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Predicting OpenAI's ad strategy

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Re: Predicting OpenAI's ad strategy

#221

Post by miltonlost »

toddmorey wrote: post #121

OpenAI is here because Sam Altman is NOT a product guy. He craves Apple style consumer success, but he's terrible at productizing his technology. Remember the marketplace of custom GPTs? Hell even the name ChatGPT. Anthropic had to show them how to build useful workflows for developers using AI. Meanwhile, OpenAI delivered... Sora. To actually quote Sam Altman: "I think of ads as a last resort for a business model."…

> It's just maddening to me because this technology could be so much more useful for purposes way beyond advertising.

Can it tho? The problem with LLMs right now is that they don't have much useful purposes beyond spam, slop, hallucinated searches, and advertisements. The lack of a product is why there isn't a profit to be made in them

Re: Predicting OpenAI's ad strategy

#223

Post by lkey »

sumedh wrote: post #204
toddmorey wrote: post #121

OpenAI is here because Sam Altman is NOT a product guy. He craves Apple style consumer success, but he's terrible at productizing his technology. Remember the marketplace of custom GPTs? Hell even the name ChatGPT. Anthropic had to show them how to build useful workflows for developers using AI. Meanwhile, OpenAI delivered... Sora. To actually quote Sam Altman: "I think of ads as a last resort for a business model."…

> It's just maddening to me because this technology could be so much more useful for purposes way beyond advertising. AI is a perfect technology for Ads though. Instead of me wasting time reviewing multiple products for my use case, ChatGpt will just give me top 3 recommendations with the pros and cons and then buy it for me.

The one thing it will never recommend is no product at all.

You've ceded even the glimmers of discernment that remain in you and all I feel is pity. It is not a 'waste of time' to interrogate your own desires.

There's no such thing as a 'top 3' for all things under heaven. You cannot purchase yourself a solution to every 'use case'. Furthermore, even if there were such a ranking, the ad machine would not reveal it to you, as you are not the customer, you are the mark.

You don't even want to be bothered to hit the 'buy it now' button. This is the mental model of an immaculate rube. You deserve better.

Re: Predicting OpenAI's ad strategy

#224

Post by pepinator »

Aurornis wrote: post #192
bearjaws wrote: post #62

There is something to be said about the state of advertising. Increasingly it seems you must go to the almighty Google or Meta in order to launch any business. We're looking to expand into a new business line and have out grown our pharmacy capacity. The new business line will cost about $2M in software dev, and $3M for the new facility. The advertising budget? $40,000,000 (annual). We can build 10 robotic pharmacies…

> The new business line will cost about $2M in software dev, and $3M for the new facility. The advertising budget? $40,000,000 (annual). The reason the advertising budget is such a high number and a recurring charge is that effective advertising returns an ROI on each dollar spent. If the software budget was increased 10X to $20 million, would the company get 10X as many customers? No. What about the facility? If you…

it surprises me how many people simply don't get the point. they say "they make more money this way, so it's ok". no big picture at all.

Re: Predicting OpenAI's ad strategy

#225

Post by nromiun »

> Yes, OpenAI is burning $8-12B in 2025. Compute infrastructure is obviously not cheap when serving 190M people daily.

So casual. Actual ad giants like Meta and Google are serving many more people than 190M while bringing in actual profit.

Yes, let's say these are just the early days and they are burning money just like any other VC company. But how are they going to scale up their hardware/usage and get a profit at the same time?

AI hardware is getting optimized YOY too but the flagship models are getting bigger every year as well. I don't see how they are going to get profit without jacking their prices at the same time. And price increases always hits usage growth.

Serving an ad is very cheap these days, while serving a big model is very much expensive.

Re: Predicting OpenAI's ad strategy

#226

Post by notnullorvoid »

Ads aren't a long-term viable model for tools. Each year it gets more feasible to self host tools (email being the od exception, but there are still many ad free alternatives). Ads shifting vehicles to AI will extend the lifetime a bit, but even still local models are getting better and that's without even much architectural advancement.

I don't see an end to advertising all together though, public spaces and entertainment don't really have an escape unless forced by regulation.

Re: Predicting OpenAI's ad strategy

#227

Post by overfeed »

nneonneo wrote: post #25
andy99 wrote: post #14

Earlier quoted context omitted.

There would be competition from API wrappers, if you want to pay there will always be lots of options to chat without ads. I hate to think what they and others might come up with to try and thwart this.

You have no guarantee the API models won’t be tampered with to serve ads. I suspect ads (particularly on those models) will eventually be “native”: the models themselves will be subtly biased to promote advertisers’ interests, in a way that might be hard to distinguish from a genuinely helpful reply.

Retraining models every time a advertiser wins a bid on a keyword is unwieldy. Most likey solution is training the model to emit tokens represent ontological entries that are used by the Ad platform so that "" can be bid on by PepsiCo/Coca-Cola under food > beverage > chilled > carbonated. Auction cycles have to match ad campaign durations for quicker price discovery, and more competition among bidders

Re: Predicting OpenAI's ad strategy

#228

Post by NiloCK »

MontyCarloHall wrote: post #6

I think ads will inevitably roll out across all tiers, even the expensive paid ones. Ad revenue isn't uniformly distributed across users, but rather heavily skewed towards the wealthiest users, exactly the users most able to purchase an ad-free experience. The users paying $20 or $200/month for premium tiers of ChatGPT are precisely the ones you don't want to exclude from generating ad revenue. Google realized this a…

Given this specific family of product, the ads are essentially baked in - medium is the message and all.

LLM induced psychosis is one thing, but extremely subtle LLM induced brand loyalty or ideological alignment seem like natural attractors.

One day a model provider will be 'found out' for allowing paid placement among its training data. It's entirely possible that free-tier LLMs won't need banner ads - they'll just happen to like Pepsi a lot.

Re: Predicting OpenAI's ad strategy

#229

Post by awakeasleep »

csense wrote: post #209
bearjaws wrote: post #62

There is something to be said about the state of advertising. Increasingly it seems you must go to the almighty Google or Meta in order to launch any business. We're looking to expand into a new business line and have out grown our pharmacy capacity. The new business line will cost about $2M in software dev, and $3M for the new facility. The advertising budget? $40,000,000 (annual). We can build 10 robotic pharmacies…

Advertising spend being too high is a symptom of a supply glut. Too many products in the marketplace, not enough consumers to buy them. In a different world where there are higher wages, more people would have more spending power. Then companies wouldn't have to spend as many dollars on advertising, which they could split between higher wages, higher margins and lower prices. Alas, the short-term single-firm directio…

I dont think you have to go georgist for that take, adam smith’s whole “free market” originally meant “free from economic rent”

Re: Predicting OpenAI's ad strategy

#230

Post by dwaltrip »

Aurornis wrote: post #211
_factor wrote: post #200

Earlier quoted context omitted.

I doubt the ROI would be so high if organic results stood any chance. The ROI on bribes is very high too, but we haven’t legalized those (officially).

> I doubt the ROI would be so high if organic results stood any chance. This is just the same fallacy. In what world are people going to organically share ads for this company on their Facebook feeds? Who is going to Google the company name before they know about it? Every business needs to proactively acquire customers. Distribution and CAC are top of mind values for any growth business. It has been this way long be…

Information can travel without people paying for it do so.

Ban most ads and everything will still work fine.

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