Aug 31 (Reuters) - OpenAI on Monday said ChatGPT Ads, the company's advertising business, has reached $1 billion in annualized revenue run rate, as adoption picks up and global expansion rolls out.
The company started testing ads in ChatGPT U.S. earlier this year and has steadily expanded to add advertisers and tap into more markets, as it banks on advertising to boost overall revenue growth ahead of a potential IPO.
Here are more details:
• Starting on Monday, advertisers across India, Europe, the Middle East and North Africa can purchase ChatGPT ads directly via OpenAI's Ads Manager — a tool it has already rolled out in the United States.
• Ads Manager has been helpful in drawing small- and medium-sized businesses (SMBs) to advertise on ChatGPT, the company said, adding that SMBs now represent a "material share" of its ads business.
• OpenAI said advertisers outside the U.S. represent a growing share of revenue, without disclosing further details.
• OpenAI has been displaying ads to users on ChatGPT's free tier and the lower-priced Go plan. In April, OpenAI had said its ads pilot in the U.S. crossed $100 million in annualized revenue within six weeks of its launch.
• Emarketer AI analyst Nate Elliott said the announcement was "incredibly impressive and terribly disappointing," as the $1 billion annualized revenue run rate suggests OpenAI is falling well short of its $2.5 billion advertising revenue target for 2026.
• For OpenAI, competing in the advertising industry means challenging the dominance of Alphabet's Google and Facebook parent Meta, both of which rake in hundreds of billions in ad revenue annually.
• OpenAI confidentially filed for a U.S. initial public offering earlier this year, with the company reportedly expected to go public in 2027 or sooner.
(Reporting by Deborah Sophia in Bengaluru; Editing by Maju Samuel and Shailesh Kuber)
