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OpenAI executives have kept a tight lid on how the company could show advertisements to users of its popular ChatGPT chatbot, leaving the broader digital ad industry eager for clues. Behind the scenes, staff are working through key details.

Employees have discussed ways to tweak AI models to prioritize sponsored information in ChatGPT’s responses when users ask relevant queries, a person familiar with the discussions said. For instance, a Sephora-sponsored beauty product ad could appear when a user is searching for mascara recommendations. And in recent weeks, OpenAI employees have been creating mockups for different ways that ads could appear inside ChatGPT, a person who has seen the mockups said.

ChatGPT has ballooned to nearly 900 million weekly active users since its 2022 launch, with ambitions to grow to 2.6 billion weekly active users by 2030. That would dwarf all but the biggest social media and search companies and compete in a more than $1 trillion digital ad market dominated by Google, Meta and Amazon.

Publicly at least, CEO Sam Altman has downplayed OpenAI’s desires to be an advertising powerhouse. But over the past year, OpenAI has been staffing up with digital advertising veterans and adding shopping features that could be springboards into retail-focused ads.

The company sees an opportunity to create a new type of digital ads, said another person with knowledge of the effort, rather than simply replicating existing formats like social media ads. OpenAI collects a lot of information about users’ interests from detailed chats, and has considered whether ChatGPT could show ads based on that history, The Information has previously reported. Analysts and ad industry executives say that ChatGPT conversations where users are clearly looking to buy something could be an advertising goldmine.

One of the options staff has discussed is giving sponsored information preferential treatment in responses to users’ ChatGPT queries, according to the person familiar with the discussions. For instance, AI models could prioritize sponsored content to ensure it shows up in ChatGPT responses.

In recent weeks, ad mockups have included displaying sponsored information in a sidebar to the main ChatGPT response window, according to the person who has seen them. Employees have also discussed showing a disclosure saying that the results include sponsored results, said the person familiar with the discussions.

One focus for OpenAI staffers is evaluating how to show ads without turning off users, who might object to chats stuffed with sponsored content or sharing personal conversations if they think responses are influenced by advertisers. OpenAI wants to show ads as unobtrusively as possible to users and ensure that the company doesn’t lose users’ trust, said the person with knowledge of the effort.

That could mean ads that show up only once a user’s conversation has progressed in a certain direction. One ad mockup showed display ads as a secondary step in ChatGPT once a user has expressed interest in finding more information rather than in the initial ChatGPT response, said the person who saw the mockup.

For instance, if a user asks ChatGPT to make an itinerary for a trip to Barcelona, the chatbot could suggest visiting the Sagrada Família. That suggestion wouldn’t be sponsored, but if the user clicks on a link for the Sagrada Família, a pop-up notice could appear with multiple sponsored links to different businesses that offer paid tours.

“As ChatGPT becomes more capable and widely used, we’re looking at ways to continue offering more intelligence to everyone. As part of this, we’re exploring what ads in our product could look like. People have a trusted relationship with ChatGPT, and any approach would be designed to respect that trust,” said an OpenAI spokesperson.

A move by OpenAI into advertising could represent a significant challenge for Google, Meta and Amazon. Those three companies dominate around 60% of the global digital ad market (excluding China) and are projected to bring in nearly $560 billion in total ad revenue this year, according to a December report from the advertising research firm WARC.

ChatGPT’s conversational format and the answers it provides—with fewer, more detailed results than a traditional web search—are good at keeping users’ attention, said Michael Morton, an e-commerce analyst at MoffettNathanson. “That makes for a potentially incredible ad platform,” he said.

For OpenAI, advertising has been a sensitive topic because of concerns it could hurt users’ trust in ChatGPT responses, while some employees feel an ads push would be counter to the company’s loftier goals of achieving artificial general intelligence, or when AI can surpass human performance in a variety of tasks. Just last May Altman said ads would be a “last resort.”

Selling ads would help OpenAI wring more revenue from its consumer business, where about 5% of weekly active users were paying for the $20 or $200 monthly ChatGPT plans as of October. At the start of this year, OpenAI projected that the average revenue per user from “free user monetization,” meaning money made from OpenAI’s nonpaying users, would be $2 per year starting next year and $15 per year by the end of the decade.

The company also expected that the products focused on OpenAI’s nonpaying users would have gross profit margins similar to those of Meta Platform’s Facebook, between 80% and 85%. It isn’t clear if these expectations have changed lately.

Overall, OpenAI this summer projected around $110 billion in revenue from nonpaying users through 2030, which would help defray the huge costs of running the AI models to answer their queries. And in recent months, Altman has struck a more open-minded tone on ads, saying “I find ads somewhat distasteful but not a nonstarter,” in an October podcast.

Making Shopping a Habit

Still, OpenAI has to balance developing newer efforts like ads with ensuring ChatGPT continues to add users as it faces competition from other chatbots. That dynamic has played out recently, with a “code red” at OpenAI earlier this month pushing back work on advertising in favor of improving ChatGPT.

Another hurdle for any ChatGPT ad business is that consumers are still just catching on to using AI for online browsing and shopping. Only 2.1% of ChatGPT queries were related to “purchasable products” as of June, according to data OpenAI released in September.

That could grow as OpenAI has added shopping-focused features in ChatGPT since then, including a checkout built with payment processing firm Stripe to make purchases in ChatGPT and personalized product recommendations. OpenAI also has a partnership with e-commerce giant Shopify, and deals with companies such as Zillow and DoorDash that bring home shopping and delivery ordering into ChatGPT.

On top of encouraging more people to shop using ChatGPT, the commerce features give OpenAI access to up-to-date merchant data that could also be used to target ads and track their effectiveness. That data also factors into how products show up in ChatGPT search results, OpenAI has said.

When OpenAI released specifications on how merchants can provide their product information in late September, thousands of brands signed up to a waitlist to submit data, according to a person who spoke with company executives.

Already, brands have started responding to more people using AI to shop by changing their sites and product descriptions to show up more prominently in chatbot responses. Advertising agencies and retailers have also been clamoring to test ways to pay for their brands and products to appear in ChatGPT responses.

But for now, little word about ChatGPT ads has filtered out to potential advertisers, according to conversations with five advertising and brand marketing executives.

One executive at a large ad agency said they have been trying to get in touch with OpenAI to help create relationships for their clients for six months with no answer. A marketer at a consumer healthcare brand, meanwhile, said that OpenAI has only been sharing generic tips on how to optimize the brand’s site to show up in ChatGPT responses but haven’t offered any details on how they could pay to advertise.