Summary: OpenAI has shifted ChatGPT’s advertising from CPM to cost-per-click pricing, with bids between $3 and $5, after the $60 CPM it charged at launch in February eroded to as low as $25 within ten weeks. The move puts OpenAI in direct competition with Google and Meta for performance ad budgets, while Perplexity and Anthropic have positioned themselves as explicitly ad-free alternatives. OpenAI projects $2.5 billion in ad revenue for 2026, scaling to $100 billion by 2030, as the company faces projected losses of $14 billion this year and an $852 billion valuation that investors are already questioning.
OpenAI has shifted ChatGPT’s advertising model from cost-per-thousand impressions to cost-per-click, a change that puts the company in direct competition with Google and Meta for performance advertising budgets ten weeks after it first placed ads inside the chatbot. Advertisers can now set bids between $3 and $5 per click, according to screenshots of OpenAI’s new ads manager, while the minimum spend has been cut from $250,000 to $50,000. The pivot, reported by The Information on 15 April, was driven by a practical problem: the $60 CPM that OpenAI charged at launch in February had eroded to as low as $25 in some cases, making a volume-dependent impressions model unsustainable for a company projecting $14 billion in losses this year.
The ads appear at the bottom of ChatGPT responses, labelled “sponsored” and visually separated from the answer. Product-led queries can include sponsored product cards similar to those on Google Shopping. Users on the free tier and the $8-per-month Go plan see ads. Paid subscribers on the Plus, Pro, Business, Enterprise, and Education tiers do not. OpenAI says advertisers cannot see user conversations, chat history, names, email addresses, or IP addresses, and receive only aggregated performance data showing total views and clicks. Targeting is contextual, matched to the topic of the current conversation, rather than demographic or third-party data.
From experiment to ad platform in ten weeks
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OpenAI first introduced advertising into ChatGPT on 9 February with a CPM model, a $200,000 to $250,000 minimum spend, and a roster of early advertisers that included Target, Ford, Adobe, Mrs. Meyer’s, and Expedia. Within two months, the pilot topped $100 million in annualised revenue with several hundred advertisers participating. OpenAI projects $2.5 billion in advertising revenue for 2026, scaling to $11 billion by 2027 and $100 billion by 2030.
The speed of the buildout has been striking. OpenAI hired Shivakumar Venkataraman, a 21-year Google veteran who led Google’s search ads business, as vice president in June 2024. Since February, the company has partnered with StackAdapt for programmatic placement, built a conversion tracking pixel supporting events including lead creation, order creation, and subscription starts, and launched a self-serve ads manager that opened to global advertisers on 15 April. International expansion to Australia, New Zealand, and Canada followed within 48 hours. OpenAI has also partnered with Smartly and Criteo to build conversational ad formats that go beyond static placements, connecting to Criteo’s network of 17,000 advertisers.
The CPC shift reflects the reality that impressions-based pricing was already softening. A leaked StackAdapt deck, shared with select buyers on 27 March, offered CPMs as low as $15, a quarter of the launch rate. Cost-per-click pricing ties revenue to demonstrable user engagement rather than passive exposure, aligning OpenAI’s model with how advertisers already evaluate performance on Google and Meta. OpenAI is also exploring action-based ad formats designed to drive purchases or app downloads directly from within a conversation.
The Altman pivot
Sam Altman spent two years building a public position against advertising. He called it a “momentary industry” in 2024. At Harvard, he described ads as a “last resort.” He told interviewers that “ads-plus-AI is sort of uniquely unsettling to me” and that he liked “that people pay for ChatGPT and know the answers they’re getting are not influenced by advertisers.” In a Stratechery interview, he said Instagram changed his mind, arguing that its ads “added value” to him.
On 9 February, as ads went live, Altman posted on X: “We are starting to test ads in ChatGPT free and Go tiers. Most importantly, we will not accept money to influence the answer ChatGPT gives you, and we keep your conversations private from advertisers.” Chris Lehane, OpenAI’s vice president of global affairs, defended the move by arguing that advertising helps “expand democratic access” to ChatGPT. In response to Anthropic’s Super Bowl commercials, which ran spots titled “Deception,” “Betrayal,” “Treachery,” and “Violation” with the tagline “Ads are coming to AI. But not to Claude,” Altman argued that Anthropic “serves an expensive product to rich people” while OpenAI needs to bring AI to “billions of people who can’t pay for subscriptions.”
The competitive landscape is splitting
The major AI companies are now pursuing divergent monetisation strategies in a way that would have seemed unlikely a year ago. Google is weaving advertising into 25.5% of AI-generated search results, extending its existing ad infrastructure into AI Overviews. OpenAI is building a parallel ad platform from scratch. And the rest of the market is running the other way.
Perplexity tested sponsored follow-up questions in 2024 and 2025, then abandoned advertising altogether, citing user trust concerns. It is now targeting $500 million in subscription revenue as the explicitly ad-free alternative. Anthropic positioned Claude as ad-free before OpenAI even launched its programme, spent millions on Super Bowl spots attacking ChatGPT’s ad decision, and saw an 11% jump in daily active users and a climb to seventh on the App Store as a result.
The split matters because it tests a foundational question about AI products: whether users treat a chatbot more like a search engine, where ads are tolerated, or more like a therapist, where they are not. An Ipsos survey found that nearly two-thirds of US adults say ads in AI search make them trust the results less. A boycott campaign called QuitGPT has gathered more than 200,000 sign-ups since late January.
The privacy question
The day ads launched, Zoe Hitzig, a researcher at OpenAI, resigned. Writing in the New York Times, she described ChatGPT’s conversation logs as “an archive of human candor that has no precedent” and warned that OpenAI risks following “the same path as Facebook.” Her concern was specific: while advertisers do not see user conversations, OpenAI must process conversation content internally to serve contextually relevant ads. Queries about health conditions, financial distress, relationship problems, and personal struggles are being analysed and categorised by the system to determine which ads to show.
OpenAI says it does not build audience segments based on demographics or third-party data and does not show ads to users it identifies as under 18. It updated its privacy policy to coincide with the ads expansion. But the structural tension remains: the same conversations that users treat as private are the signal that makes the ads work.
Why now
The financial pressure behind the pivot is not subtle. OpenAI generated $13 billion in revenue in 2025, a 236% increase from $3.7 billion in 2024, and is currently producing roughly $2 billion per month. It closed a $122 billion funding round at an $852 billion valuation on 31 March, led by Amazon, Nvidia, and SoftBank. But the company is projected to lose approximately $14 billion in 2026 on compute, research, and infrastructure costs. It does not expect to reach profitability until 2030. Internal targets include an IPO filing in the second half of this year and a 2027 listing at a potential valuation of up to $1 trillion.
Advertising is the fastest path to closing the gap between revenue and expenditure without raising subscription prices or conducting another funding round. The US market for AI search advertising is projected to grow from $1 billion in 2025 to $25.9 billion by 2029, representing 13.6% of all search ad spending. OpenAI’s $2.5 billion target for this year would make it a significant player in that market immediately.
The question is whether cost-per-click changes the calculation for advertisers who found the CPM model expensive and difficult to measure. CNBC reported in March that the test was “moving too slowly to meet the hype” and that OpenAI “can’t prove the ads are working” due to the absence of mature measurement tools. CPC at least gives advertisers a metric they understand: someone clicked. Whether that click leads to a purchase, and whether the broader disruption of AI search makes ChatGPT a necessary advertising channel regardless of its current limitations, will determine whether OpenAI’s advertising ambitions prove as transformative as its AI ones or as fleeting as the CPM rates that collapsed in ten weeks.
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