI assistants’) share in digital advertising could reach around 8% by 2030, largely taking away from general search and static displays,” the report said.
Shalvi Mangaonkar-Biswas, founder and chief executive of independent digital marketing agency Magic Mammoth, concurred, adding that the introduction of advertisements on ChatGPT was “a no-brainer.”
“There is no doubt that ChatGPT is purposefully accessed by people, and it is also important to note that OpenAI has a highly precise profile of users that can help them determine what ad would suit whom, even if they do not share user data with advertisers,” she said. “They’re also launching around the festive season, which could make ads on ChatGPT very important for small brands.”
Mangaonkar-Biswas added that a typical advertisement campaign for a small brand “would cost at least ₹2-3 lakh per month for any meaningful returns, which is more expensive, if not at least similar, to the early pricing that ChatGPT is floating.”
“On top of that, it is important to note that platforms under Meta offer generalized user data. The key for ChatGPT, to be sure, is how precisely targeted the ads can be,” she said.
OpenAI has claimed its advertisements will not use or collect any personally identifiable information from users, or share user data with advertisers. This was confirmed by Dugan.
While he did not offer a guidance on the likely share of its net operating revenue that advertisements will fetch this year, he said the company expects ads to be a “critical” third revenue stream for OpenAI, alongside long-term deals with and paid subscriptions from users.
“For small and medium businesses in India, we’ll also be offering a self-serve platform, where companies can create and run ads by themselves, even without an agency or a large in-house team,” he added.