OpenAI has shifted ChatGPT's advertising model from cost-per-thousand impressions to cost-per-click, ten weeks after first placing ads inside the chatbot. Advertisers can now set bids between $3 and $5 per click through OpenAI's new self-serve ads manager, while the minimum spend has dropped from $250,000 to $50,000. The move puts OpenAI in direct competition with Google and Meta for performance advertising budgets — and it signals that the AI tool hundreds of millions of people rely on for personal and professional decisions is now, unmistakably, an advertising platform.
From experiment to ad platform in ten weeks
The speed of this buildout has been remarkable. OpenAI launched ads on 9 February with a CPM model, a $200,000–$250,000 minimum spend, and a roster of early advertisers including Target, Ford, Adobe, and Expedia. Within two months, the pilot topped $100 million in annualised revenue with several hundred advertisers participating.
But the CPM model was already softening. The $60 CPM that OpenAI charged at launch eroded to as low as $25 in some cases — a decline of nearly 60% in ten weeks. A leaked StackAdapt deck offered CPMs as low as $15, a quarter of the launch rate. When impression prices fall, so does the revenue each one generates. CPC gives OpenAI a way to grow ad revenue that isn't hostage to declining impression rates.
"As OpenAI looks to increase spending, this is going to help advertisers directly compare their results on OpenAI to other major advertising platforms and manage their spend," said Nicole Greene, VP Analyst at Gartner.
The infrastructure has scaled in parallel. 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, 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.
The financial pressure driving the pivot
The numbers behind this move are not subtle. OpenAI projects $2.5 billion in advertising revenue for 2026, scaling to $11 billion by 2027 and $100 billion by 2030. These are staggering targets, but they exist because the alternative arithmetic is worse: OpenAI is projected to lose approximately $14 billion in 2026 on compute, research, and infrastructure costs. It closed a $122 billion funding round at an $852 billion valuation on 31 March, but does not expect to reach profitability until 2030.
Advertising is the fastest path to closing the gap between revenue and expenditure without raising subscription prices or conducting yet another funding round. The US market for AI search advertising is projected to grow from roughly $1 billion in 2025 to $26 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.
Competing on Google's home turf
CPC is Google's territory. Google has spent years building the most sophisticated click-based bidding system in existence — pricing each click based on intent signals, quality scores, auction pressure, and retargeting data. Its CPCs continue to grow quarter on quarter. Advertisers keep getting evidence that Google clicks convert.
OpenAI will need to make the same case, and it's harder than it sounds. Not all clicks are equal. Meta's CPCs run three to five times cheaper than Google Search, not because the inventory is worse, but because the intent behind them is different. Social users are browsing; search users are looking for something specific.
"LLMs are now starting to bridge that gap, as intent begins to build through the back-and-forth of prompt-driven conversations," said Ashley Fletcher, CMO at Adthena, which has several clients testing ads on ChatGPT.
Where ChatGPT lands on that intent spectrum will determine what its clicks are actually worth. The ads appear at the bottom of responses, labelled "sponsored" and visually separated from the answer. Targeting is contextual — matched to the current conversation topic rather than demographic or third-party data. Product-led queries can include sponsored product cards similar to Google Shopping. Users on the free tier and the $8-per-month Go plan see ads; paid subscribers on Plus, Pro, Business, Enterprise, and Education tiers do not.
The industry splits on monetisation
The major AI companies are now pursuing divergent monetisation strategies that would have seemed unlikely a year ago. Google is weaving advertising into 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 as a result.
The split tests a foundational question: 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.
"OpenAI's experimentation with CPC is driven largely by its need to maintain demand growth and build trust with advertisers, though declining CPMs and an expanding pilot are also factors," said Claire Holubowskyj, Senior Research Analyst at Enders Analysis.
What this means for Australian businesses
The ads pilot has already expanded to Australia, New Zealand, and Canada as of late March — so this isn't hypothetical for local businesses. If you're a business owner considering AI tools, two things matter right now.
First, if you use ChatGPT's free tier for business decisions, your results now include advertising. Ads are contextual and clearly labelled, but they're there. OpenAI maintains that ads don't influence ChatGPT's answers — advertising and organic responses are separated — but the structural incentive has shifted. If you rely on ChatGPT for research, vendor comparisons, or purchasing decisions, it's worth understanding that the free experience now serves two masters.
Second, ChatGPT is now a new advertising channel. The minimum spend has dropped to $50,000, and OpenAI has partnered with StackAdapt, Smartly, and Criteo for programmatic buying. For businesses already running Google and Meta campaigns, ChatGPT ads represent a new surface to test — particularly for product-led queries where conversational context might produce higher-intent clicks than traditional search.
The broader lesson: the AI tools that businesses adopted as neutral productivity assistants are becoming platforms with their own commercial incentives. That's not inherently bad — Google Search has always been ad-supported — but it changes the calculus for how much you trust unattributed AI recommendations.
What to watch
The next six months will determine whether OpenAI's ad ambitions are transformative or whether they follow the CPM rates — impressive at launch, then rapidly deflating. Key milestones: whether OpenAI hits its $2.5 billion ad revenue target, whether the company's IPO filing materialises in the second half of this year, and whether user trust metrics hold as ads scale globally.
For the AI industry, the deeper question is whether advertising and AI assistance can coexist without degrading the product that made people care in the first place. Sam Altman spent two years calling ads a "last resort" before reversing course. The market will now judge whether that reversal was pragmatic realism or the first step down a familiar path.
Sources
- Our approach to advertising and expanding access — OpenAI
- Testing ads in ChatGPT — OpenAI
- OpenAI turns on cost-per-click ads inside ChatGPT — Digiday
- OpenAI shifts ChatGPT ads to cost-per-click as $60 CPM erodes — The Next Web
- OpenAI projects $2.5 billion in ad revenue this year, $100 billion by 2030 — Axios
- 'Everything is coming down': ChatGPT ads are getting cheaper — Digiday
- AI-driven search ad spending set to surge to $26 billion by 2029 — Reuters
