OpenAI Hires Ex-Meta Exec to Build Advertising Business

OpenAI has hired Sarah Personette, former Meta executive, to lead its first advertising business. This marks a shift from OpenAI's subscription-only model as it seeks to diversify revenue streams and offset its estimated $5 billion in annual losses.

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OpenAI's decision to build an advertising business comes as the company faces significant operating costs, estimated at $5 billion annually, and a $157 billion valuation to justify. With ChatGPT's rapid growth to 400 million weekly active users, converting that audience into paying subscribers has proven difficult. Advertising provides a way to monetize the 'long tail' of users who may not pay for a subscription. OpenAI plans to replicate Meta's ad infrastructure within ChatGPT, including sponsored answers, promoted products, and brand integrations in Sora-generated content. However, OpenAI faces a structural disadvantage compared to Google and Meta in ad targeting, as it lacks the extensive search and social data those companies possess. To close this gap, OpenAI is aggressively hiring a large ad team, offering 40-60% salary premiums to poach talent from major tech firms. The introduction of ads will likely start with the free tier of ChatGPT, with potential for tiered ad loads in the future, raising privacy concerns around the sensitive data contained in user conversations.