OpenAI has rolled out ads on ChatGPT for select plans in India, one of its largest and most active markets, as the artificial intelligence company looks to maximize its revenue ahead of its planned listing next year.
Advertising would support "broader access to ChatGPT through free and lower-cost tiers," a spokesperson for OpenAI told CNBC in an email. Ads have been rolled out for free users and those on the 399 rupee ($4) per month 'Go' plan.
The ad feature is already live in 38 countries, including the U.S., Japan, Korea and across 31 European nations, as per the information shared by the company.
"India is one of ChatGPT's largest and most active markets," the spokesperson said, adding that OpenAI's priority is to "learn from users and advertisers while protecting the experience that made ChatGPT valuable in the first place."
The company also added that it does not show ads to users who identify as, or are predicted by the algorithm to be under 18.
OpenAI is planning to go public in 2027 and faces pressure to justify its $852 billion valuation ahead of its IPO, especially as some of its key metrics lag behind its rival Anthropic, which is also preparing for listing on public markets.
Monetization through ads will help OpenAI partially cover the cost of generating inference for a query and stem the company's losses, experts said.
Unlike Anthropic, which gets a higher share of its revenues from enterprises, OpenAI is more popular among individual consumers, explained Ujjwal Chaudhry, a partner at market intelligence firm Analysys Mason.
To monetize an individual consumer base on a scale, the ad model is most effective, Chaudhry said, adding that his firm's data shows that online ads account for more than 75% of total global ad spending worth $1.18 trillion. In-app advertisements are a $400 billion market.
OpenAI told CNBC, "ads will be clearly labeled, visually separate and shown below the response," adding that "Answer independence is non-negotiable."
Earlier this year, Anthropic slammed OpenAI's plans to start showing ads, insisting that its chatbot Claude will remain ad-free. Users will not see ads or sponsored links near their conversations, and the chatbot's answers will not be influenced by third-party product placements, Anthropic had said.
"OpenAI is in a tough spot," Dan Niles, founder and portfolio manager at Niles Investment Management, told CNBC in June. OpenAI is going to get squeezed between Anthropic, which is focused on enterprise customers, and Google, which is "the king in consumer," Niles said, adding that Google has plenty of cash flow to fund its ambitions.
The ChatGPT-owner has rolled out managed ads feature in India, and on Sept. 4, it will launch self-serve ads. Self-serve ads are popular across many social media platforms as they allow advertisers to directly use the platform to bid for ad impressions, Chaudhry said.
