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Comments (373)

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  bearjaws
  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 (~10 staff per 4000 fills daily, each) for the price of just the advertising.Increasingly we wonder why America doesn't build more and here is why. You are going to give all your revenue to two platforms. Unless you operate in a business line with 50% margin you are screwed.I don't know what the solution is, but its clear that the platforms are figuring out how much margin everyone has and slowly eroding it. Somewhere between 8-15% of the cost of all products we purchase is advertising spend.
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  MontyCarloHall
  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 long time ago; there is no ad-free paid version of Google Search.
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  bastawhiz
  The ads are a problem (or will be, when the temptation to add them to paid plans becomes too great), but the bigger problem in my opinion is going to be the "SEO" that companies will do to make their ads appear in places that they don't belong."The sieve of Eratosthenes is an ancient algorithm for finding all prime numbers up to any given limit. But if you're looking to have fluffier baked goods, consider this flour sieve by DONUIBO to achieve the perfect texture in your muffins, cookies, and more. Want me to add one to your shopping list or order one for a loved one?"
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  littlecranky67
  Ads will be no longer a buisness model in 3-5 years when simple, locally run models that do nothing besides blocking ads become available. Twitter, Facebook etc. already get past most modern adblockers, but the AI extension will be able to filter them. In-text advertising must be marked as advertisment in most countries, and even if it isn't, local AI will filter this probably out. So a free ChatGPT service with in-text AI can simply be countered by another local browser extension, that rewrites the text and removes ads.One can make the point that Google, Meta and others are investing so much into AI as they know, we are facing the end of the ad-based internet economy. The investments are to create new buiness models, because their old ones are gone soon.
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  yoyohello13
  The ad based business model is the most destructive technology of the new millennium. The whole point of advertising, to make people feel unsatisfied with their current life. The current state of the world makes perfect sense when you think of the last 20 years we've been cultivating fear, and dissatisfaction among the populace. All in the hopes of selling 0.1% more widgets.
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  loloquwowndueo
  > Look on the bright side, if they're turning to ads it likely means AGI is not on the horizon. Your job is safe!I like this quote from TFA :)
• rimbo789
  We need to massive restrict when and where ads can be shown in all aspects of our society. No ads in ai at all. Ever. No targeted ads, no unskipable ads, limit ratio of ads to content in video, no roadside billboards, reign in the size of ads on buildings.Ads are a blight on our society and purging them from many areas will greatly improve quality of life.
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  RobotToaster
  "I kind of think of ads as like a last resort for us as a business model," - Sam Altman, October 2024
• mattmaroon
  This will be fun to look back on in a few years. Making concrete predictions in a market moving this fast is a minor act of courage, so much respect.
• orbabam
  Kinda funny the author fed a visual from French film 'La Haine'[0] to ChatGPT to produce whatever this illustration is supposed to convey ("The world is our/ads"? What does that mean?).Without crediting the movie of course.[0] https://www.machina-deriveapprodi.com/post/le-monde-est-%C3%...
• KellyCriterion
  The thing is:Global online advertising is around 650-700 billion per year - how much of this stake need OAI to capture over how many years to fulfill all its datacenter orderings? (a huge chunk of this is already caught bei Meta/Google/etc. per year)
• twapi
  When search (content discovery) becomes AI-led, we will look back and realize that Google Ads were far less personalized and targeted than we thought.
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  jamesgill
  I'm surprised how few seem to understand this; AI is the ultimate 'net' to capture and exploit consumers. AI was never about improving civilization; it was always about money. This is the only thing 'inevitable' about AI.
• popcorncowboy
  > the greatest, smartest, brightest minds have all come together to... build us another ad engineOh man, maybe it's just the drink talking, but I actually cried laughing reading this. Haha oh my god thank you. This. A hundred times Rick and morty this.
• zkmon
  When users come to you, they may or may not shell out money for your products, but they are forced to give out something valuable to you. That is their attention which you can sell. The value of attention of the crowd could be so big for some companies to give away their products free.
• themafia
  Lie.Their strategy is just to lie. Until they're caught. A CEO with no AI skills and no business skills. There's not a lot of analysis you have to put into this.
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  avaer
  What's the difference between AI ads and computer-assisted bribery?We can wrangle the legalese (as AI companies certainly will) but is there any ethical, moral, or practical difference?
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  dmurray
  > 2029: $50.00 (Suuuuuuuper bullish case) - Approaching Google’s ~$60 ARPU. By now, the infrastructure is mature, and "Conversational Commerce" is the standard. This is what Softbank is praying will happen.There's no way Softbank's, or any other investor's, extreme bull case is that four years from now, ChatGPT sells the same amount of advertising as Google and earns $50 a year.The extreme bull projection is that everyone buys everything through ChatGPT and each user is worth thousands per year. If you don't believe there's at least a slim chance of this you shouldn't be investing in OpenAI, and if you're an OpenAI executive who doesn't think there's a chance of this you shouldn't be writing pitch decks for SoftBank.
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  phailhaus
  I do not understand why this is a big deal. There is no world in which ads are embedded in LLM answers, because you'd need another LLM to determine whether the "placement" was correct and included all the information that the advertiser wanted (and it still won't work 100%). They are putting ads on the side, like they've always done, leveraging all the tech that already exists to do this. This is pretty much a no-brainer for OpenAI and any AI company.
• Havoc
  Ads I'm not to worried about.It's ads after they've got some sort of lock in that is the problem. e.g. some sort of system that "knows" you and makes it hard to switch to another provider.Once they've got that hold on you being force fed ads at max rate is guaranteed.
• timpera
  Great article, thanks for sharing. Perplexity having >$50 CPMs seems crazy to me.
• anon
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  OptionOfT
  I remember when Netflix took out a whole page ad for their Orange is the new Black show.John Oliver had a piece on it https://www.youtube.com/watch?v=E_F5GxCwizcThis is a natural extension of it.But what is revolutionary is the scale that this is now possible.We have so many people out there who now blindly trust the output of an LLM (how many colleagues have you had proudly telling you: I asked Claude and this is what it says <paste>).This is as advertiser's wet dream.Now it's ads at the bottom, but slowly they'll become more part of the text. And worst part: you don't know, bar the fact that the link has a refer(r)er attached to it.The internet before and after LLMs is like steel before and after the atomic bombs.Anything after is contaminated.
• dzink
  Annoying was a thing of the past. Look at the evolution of ads and content placement. With social media advertising being pushed to trigger massive anxiety and societal schizophrenia on some topics, imagine what can be done with personalized AI (especially if the buyers are well funded politicians, or state-backed malicious actors vying for territory, real estate, or natural resources where you live - the highest margin opportunities).At first, In retail you had billboards and shelf space. The lowest quality ingredients your product has (example syrup bottled with soda water), the higher your margin was, the more you could afford to buy out shelf space in retail chains and keep any higher quality competition out. Then you would use some extra profits to buy out national ads and you’d become a top holding for the biggest investors. That was the low-tech flywheel.In the Search Engine world - the billboards weee the Margin-eating auction-based ads prices and the shelf space became SEO on increasingly diluted and dis-informative content to fill the shelf-space side. In Video advertising, rage-bait and conspiracy theories try to eat up the time available for top users.AI advertising if done right can be useful, but the industry that asks for it intentionally asks for obtrusive and attention hogging, not for useful. The goal is always to push people to generate demand, not sit there when they need something. Thus the repetition, psychological experiments, emotional warfare (surfacing or creating perceived deficiencies, then selling the cure). Now if you understand that the parties funding AI expansion are not Procter and Gamble- level commercial entities but state and sovereign investors, you can forecast what the main use cases may be and how those will be approached. Especially if natural resources are becoming more profitable than consumer demand.
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  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.
• chrisXOXO
  I have never really looked at ad revenues, but honestly those numbers seem reasonable and crazy at the same time (or their calculation at least). My main issue is, that I hate oligopolies. For many industries I think a country can protect itself against oligopolies from outside. But everything digital comes out of little valley on the west coast. This really bothers me.
• anon
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• DetectDefect
  "Ad" is a euphamism for behavioral management - the goal and the pièce de résistance for any successful enterprise. Always has been this way, always will remain this way. Only thing that is changing is how easy we're making it for them.
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  mentos
  The pragmatic side of me wonders if there is any way to shape this inevitable future now so we might see a better outcome 20 years.
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  jadenpeterson
  I can't be the only person completely unconcerned about this state of affairs. They're ads. This is the most straightforward incentive structure in the world - they are paid to supply ads on behalf of other companies, and we consume those ads and are, in turn, provided with their product. I don't know why it is, but people are incapable of evaluating this exchange objectively - there's something inherently detestable about advertisement to the human mind. This is a perfectly reasonable exchange.Besides, if it wasn't for ads, I never would've found out about Zyns, and now I can't stop buying them.
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  mmaunder
  I’m fascinated at how out of touch that NYT article is. It’s as if it was written by someone who just spent 3 years on the moon. “The next big thing will be agents: The models will fill digital shopping baskets and take care of online bills. They will act for you.”Golly Mr two times Pulitzer nominee, do tell us more!There is a kind of liberal arts elite that seems to not be using AI very much and not be buying any of their services. Contrast that with those of us in tech who are handing over money as fast as we can and can’t get enough of gpt 5.2 codex on xhigh and similar products that are game changing enablers.Makes me wonder if we’re seeing a fracture in society beginning to form where the doomsdayers, naysayers, cynics and skeptics will realize their error too late.My view on AI is that this is the world’s first Unbubble: where the majority view is that we are over invested, but where history will show we actually underestimated future revenue and profitability.The conditions for the Unbubble are perfect. We have a once in a species level innovation with an economic system where all value accrues to the creators and financiers. And we have just emerged from the housing bubble and the dot com bubble in the last 3 decades, freshly scorched.We thought connecting everyone would create new value far faster than it did. But really it took a long time to run all that fiber and make it fast, and it was just laying the plumbing for this moment.Training big foundational models may seem slow, but it’s happening way faster than circling continents and the globe with fiber and developing terabit switching fabric.I spend 12 hours a day using codex CLI to write extremely fast Rust and cuda code with advanced math that does things I didn’t think were possible. My focus is on creating value from the second and third order effects of AI. These enabling effects are in few conversations. As weirdly innovative products emerge from small shops, they will begin to be discussed.
• dgroshev
  I wish we collectively had a better understanding of those ad tech shifts being fundamentally zero sum.If we treat marketing as a black box, where are the benefits from supposedly more efficient marketing? Ad budgets are the same. People have the same amount of disposable income (or less, really). So on the both sides of the box converting ad budgets into paying customers the sum is the same. Quasi-monopolistic ad networks (Google and Meta) just hoovered up the money that previously went into other ad spaces, like local papers. Now OpenAI is going to fight for the same pie.Ad tech is a market failure.
• cryptoegorophy
  Yeah, I remember Google had good intentions too. They had a moto “don’t be evil”. Good old days. Enjoy chatGPT while you can I guess.
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  woeirua
  People are a bit too eager to jump on the emergence of ads as an indicator that things are slowing down. I view it as the opposite, mostly because of my experience with Codex 5.2 and Opus 4.5. These models are incredible. I think by some definitions they’re already AGI.So why bake in ads? My hunch is that raising funds privately can only take you so far. To keep scaling, they need more capital and have to go public. Despite all the hype they still have to show _some_ revenue to help justify the valuation they need to keep buying hardware. They are a business after all. Ads to support the lowest tiers feel like a no brainer. People already accept them for search.
• notepad0x90
  I'd pay $0.005 per conversation, provided the payment is not inconvenient, anonymous, and an account isn't required. That in my opinion is the root cause of the problem, people can't pay easily even if they wanted to pay instead of get ads.I think the next natural evolution after showing ads in chat sessions is providing services where LLMs tailor site content to include ads in real time. Right now you get served a prepared advertisement after the bid is won and the ad for you is selected. With LLMs, both the bidding process and the ad served would be seamlessly integrated with the site content/context.Part of the "problem" with ads is people know they're ads. What if this comment was edited by HN's servers and rephrased to mention a specific product? You might see a sentence about how OpenAI is the future, someone else might see how claude or anthropic are. Another person might see a paragraph from me about how I used Tide to clean laundry this morning with the help of AI, telling me the right portions for the right cloth. You might suspect it's AI but you won't always be able to tell. Even if they made it more obvious like how reddit is doing it, the content of the AD itself, pictures, text,etc.. could be crafted dynamically so that it embeds in your subconscious without much resistance.The tech developed to make ads more effective is also used to influence people for other purposes. The current state of society came about after the widespread accessibility of smartphones, social media and the rise of surveillance capitalism. Russia's influence ops using ads is well documented for example. I mentioned all this to say how catastrophic the combination of LLMs and advertising could be, even by today's standards.
• twapi
  AGI = Ads Generated Income
• smithmayowa
  Advertisement General Intelligence, at least it still has "general intelligence", this is good enough for me.
• rambojohnson
  AI-generated ads. Dead-internet dog food. I’ve had to block recommendations across multiple SNS feeds because they’re flooded with blatant AI slop: synthetic video, synthetic images, synthetic music, topped off with a fake voice narrating the whole thing. Nausea.then I open LinkedIn and it’s C-suite know-nothings openly bragging, wrapped in self-aggrandizing, narcissistic nonsense that only garners likes from other C-suite know-nothings or PMs that have never written a line of code, shilling AI like evangelists and borderline celebrating the obsolescence of entire careers despite being unable to deploy their boring SaaS app live to production.to keep that part of my brain flexed however, because I do enjoy the craft of software engineering, I still tinker as a hobby, working on passion projects on my own terms. But it’s not my bread-and-butter anymore. Pivoting away from all this dogshit has been the biggest weight off my shoulders this year as I budget my investments and the savings garnered from my extensive engineering career abroad in Japan. early retirement. I’m done.
• dbacar
  The ads stirs the already murky waters of trust for the answers you get.
• iugtmkbdfil834
  I am going to offer an unpopular opinion. This is not a bad thing.Even now there are viable options for a person to pick up a dedicated ( and reasonably powerful ) local inference machine, where time from setup to working is than few hours ( more if you don't want to use Windows.. which is fair ).Separately, about the chat sessions. For once, those ads could be more relevant than repeat toaster ads immediately after me buying a toaster. But if one is worried about profiling ( and advertising ), one should not using a commercial solution anyway. Personally, I am taking a.. calculated risk.There is a concern that openai will follow the same path as google, but they can't ( at least for now ) really afford to make chatgpt not useful as this is their only viable product.I will end with a more optimistic note. This is HN. There are people here, who are likely working on something that does not depend on openai or any of the big providers anyway. It is going to be ok. And if it won't be. Make it so. After all, this is supposed to be your realm. Own it.
• dandelionv1bes
  Nice read - I can’t seem to subscribe? Getting an error with Buttondown.
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  tantalor
  > response to an NYT analystIt's a guest op-ed, relax.
• herf
  What if your query is answered by an insane AI that is obsessed with getting you to buy things? Like this demo that could only think about the Golden Gate?https://www.anthropic.com/news/golden-gate-claudeThis would make astroturfing on Reddit look like basic mode.
• clcaev
  Pharma ads as AI health advice will be super profitable. AIs are very engaging and able convince people they have a disease, inadvertently coach them on how to mislead their doctor, and how to fast track diagnosis supporting their specific meds. The only guard is to have detailed manifest of exactly what was used in training. Even that may prove insufficient as "final assembly" has emergent properties. For example, omitting case reports of severe outcomes for a given formulation. Bias can be constructed.
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  toddmorey
  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.
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  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.
• rvz
  AGI can have multiple meanings. Depending on who you ask, it can mean:"Ads Generated Income""Artificial General Intelligence""A Google Imitator""Absolutely Great IPO"It is any definition that fits the goal of the original secret definition of "100 Billion dollars in profits" from Microsoft and OpenAI [0].[0] https://archive.is/nHedH
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  imiric
  There's no question that "AI" is the next advertising frontier. I've been saying this for years[1][2][3]. It is going to be the most lucrative form of it yet, and no "AI" company will be able to resist it. Given the exorbitant amount of resources required for this technology, advertising will probably be the only viable business model that can sustain it at scale.[1]: https://news.ycombinator.com/item?id=35706981[2]: https://news.ycombinator.com/item?id=36689090[3]: https://news.ycombinator.com/item?id=46425948
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  philipwhiuk
  Even if they raise 10B in ad revenue (an order of magnitude higher than the author suggests) that would still imply a 100x valuation which is insane.There's still an AI bubble.
• lo_zamoyski
  "it seems that the pinnacle of human intelligence: the greatest, smartest, brightest minds have all come together to... build us another ad engine"Putting aside the ridiculous hyperbole, the reason is that consumerism is our culture. Our cult-ure. Everything is oriented toward and reduced to consumption. Our worth as human beings is replaced by consumerist criteria and measures. It's why physicists leave research and work in finance where their training is repurposed in service of all sorts of financial jiggery-pokery."The A in AGI stands for Ads! It's all ads!! Ads that you can't even block because they are BAKED into the streamed probabilistic word selector purposefully skewed to output the highest bidder's marketing copy."But note the implication. Sure, ads weaved into the content, but they still must be targeted. And here's the irony of the online existence. People often refrain from expressing various desires in public for fear of judgement. It's why the vitriol online is so much spicier. The world of social media where you can express repressed opinions, the world of games and other ahem media where you can sublimate all sorts of desires and fantasies - all of this is data for the AI machine. These companies, in some respects, "know" you better than the people in your life do - especially those parts of you that you could be embarrassed to reveal in public - and they use this information to manipulate you, largely for profit, but why not for broader social and psychological control. AI's convenience is already irresistible. It's the go-to in Google search.
• anon
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  emil-lp
  The title is actually The A in AGI stands for Ads Not Predicting OpenAI's ad strategy
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  nickphx
  [flagged]
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  skeltoac
  To those who believe ads are evil and must be stopped, I ask how the world will work if we kill the freedom to sell space for commercial messages where people can see them.