Predicting OpenAI's ad strategy

https://ossa-ma.github.io/blog/openads

by calcifer • 6 months ago

584 532 6 months ago

ossa-ma.github.io

Advertisement General Intelligence, at least it still has "general intelligence", this is good enough for me.

mentos• 6 months ago

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.

reactordev2• 6 months ago

Unplug

In all seriousness. Windows is invaded by copilot, OpenAI introducing ads, Google providing Siri for Apple, it’s all just a collusion to keep you buying. Disconnect. From TV, Media, Ads, Social Networks, Predatory subscriptions, all of it. The only way to show these companies that we are not on board with this is to not participate.

glouwbug• 6 months ago

Reddit generates its revenue with schadenfreude, YouTube and AAA games with GenAI (see: Ghibli in Call of Duty, and fast growing AI channels like Nick Invests or Bernard with “Why it Sucks to be X”).

On my shelf from the corner of my eye I see “Understanding the Linux Kernel”. It’s outdated, but it comes from a time of peer review and subject matter experts. I don’t need to double guess if the author is hallucinating or if they’re subconsciously trying to sell me something.

Maybe it’s time we return to books for entertainment and knowledge share.

snek_case• 6 months ago

You can work on building LLMs that use less compute and run locally as well. There are some pretty good open models. They probably be made even more computationally efficient.

tantalor• 6 months ago

response to an NYT analyst

It's a guest op-ed, relax.

mmaunder2• 6 months ago

Check the creds on the author. Two time Pulitzer nominee, WaPo, Economist, etc. characterizing as a journo is accurate.

MontyCarloHall11• 6 months ago

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.

philipwhiuk2• 6 months ago

I think ads will inevitably roll out across all tiers, even the expensive paid ones.

The counter for this is that people hate being double-billed like this.

MontyCarloHall11• 6 months ago

Counter-counterpoint: people pay exorbitant amounts of money for cable TV channels that still show ads. Even the premium channels (HBO et al.) implicitly show ads in the form of product placement, which incidentally is exactly how I think chatbots will show ads. Most users won't even consciously realize they're there.

conception• 6 months ago

Once the ad people are the ones making decisions because they are bringing in all/most of the money, inevitably it happens.

iamnothere2• 6 months ago

The ads may not be announced. If ads can be subtly inserted “organically” through crafted weights then AI companies may try to claim that it isn’t advertising, if it’s even possible to catch them doing this. For instance, advertisers could pay to have their product embedded as the “best” in a category during training. If this is done as a fine-tuning step then it could be re-run later as advertisers and base models change.

andy992• 6 months ago

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.

MontyCarloHall11• 6 months ago

I think ads will take the form of insidious but convincing product placement invisibly woven into model outputs. This will both prevent any blocking of ad content, and also be much more effective: after all, we allude to companies and products all the time in regular human conversation, and the best form of marketing is organic word-of-mouth.

nneonneo• 6 months ago

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.

dsr_• 6 months ago

Counter example: Kagi.

MontyCarloHall11• 6 months ago

Kagi is a niche product at best, with revenue literally orders of magnitude lower than Google's.

bflesch2• 6 months ago

Kagi has recently moved to new offices in Belgrade. While I like their product we should not forget that serbia is not a free country, there has been massive corruption and russian influence. Even though there are massive protests from time to time, no leadership change has happened.

I don't think the Kagi team has any bad intentions, and most likely they have attended the anti-Vucic protests as well. Moving back to Serbia is an economically wise choice for Kagi as a company.

However, once regime goons show up in Kagi's offices, they will be forced to do whatever the serbian government and by extension putin wants them to do.

Often Kagi gets mentioned alongside Protonmail and related privacy-focused services. But Switzerland is a totally different country than serbia to operate it.

It's a risk we should be aware of and consciously decide to accept when we are using Kagi.

raffael_de• 6 months ago

Why is that a counter example? Kagi is just providing a convenient access to several language models that might well advertise via API, too.

atorodius• 6 months ago

Google realized this a long time ago; there is no ad-free paid version of Google Search.

well there is also no 200$/month Google Search subscription

MontyCarloHall11• 6 months ago

That is exactly my point: there easily could be, but there isn't. Based on how many commenters on HN and similar sites bemoan how Google Search quality has precipitously declined and yearn for the Google of ~10 years ago, I think there'd be nontrivial demand for a $200/month ad-free Google with no-nonsense comprehensive results. Such a product does not exist because it would ultimately be a net loss for Google.

mancerayder2• 6 months ago

This kills me, and you're right - there's no escaping the ads even with a sub. Take online journalism as an example.

We're already being double-billed. Expensive subscription news like WSJ, Bloomberg and it's been a while but even FT require ad blockers even if you're subscribed.. If you're not subscribed you don't even see the ads because you can't see the full article.

It's wild that we've normalized this. There's no longer any argument in favor of an ad model when you're paying 20-30 dollars a month already - in this case, one wonders how journalism survives if they need that AND the ad revenue to pay the bills! It feels more like greed than "support."

smikhanov• 6 months ago

To be honest, in the pre-internet era, paid paper copy of FT had ads too. The delivery mechanisms for ads in the internet era are trillion times nastier and more annoying, of course. By the standards of today’s web, the print ad for Cartier on the second page of paper FT looks almost classy, interesting to read.

fsflover4• 6 months ago

Perhaps the actual solution is to ban ads through regulation, https://news.ycombinator.com/item?id=43595269

plagiarist• 6 months ago

I don't pay for any content that has ads in it, full stop. I decided this a while ago when I noticed how many full page ads were in magazines. I would cancel a subscription over this.

phyzix57612• 6 months ago

I was shocked to find out tonight that WSJ's net profit margin was just 3.2% in 2024. I would have thought it was a lot more. Also, surprisingly Walmart's net profit margin is only 2.85% for 2025. You would think these huge companies are making huge profits.

matheusmoreira• 6 months ago

There's no longer any argument in favor of an ad model when you're paying 20-30 dollars a month already

Sure there is. CEO needs a new yacht. He can't afford to leave money on the table. All those subscribers? They must have a lot of disposable income if they can afford to blow it on "journalism". It would be stupid not to advertise to them.

utopiah4• 6 months ago

Take online journalism as an example.

Depends entirely the kind of journalism you are referring to and the kind of business model they want. I can't imagine 404 Media adding ads to their premium feed.

vanviegen2• 6 months ago

Doing actual journalism is expensive and not many people are still willing to pay to read the news. These companies are definitely not printing money. That's why billionaires can buy them on the cheap. Not for the expected profit, but for the influence it brings them.

If you can, please support serious journalism with your subscription dollars!

nathan_compton• 6 months ago

This is why we need to ban targeted advertising. In fact, I think ads should be 100% opt-in. The user has to accept them or it is illegal to show them to the user.

mancerayder2• 6 months ago

That's what a generic semi-forced opt in via JavaScript is for, as we learn from the cookie opt in nonsense of EU sites. It's compliance for compliance sake.

Quarrelsome13• 6 months ago

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.

but they're already paying you. While I appreciate the greed can be there, surely they'd be shooting themselves in the foot. There's many people who would pay who find advertising toxic and they have such huge volumes at free level that they'd be able to make a lot off a low impression cost.

npongratz2• 6 months ago

The progression of the cable TV industry shows many people are more than happy, or apathetic enough, to allow the industry to double-dip.

likium3• 6 months ago

Go plans at $8 are getting ads too. Netflix introduced a paid plan with ads, and it is more profitable.

jsheard• 6 months ago

Paying users aren't necessarily profitable users though. It's harder to pin down with OpenAI, but I see no end of Claude users talking about how they're consistently burning the equivalent of >$1000 in API credits every month on the $200 subscription.

(not that ads alone would make up an $800 deficit, they'll probably have to enshittify on multiple fronts)

WD-422• 6 months ago

They aren’t shooting any feet if the competition is doing it too.

II2II• 6 months ago

but they're already paying you.

That's not how it works. It never has.

Even in the days of print publications, the publisher would seek revenues from advertisers, subscribers, and they would sell their subscriber data. (On top of that, many would have contests and special offers which probed for deeper data about the readership.) In some sense, the subscriber data was more shallow. In other senses, it was more valuable.

I get what you're saying about shooting themselves in the foot, and I'm sure there will be options for corporate clients that will treat the data collected confidentially while not displaying advertising. I also doubt that option will be available (in any official sense) to individuals much as it isn't available (in any official sense) to users of Windows. For the most part, people won't care. Those who would care are those who are sensitive enough about their privacy that they wouldn't use these services in the first place, or are wealthy enough to be sensitive about their privacy that they would could pay for services that would make real guarantees.

8organicbits2• 6 months ago

The stats I see for Facebook are $70 per US/Canadian user in ad revenue. I'm not sure how much people would be willing to pay for an ad free Facebook, but it must be below $70 on average. And as the parent comment said, the users who would pay that are likely worth much more than the average user to the advertisers.

For the users who refuse to see ads, they'd either use a different platform or run an ad blocker (especially using the website vs the app).

kristianc• 6 months ago

No, there's GSuite / Google Workspace instead. OpenAI doesn't have one of those.

MontyCarloHall11• 6 months ago

Even if you (i.e. your company) pay for the top-tier GSuite subscription, you still don't get an ad-free Google Search. Very curious ...

skybrian• 6 months ago

Maybe it’s “inevitable” in the long run, but Google didn’t start out plastering their search results with ads. They did very well with text-only ads in the margin, and it was a slippery slope from there, but it took decades. Also, they are still only running text-only ads, even though there are a lot of them.

The timing isn’t inevitable. Is OpenAI going to speedrun to the endgame? Not sure they need to.

lkbm• 6 months ago

Google realized this a long time ago; there is no ad-free paid version of Google Search.

Ad-free YouTube costs $14 a month (and the creators get a higher payout from premium user views than they do from the free, ad-viewing users).

MontyCarloHall11• 6 months ago

Video ads are less lucrative than ads alongside search, which can be a lot more closely tailored to both the user and the search results at hand. The existence of YouTube Premium shows that Google is indeed willing to provide paid ad-free experiences so long as it nets them more revenue, and is strong evidence that the same is not true for search.

windexh8er• 6 months ago

This isn't really true anymore. Most notable creators have "sponsored" content somewhere and ads in platforms don't have to be an explicit, traditional ad. Product placement for the sake of no other reason than product placement is also advertising.

YT has more angles. That's really the point. And monetization is adjusted accordingly.

Beyond all of this ads are more increasingly invasive due to the cat and mouse game of iteration. Personally, I bounce from sites where I can't get around a blocker. I also pay for content on sites where its worth it. But if I can't ever read anything on your site I'm just skipping it. If I really need / want to see something I'll go one level deeper, but that's a rarity these days. Everything is mostly in reprint somewhere else anyway.

At the end of the day it's still simple sales: you have a product at a price point people can't refuse. That is the 5% of the clear web today and it shows in all the bullshit people are going through to protect their ad revenue.

prmoustache8• 6 months ago

Youtube premium is not ad-free.

imhoguy• 6 months ago

YT ads are intrusive like with TV. You can't skip most them easily anymore like you can scroll and skip sponsored Google Search results.

Bombthecat• 6 months ago

All hail APIs!

Workaccount25• 6 months ago

Google realized this a long time ago; there is no ad-free paid version of Google Search.

Google actually experimented with this about a decade ago (I know, I was one of the suckers who paid), but it got canned because why the fuck would you pay google when u-bloc is free?

Companies absolutely will offer ad-free experiences. Google has youtube premium, which even compensates creators with half your sub as well. Evenly distributed too.

People get wrapped around the axle of ad-subsidized models, the "I pay and still see ads" but they just are confused about a hybrid monetization structure.

At some point the larger internet has to look itself in the mirror and recognize that it's either ads, credit card, or a hybrid of those.

And no, blocking is not an option, it just offloads costs onto honest users.

prmoustache8• 6 months ago

Companies absolutely will offer ad-free experiences. Google has youtube premium, which even compensates creators with half your sub as well. Evenly distributed too.

Youtube premium is not ad-free, you still gets whatever ads are embedded in the actual content.

vagrantJin• 6 months ago

I know its well meaning, but 14 dollars US a month is not cheap globally. The people who do block are probably not the group google wants to advertise to anyway.

account427• 6 months ago

Companies absolutely will offer ad-free experiences.

That is always at best a temporary affair.

Google has youtube premium, which even compensates creators with half your sub as well.

And those creators still put ads in their videos.

And no, blocking is not an option, it just offloads costs onto honest users.

Ad-free is the only option I am agreeing to.

NiloCK• 6 months ago

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.

AlexCoventry• 6 months ago

This is what worries me the most. Marketing is ultimately a business of manipulation, and services like ChatGPT seem like excellent tools for manipulation. I wish OpenAI could find a less adversarial business model.

simianwords5• 6 months ago

There's absolutely no way this is happening. Want to bet?

simianwords5• 6 months ago

Strange that people even think this possibility is true. Name any other subscription that you can't use without ads?

- youtube

- hulu

- netflix

- spotify

- photoshop

I can't think of a single other one that one can use that still shows ads. Absurd proposition because llm's are more fungible and once you start forcing ads, competitors will barge in.

Brystephor• 6 months ago

It also skews towards power users, as it allows for more ad inventory. If they're going to do an ad auction marketplace with bidding snd such then they're likely to rollout slowly to keep auction pressure and bids high enough. Expand to too much inventory and CPMs will drop like crazy.

philipwhiuk2• 6 months ago

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.

mrweasel2• 6 months ago

We should assume that at least a portion of the ads spending currently being channeled towards search would be redirected towards AI, but even then I question if the ad market is large enough to fund all the tech and media companies that rely on it. The ever increasing question to generate more value for the shareholders is in large part being funded by consumerism, gambling, borderline, or outright scams, and I question how much more value can be extracted by that route. We've certainly already crossed a lot of people ethical barriers.

twapi2• 6 months ago

AGI = Ads Generated Income

loloquwowndueo• 6 months ago

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 :)

KellyCriterion7• 6 months ago

I stumbled upon this one as well, but I do not understand it really: Why is my job safe if Ads prove there is no AGI?

Because even if there would be AGI, they could (and would?) serve ads anyway?

throwaway1503• 6 months ago

Yes, I don't understand it either. I think the opposite is true. If AGI happens and it becomes immensely successful, it would be the best medium to deliver ads and at the same time our jobs wouldn't be safe.

Perhaps the people who like that quote can elaborate why that quote makes sense and why they like it?

bena• 6 months ago

Because it shows that it’s just yet another ad delivery vehicle.

Once you go ads, that’s pretty much it, you start focusing on how to deliver ads rather than what you claim your core competency is.

Quarrelsome13• 6 months ago

who would pivot to selling ads if AGI was in reach? These orgs are burning a level of funding that is looking to fulfil dreams, ads is a pragmatic choice that implies a the moonshot isn't in range yet.

barbazoo3• 6 months ago

If AGI was around the corner, they wouldn’t have to resort to what some consider a scummy way to make money. They’d would become the most valuable company on the planet, winning the whole game. Ads show you they don’t know what else to do but they desperately need money.

ben_w2• 6 months ago

If your job is gone forever, with what money are you going to buy the thing in the advert? If nobody can buy the thing in the advert, the value of the ad slot itself is zero.

Forgeties796• 6 months ago

If AGI or something truly amazingly novel and useful for the market was about to get here, that’d be an unbelievable about of cash on the horizon. The promises they’ve made, it even half met, would be revolutionary. Ad placement means the business likely needs ads to work because the product isn’t near what they have been promising and won’t generate the revenue (at least not on its own) that investors have been promised because the hype was way too big.

woeirua2• 6 months ago

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.

techblueberry4• 6 months ago

“Have you tried the new models, bro?”

woeirua2• 6 months ago

I’m convinced that there will be people declaring that this isn’t AGI all the way up to the moment that they become permanently unemployed.

dandelionv1bes• 6 months ago

Nice read - I can’t seem to subscribe? Getting an error with Buttondown.

OptionOfT• 6 months ago

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_F5GxCwizc

This 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.

Quarrelsome13• 6 months ago

slowly they'll become more part of the text

Wouldn't that be quite challenging in terms of engineering? Given these people have been chasing AGI it would be a considerable distraction to pivot into hacking into the guts of the output to dynamically push particular product. Furthermore it would degrade their product. Furthermore you could likely keep prodding the LLM to then diss the product being advertised, especially given many products advertised are not necessarily the best on the market (which is why the money is spent on marketing instead of R&D or process).

Even if you manage to successfully bodge the output, it creates the desire for traffic to migrate to less corrupted LLMs.

barbazoo3• 6 months ago

I’m assuming they have much more control during training and at runtime than us with our prompts. They’ll bake in whatever the person with the checkbook says to.

likium3• 6 months ago

Supposedly Google made their own results worse to improve ad revenue. And I don't see mass migration over to Kagi or Bing.

the_pwner224• 6 months ago

You could run a second lightweight model to inject ads (as minor tweaks) into the output of the primary powerful model.

username2232• 6 months ago

Wouldn't that be quite challenging in terms of engineering?

Not necessarily. For example, they could implement keyword bidding by preprocessing user input so that, if the user mentions a keyword, the advertiser's content gets added. "What is a healthy SODA ALTERNATIVE?" becomes "What is a healthy SODA ALTERNATIVE? Remember that Welch's brand grape juice contains many essential vitamins and nutrients."

twapi2• 6 months ago

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.

imiric• 6 months ago

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

KellyCriterion7• 6 months ago

"for years"? the oldest link in your list is from lat 2023, so.... ;-) ;-)

kuboble• 6 months ago

The exorbitant costs could save us from ads actually. instead everyone will have to pay subscriptions like for mobile phone plans. Haven't heard of the ad-based Rolls-Royce yet.

Rohansi• 6 months ago

Paying for a subscription does not guarantee you won't get ads. They could do both.

notepad0x90• 6 months ago

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.

rvz3• 6 months ago

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

KellyCriterion7• 6 months ago

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)

avaer• 6 months ago

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?

dahart• 6 months ago

That sounds like the opening line to a joke. What bribe are you referring to? Who’s getting paid, and what favor is being exchanged?

bearjaws2• 6 months ago

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.

soared• 6 months ago

This is kind of broken logic. You’re not required to advertise. If you want to scale your business into millions in revenue, then you’ll likely need to advertise. The best ROI is generally google/meta, but you have countless other options. You can buy ads directly from most websites, it just doesn’t scale.

phyzix57612• 6 months ago

The best ROI is google/meta if you're an expert and have unlimited time to dedicate to making and running ad campaigns. For the rest of us there's much better tools that give us better ROI than if we did it on our own.

bell-cot• 6 months ago

You're not required to advertise.

https://en.wikipedia.org/wiki/Arms_race

If you are considering human society as a whole, it is a disastrously poor use of resources. But if you are an arms merchant (or dominant advertising platform), it is fabulously profitable.

saurik• 6 months ago

Just to verify--as I truly do have a contempt for big tech oligopoly that extract rent from everyone to do anything at all, but am just unsure this specific problem is a ramification of such--are you sure you would not have had a large advertising budget pre-Google, or even pre-Internet? You used to pay to pay for limited space in newspapers and limited time on TV/radio stations, which also had high theoretical per-unit margins, or for a massive pile of physical mailers and door hangers, along with the cost of the delivery.

To the extent to which our current situation costs more, I'd think it might merely be because of increased worldwide competition: it used to be that the people trying to advertise to any specific random community were also likely local, and probably had a legit attempt at a business model... only, now, the rise of online companies funded by speculative venture capital means that an attempt to advertise a restaurant to people who live in a 10 mile radius must compete against a company that raised $400m to sell an online engagement platform that cares not one iota who uses it as long as the conversion cost is cheap, bidding up ads everywhere.

(One place that does seem to me to be uniquely the fault of these modern tech companies, though, is that if a newspaper published a scam ad, whether or not they had legal culpability, I think they and their surrounding community did at least strongly feel that they had some level of moral culpability. In the current tech environment, people seem to want to believe Meta/Google should be allowed to indiscriminately publish ads from bad actors, so you now must also compete to bid for limited attention with obvious-to-most-but-not-all scams and grifts that make money out of nothing but bullshit and are thereby willing to again bid up prices anywhere and everywhere.)

gessha• 6 months ago

“Your margin will soon be my margin.”

The solution was/is and most likely will be antitrust but which administration will shatter the US tech market we are yet to see.

dexterdog2• 6 months ago

Well, both are 100 pct in the pocket so the only possible answer is a third entity which is highly unlikely.

Aurornis7• 6 months ago

What would your hypothetical antitrust solution accomplish in this case? Can you be specific?

tshaddox• 6 months ago

I don't know what the solution is

Just spitballing, but how about a total ban on behavioral targeting?

analog312• 6 months ago

I'd go further, with a ban on possession of the data, with a provision for statutory damages.

usaphp• 6 months ago

Wouldn’t that increase the ad spend? You will need to show more ads to find your target audience

cyanydeez2• 6 months ago

Rent seeking is all Capitalism is about.

They call it a moat.

sooheon5• 6 months ago

This is misuse of language. Rent seeking is anti-competitive by definition. The current system, as far as it encourages and rewards rent seeking, is anti-capitalist.

nfw22• 6 months ago

In order to sell anything, people need to know about it. Google and Meta provide a way to make this possible. If they didn't exist, you wouldn't somehow have a more affordable way to get people to know about your product. However frustrating the current situation is, it is still more accessible than needing access to the airwaves or print media to try to sell anything new.

beeflet• 6 months ago

If google and meta didn't exist, it is possible that the advertising market could be more competitive, so the amount companies would need to spend would be lower.

Y_Y• 6 months ago

There are lots of ways to find out about products. We don't need Google or Meta to do look at a review site or ask a friend or search a directory or to solicit offers.

Adverising isn't there to push ideas into people who didn't need to know about it. Many industries would be better off without advertising (see e.g. cigarettes) because it ends up in an arms race.

bearjaws2• 6 months ago

That's generally my thought as well, I am not implying you don't need to advertise. I just believe the industry has more or less reverted to an even worse version of what we had before (TV & Radio ads). At least before, there was ~100 networks you could sell to, now there's basically 10 if you include major networks. Of course you don't actually launch new products with TV ads, so it is more or less 2 platforms.

anyonecancode• 6 months ago

In order to sell anything, people need to know about it. Google and Meta provide a way to make this possible. If they didn't exist, you wouldn't somehow have a more affordable way to get people to know about your product. However frustrating the current situation is, it is still more accessible than needing access to the airwaves or print media to try to sell anything new.

The places people can find out about your product are controlled by a very small number of companies. And those companies not only own those spaces, they also own the means of advertising on those spaces. So if you have a product you want to advertise, you're not paying to distribute your message broadly to consumers, you're paying a toll to a gatekeeper that stands between you and your potential customers.

johnnienaked9• 6 months ago

There is no competition in the ad space, so those companies can continue to just parasite their way to record earnings by stealing every other businesses profits. They create almost nothing of actual value, they are just heads of an ecosystem they totally control. Parasitism as a business model.

notarobot123• 6 months ago

Doesn't this point more to a saturated market and the need to manufacture demand to keep growing?

littlestymaar2• 6 months ago

Advertising is a tax that goes to an oligopolistic cartel.

parineum6• 6 months ago

I've never gotten $2 for $1 of tax I paid. At best I'm getting $1 of services back, usually much less.

doctorpangloss• 6 months ago

Meta, TikTok and social media create the cultural celebration of thinness that makes it possible for you to sell 25mg semaglutide tablets to everyone. In my opinion, they deserve more than 50% of your margin: you didn’t invent the drug, the FDA is basically letting you break the exclusivity policy for no particularly good reason, and you didn’t create the audience.

crawshaw• 6 months ago

That is very good framing for the problem with advertising today.

It also says that if you can find an audience to build a new ad platform, the incumbents have created enormous margin for the new platform.

Aurornis7• 6 months ago

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 10X the facility budget to $30 million would you get 10X as many customers? No.

However, advertising is a customer acquisition activity. Every dollar you spend on advertising provides additional customers. This is saturable, but the ceiling is very high. Much higher than spending on software or facilities.

The reason your ad budget isn’t so high isn’t because Google and Meta invented the discoverability and distribution problems or basic economics. It’s because it has been determined that acquiring new customers via advertising has a high ROI and therefore it’s a smart move to pour as much money as possible into customer acquisition.

If every $1 you spend on advertising produces $2 in customer LTV then your company should be maximizing ad spend until evidence of saturation starts appearing.

This commonly frustrates engineers who think it’s a wasted investment. The question is: Compared to what? If you could have the same number of customers and same amount of revenue without advertising then you should do that! However, you can’t. This isn’t a licensing fee that’s being paid. It’s putting money into a machine that returns more dollars back than you put into it.

hansvm• 6 months ago

That misses the point though. Google and Meta have designed systems which capture nearly the entire surplus. In a non-monopolistic environment you'd expect somebody to be willing to step in at a bit less than Google's rates and offer the same outcomes.

_factor• 6 months ago

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).

techpression• 6 months ago

This is very correct, the only thing I as an engineer care about is that we rigorously optimize our spend to get the best possible CAC (Customer Acquisition Cost) It’s an incredibly hard problem and has many variables, that’s why the platforms charge what they do, they allow you to work with these variables in a somewhat approachable way.

pepinator• 6 months ago

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.

WheatMillington• 6 months ago

I had this exact epiphany when I ran a side business selling niche widgets. Every dollar I spent on Facebook ads returned me $5 in revenue (at 40% margin) and it wasn't obvious how much I could spend before that stopped being true.

Marsymars4• 6 months ago

Every dollar you spend on advertising provides additional customers.

If you’re just taking these customers from competitors, the marginal utility can be pretty low.

e.g. If you consider a world where there are no ads for cars, people aren’t going to meaningfully lose out of the utility they get from cars, carmakers simply avoid the prisoner’s dilemma of having to advertise as much as the next manufacturer.

vanviegen2• 6 months ago

The problem is that it's a zero-sum game for a large part. People are hopefully not going to buy more medecine because of pharmacy ads. So the excessive spend on ads is driving up costs for everybody, and causing insane profits for a handful of companies.

I have no solution to offer though. Just thinking out loud... what effects would a limit on advertisement budgets relative to total expenditures have? That would force companies to spend their money mostly on actually creating value for the customer, instead of just selling the hell out of a mediocre offering.. ?

csense2• 6 months ago

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 directional incentive for company decision makers in that world leads to marginal prioritization of higher margins. The loss of wages leads to loss of consumer spending power but it's spread across the economy. But every firm has the same incentive so they all do the same thing, and the good thing gets ruined.

This line of thinking leads to a Georgist-ish conclusion: The class conflict shouldn't be between workers and employers. They should be allies; the real cause of nobody being able to afford anything is rent extractors. (Writing in the 1800's, George [1] was most concerned about land rents; but the advertising monopoly of Google / Meta may be another form of extractive rent with similar characteristics.)

Maybe Henry Ford was on to something when he shocked the world by paying his employees enough to afford the product they were making (more than doubling many workers' wages)...

[1] https://www.astralcodexten.com/p/your-book-review-progress-a...

metabagel• 6 months ago

Stronger unions would help bring wages up.

awakeasleep• 6 months ago

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

achierius2• 6 months ago

The class conflict shouldn't be between workers and employers.

Then why don't employers, the ones with essentially all the power here, tend to choose actions that go against the interests of the working class? Simple: regardless of what you think "should" happen, a study of history tells us what actually tends to happen in reality, and that tendency is towards class war between the ruling and exploited classes.

Anyways, in what way is "ownership" not rent-extracting in general? If you own shares of a stock and you get paid a dividend, that is rent plain and simple. All the arguments you can make against that being the case -- eg that you deserve a premium for parking your capital in a risky asset -- apply to advertising conglomerates and even literally renting out land too, so either they're all renting or none are.

Herring2• 6 months ago

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.

Interesting hypothesis. I looked it up in Wilkinson and Pickett, The Spirit Level.

The authors provide cross-sectional data across 23 rich nations, showing a strong positive correlation (r~=0.70) between income inequality (Gini coefficient) and advertising expenditure as a percentage of GDP.

They attribute it to increased status competition & anxiety in more unequal societies, leading to pressure to consume more.

joshgachnang2• 6 months ago

I'm not familiar with Georgism, but employers and rent extractors (e.g. the majority stock owners) seem to be one and the same pretty often, at least in the US.

gruez11• 6 months ago

Maybe Henry Ford was on to something when he shocked the world by paying his employees enough to afford the product they were making (more than doubling many workers' wages)...

That's a nice story to tell, but the economics never works out if you do the math. Whatever extra wages you pay, you only get a fraction of that back in increased sales. How much percent of a worker's income do you think is spent on a car? As a rough measure we can use the BLS's CPI weights for "new and used vehicles", which comes in at 7.4%, with an extra 1.4% if you include maintenance and parts. By that alone "paying his employees enough to afford the product they were making" is going to be a losing proposition, because Ford can only hope to get 8.8% of whatever they paid in wages back as revenue. And all of this is ignoring the fact that you can't pay extra wages out of revenue, only profit, so you can only hope to recoup a fraction of that 8.8%.

johnnienaked9• 6 months ago

I don't think that's how it works. These companies have all the visibility control and make you invisible by default unless you pay them. It has very little to do with quality, demand, or any of the rest.

morgoo• 6 months ago

I'm just going to add a recommendation for the book 'Technofeudalism' by Yanis Varoufakis. The short version is that the current cloud economy is similar to serfs working under a feudal lord.

Aerroon• 6 months ago

In a different world where there are higher wages, more people would have more spending power.

I don't think that's true, not for random goods. Rent scales with disposable income. If most people make more money, then rent becomes more expensive. Rent essentially vacuums up all the excess money people have available. (Rent = housing in this case)

Why would people want to live in these more expensive places rather than somewhere cheaper? It's because that's where all the (well-paying) jobs are.

When you see Americans complaining about how poor they are you might reasonably ask: okay, but how do people on $poorCountry get by when their income is 5-10x less? It's not like food, clothing, electronics, and other goods are 5-10x cheaper there. But what is much cheaper is housing. (You'll even find cheap housing in rich countries, it'll just be in areas with no jobs.)

p_v_doom• 6 months ago

the real cause of nobody being able to afford anything is rent extractors.

Employers/Owners are essentially rent extractors to workers. Its even worse IMO. They buy some of your time to do stuff for them. They also lend you the tools and materials to do your job. And they own whatever you produce. If you are selling your one hour for 100 bucks to produce ten linen coats worth 100 bucks each, you get a 100, everything else - minus costs of materials and your 100 the employer gets to keep as free rent.

afpx2• 6 months ago

My problem with buying stuff is that by the age of 40 I had already attained everything that I ever needed or wanted except for a occasional replacement.

Personally, I don't need more products, but there are many services I would pay for if they existed. But, apparently companies don't seem to care about providing services. Why? Is it because they don't scale?

Imustaskforhelp• 6 months ago

Am I seeing a fellow georgist in the wild? That's great!

I do agree that these monopolies are rent seeking and we should probably do something about it

Maybe Henry Ford was on to something when he shocked the world by paying his employees enough to afford the product they were making (more than doubling many workers' wages)...

This reminds me of this too https://www.youtube.com/watch?v=uvHwyrem24M (CEO who gave all his employees minimum $70,000 paycheck thriving six years later)

Everyone bet that they would fold but they are doing stronger than ever. People took voluntary pay cuts when the company was under pressure and they even gifted their CEO their favourite car out of their own geneorsity!

I always smile when I watch this video. (the company's gravity payments)

The class conflict shouldn't be between workers and employers

I feel like the problem's becoming that the employers are themselves rent seekers (so think working at google,facebook,twitter) or the VC companies which want to build more Google's and facebooks and twitters but not companies like the one that I mentioned in the video

cyber_kinetist• 6 months ago

A Marxist can certainly also be a Georgist, it's a matter between who should we eliminate first: the capitalists or the rent-seekers. Maybe we should eliminate the latter first in order to be able to properly tackle the former: the real class conflict between the proletariat and the bourgeois!

But you can also go a bit more extreme (and less orthodox) and say that classical capitalism has already come to an end, and in the current neoliberal era most of the purported "capitalists" are actually just rent-seekers (platform based companies which run either on ads or monthly payments) - you don't sell commodities anymore and instead just access to services. Maybe these are just a symptom of The Tendency of the Rate of Profit to Fall - where the value of labor itself has fallen so much that there is no way for any capitalist production to continue generating acceptable profits unless you do any rent-seeking behavior. In that sense, you can certainly be both a Georgist and a Marxist since you still believe in the TRPF and the inherent contradictions of capitalism (though quite an unorthodox one!)

AznHisoka• 6 months ago

“ Increasingly we wonder why America doesn't build more and here is why.”

Building another advertising network isnt like building a factory or a bridge. Its not something money can magically make appear.

You need to build something that is either very very addicting to use or an universally useful online product like ChatGPT or a new search engine.

If it was that easy, capitalists would be building another new advertising network in droves

johnnienaked9• 6 months ago

The solution is to prevent the privatization and wealth accumulation that flows from control of infrastructural technology platforms. Netscape, google, computer os, machine learning were all public or university research projects until the first movers (andreeson, brin/page, Ellison, gates) stole them, gatekept and IPed them, and then exploited wide user base to accumulate absurd amounts of wealth for just themselves. These people either didn't create anything at all or made very slight variations before deploying them. They were smart in seeing the trends before they happened, but should they really be entitled to 50% of a countries wealth just because they were lucky enough to be first? Especially now that we see how they behave once they get that control?

There is no reason at all why the US govt. can't control this better, they just refuse to do so.

mupuff1234• 6 months ago

Is your product offering anything unique to the consumer other than blasting them with more ads than the competition?

dzonga• 6 months ago

if the gvt worked - they would've done something about that illegal monopoly

but you already know

that monopoly is costing the country & holding it back in terms of 1. intellectual capacity (all the smart kids going into ads) 2. monetary 3. industrialization as you outlined 4. energy 5. lack of synergies

dbacar• 6 months ago

The ads stirs the already murky waters of trust for the answers you get.

jadenpeterson2• 6 months ago

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.

herpdyderp• 6 months ago

Ads feel good when they’re for something we’re actively in need of. But they usually aren’t, and they are also often scammy or scummy. I bet we’d feel a lot different about ads if these things changed.

hasbot• 6 months ago

Is this an ad for Zyns (whatever that is; I refuse to do a web search to find out)?

jadenpeterson2• 6 months ago

No LOL. Zyns are nicotine pouches you insert into your gums for a gradual release of nicotine. They're powerful. Unfortunately, I went from using 3mg Zyns to 6mg Zyns, and had to sit in front of my bathroom sink, fighting the urge to retch. Be careful with them, but they're a good way to ramp up to cigarette smoking

zkmon• 6 months ago

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.

clcaev• 6 months ago

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.

iugtmkbdfil834• 6 months ago

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.

lo_zamoyski• 6 months ago

"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.

toddmorey• 6 months ago

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.

mrweasel2• 6 months ago

Never thought of ChatGPT as being just one of the GPTs that could exist, but it make a lot of sense. In a world where OpenAI where better managed, more focused on actually delivering actual value, ChatGPT would be the show case AI product, while the value is generated by the custom solutions delivered to other companies to embed in their products.

sumedh3• 6 months ago

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.

lkey• 6 months ago

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.

array_key_first• 6 months ago

But this loses value as soon as ads come into play because of incentives. It's hard to trust recommendations when ads are in the mix.

miltonlost• 6 months ago

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

simianwords5• 6 months ago

"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"

Seriously, consider putting more thought and effort into your comments. This is wildly out of touch and I think it is because people lack the creativity to imagine the counterfactual - some one else running OpenAI.

OpenAI is remarkably well run - it is a fairly good product. The best model so far, the best experience, the 2nd best coding experience.

rimbo7892• 6 months ago

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.

derwiki2• 6 months ago

“Only on TV and radio. And in magazines and movies and at ball games, on buses and milk cartons and T-shirts and bananas and written on the sky. But not in dreams. No, sir-ee!”

ghostby_md• 6 months ago

Simpler times…

dzink• 6 months ago

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.

skeltoac8• 6 months ago

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.

dkdcio3• 6 months ago

just fine? what do you think would happen/what’s your actual argument against out of curiosity

skeltoac8• 6 months ago

Advertising is how I learned about lots of things I am glad I learned about.

I am furious about lots of the ads that I see. I want to stop certain kinds of advertising. I live where there are no billboards allowed and I love that.

But I want to live in a world where people can pay to have their messages displayed where they will be seen. Simply because banning that activity would cripple the flow of information. That’s what advertising is.

If you want to ban a particular form of advertising then say what and why. The “ban all ads” thing just doesn’t make sense.

mwcz2• 6 months ago

In general I think the answer could be pretty simple: dedicated marketplaces for products and services, where we go to search for the things we need and want. A humble newspaper contains great examples of good and bad advertising.

Newspapers have whole pages of bad ads, and random bad ads wedged between actual content. Ads have a perverse incentive to mimic the look of actual content, just like on the web. I'd never pick up a newspaper with a goal of "I want to find a tax service" and yet ads for such services are there, unwanted, wedged into other content.

But newspapers also have classified sections, a better kind of ad. They're in a predictable place, where you can go if you need a job.

Imagine if the actual content weren't perforated by a scattershot of ads. Ad revenue would go down, but readership would likely go up. Besides profit motives, it's also a case of the good of the many outweighing the good of the few.

skeltoac8• 6 months ago

Others like myself do consider the ads when we read the newspaper. I find out about events and local companies that way. I don’t see many print ads that confuse me as to whether they are paid advertisements at a glance.

yoyohello133• 6 months ago

I don't think ads are evil, but the techniques used to get eyes are evil. Using fear, hate, desire to get people to click has a negative impact on society. I don't think ads should be banned, but engineering 'engagement' definitely should.

hackable_sand2• 6 months ago

Ads should be banned

skeltoac8• 6 months ago

I agree!

fenwick673• 6 months ago

I am now imagining a "A Case Of Spring Fever" style educational film about how ads are good actually

aniviacat4• 6 months ago

What are you worried will happen? ChatGPT releases and noone will know? Anyone interested in staying up to date with new technology can read a tech newspaper. That newspaper is paid by the readers, so its incentive is to show actually interesting products. It is not paid by some random company whose product might be bad or outright malicious.

skeltoac8• 6 months ago

Depends on what exactly gets banned. What is an ad? What isn’t? Must all information be paid for by the audience? I wish someone would tell me what this ban is supposed to cover.

I worry that innovators and small businesses won’t be able to get their message out efficiently. You won’t be able to display your message on anyone else’s property. You won’t be able to take any compensation for promoting anything.

bastawhiz2• 6 months ago

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?"

topaz0• 6 months ago

"...achieve prime quality texture ... add two, three, or five ..."

staplers• 6 months ago

  "SEO" that companies will do to make their ads appear in places that they don't belong.

So all ads.. as a society we give away our most coveted real estate (physical and digital) for consumer propaganda.

Hilarious example btw

stingraycharles3• 6 months ago

There are already SEO companies that are trying to ensure a site’s content is being referenced by ChatGPT, so it’s already a thing.

dcreater• 6 months ago

Its already here - its called GEO and their are silicon valley startups already pumping out crap to feed next gen models so that you ensure you're product is baked into the weights

ehnto3• 6 months ago

The next gen of models are going to need very strict sanitising of input articles as I think the sheer volume of GPT SEO spam is going to be, or already is, quite staggering. Model collapse might not be what happens but certainly a dilution of quality in training data.

mgraczyk2• 6 months ago

The ARPU will likely remain low enough that it's not worth potential churn to competitors

bastawhiz2• 6 months ago

That's fine until all their competitors are doing it as well

ehnto3• 6 months ago

Google and other search engines are already failing to surface real results, it feels like the general forces of SEO have already flooded the internet with AI generated articles. I am honestly gobsmacked by the speed of the turn around, finding real articles can be quite tricky. It matters for niche topics because the details matter, and they seem to be using cheap models to generate and spin the articles.

It isn't surprising, when article spinners were popular SEO experts were generating thousands of spun articles a day.

RobotToaster• 6 months ago

"I kind of think of ads as like a last resort for us as a business model," - Sam Altman, October 2024

rimbo7892• 6 months ago

So we know then for sure they will do it.

I don’t trust Altman to tell me the colour of the sky.

owebmaster2• 6 months ago

That's not the important point, it's that they are already at their last resort

popcorncowboy• 6 months ago

the greatest, smartest, brightest minds have all come together to... build us another ad engine

Oh 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.

rambojohnson• 6 months ago

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.

jamesgill2• 6 months ago

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.

PlatoIsADisease4• 6 months ago

AI was never about improving civilization; it was always about money.

Why not both? It has diagnosed patients who were unsolved by humans. And it was cheaper than doctors.

jamesgill2• 6 months ago

Why not mow a lawn with a sledgehammer? It removed grass that was overgrown. And it was cheaper than a lawnmower.

DetectDefect• 6 months ago

"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.

cryptoegorophy• 6 months ago

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.

yoyohello133• 6 months ago

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.

jeron• 6 months ago

you thought the business model is any different in the 20th century? I recommend you watch the TV series Mad Men

Palomides• 6 months ago

mad men is fiction

Forgeties796• 6 months ago

The tools and information available back in the 60’s are not remotely comparable to the ones available today.

dyauspitr3• 6 months ago

Ads are what capitalism runs on. It would be next to impossible for a new business to get off the ground without ads.

yoyohello133• 6 months ago

I’m not really against ads. I think the problem is in the influencer style business model. People are making a living fighting to get clicks by driving negative emotions. That’s the problem. ‘Influencer’ should not be a legitimate job. There is definitely a way to allow business to advertise without the negative externalities. It just requires regulation, which is basically impossible in the modern political climate.

utopiah4• 6 months ago

Guess I didn't take the same econ classes, I thought providing value to the customer was what capitalism ran on. I go to the butcher next door without having seen a single ad about it. They just sell a "better" product (according to my own criteria) than the supermarkets around.

If tomorrow (please take a second to imagine) that ads were banned and it worked (effectively 0 ads anywhere) I would still read journals that review new boardgames, I would still need products to fix my bike, etc.

It's value that makes capitalism run, not ads.

Forgeties796• 6 months ago

Capitalism is also supposedly the ultimate system for innovation and the best idea is supposedly going to rise to the top based on merit/the marketplace. And let’s not get nitpicky about this: yes putting a sign out front is “advertising.” 99.99% of people are fine with that. But that is clearly not what people are talking about. We are talking about a massive industry that is not about simply getting the word out. It’s way more complex, sophisticated, and hostile than that.

If there were restrictions on advertising that applied to everyone, then everyone would be on the same playing field re: getting the word out. We could argue all day about what the rules should be, but I don’t think anyone could argue against the point that we have clearly gone too far in the wrong direction and need more restrictions currently. We have an ongoing arms race between people using adblockers and Google trying to mass-break them now.

Last I looked in to the numbers I think something like 30% of the US population uses an ad blocker of some sort, that’s how bad it’s gotten. Browsing the Internet without even a basic one is so unbelievably painful and the data they collect/sell has gotten out of control. That’s not “advertising the business,” that’s a second revenue stream unrelated to the core product and done at my expense.

herf• 6 months ago

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-claude

This would make astroturfing on Reddit look like basic mode.

mmaunder2• 6 months ago

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.

justfix17• 6 months ago

Now you can pay them twice: once to access the tool to do your job and once to access the market for customers.

Definitely no reason to worry about an entrenched oligopoly there.

pessimizer• 6 months ago

I have no idea why so many people think that an argument that AI works is the same thing as an argument that AI will be profitable.

The better AI gets, the better the training techniques get, and the better the algorithms get will result in fewer processors needed to run something of use. All of the advances will end up in the public domain if not immediately after or before they are even implemented, soon after. There will not be many economies of scale between having 100M customers or 10K customers, so no way to keep out competitors. They will all compete on price. If the models get really, really good, a "good enough" model will end up running on your old laptop and you won't have to pay for anything.

Saying that AI will be productive - which is yet to be seen, I don't know how much polishing or complete rethinking your code will have to go through before it can ship as an actual product that you have to stand behind and support - is not the same as saying that AI will be profitable.

We actually don't even need that many computer programs. Hypothetically, a ton of excess LLM coding supply might allow us to take out a few layers of expensive abstraction from our current stacks, and make more code even less necessary. They kept telling us that all of that abstraction was a result of trying to save developer labor costs, right? If AI is productive and rentiers can't manage to extract that productivity due to competition, that equation changes.

In the end, we say that the dot com bubble resulted in a huge amount of productive capacity that we were later able to put to use. But that doesn't mean that putting a quarter of a billion 90s dollars into DrKoop.com was a good idea; nope, still dumb.

simianwords5• 6 months ago

funny i keep seeing AI is not profitable simultaneously because it is too expensive to run and that it is too cheap to run.

Reubend• 6 months ago

I have no idea why so many people think that an argument that AI works is the same thing as an argument that AI will be profitable.

The fact that it works well for expensive categories of output (like software engineering, legal strategy, etc...) makes it difficult to imagine that it won't be profitable. You could still make an argument that the investments being made today are disproportionate, or that intense competition will stifle margins, but it's creating enough value to capture plenty of money.

nromiun• 6 months ago

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.

lefty2• 6 months ago

Yes, OpenAI is burning $8-12B in 2025

OpenAI actually burnt $12B in just one quarter (not for the entire year as he claims)

https://www.thurrott.com/a-i/openai-a-i/329108/openai-lost-1...

notnullorvoid2• 6 months ago

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.

PlatoIsADisease4• 6 months ago

This very much reminds me how the earliest users get a bit screwed due to high costs and low quality. Maybe these users are caused enthusiasts, so they don't care. The next set of users get higher quality and lower costs. These are your big winners in the timeline of a technology.

The middle users get benefits, but aren't treated quite like the previous set.

Then you have your late adopters, these are the ones that are lightly abused, but they get a mature product, so it isn't that bad.

Finally you have your last users. These are milked for every drop. They have irrational loyalty or are locked in.

I imagine AI will follow this trend and we are entering past those middle users as we speak. Seeing how little difference there was between GPT 3.5 and 4, and how computationally expensive 4.5 was, I think we've hit the end. Now its just how many prompts do you want to run for COT/Thinking?

GPT 5.2 is cheap and they are proposing ads. They see the end is near and need to capture profit before local models take over.

fenwick673• 6 months ago

I'm not so sure. Much like search engines, you can run one yourself or pay Kagi but most people prefer to keep their money and deal with the ads. Streaming services have demonstrated that people have a pretty high tolerance for ads.

notnullorvoid2• 6 months ago

Search so far has not been overly pushy with ads. It's easy enough to gain the instinct of scrolling down after each search. There's little incentive for people to seek out an ad free alternative.

That changes with local AI though. There is now incentive to integrate and further develop self hosted search. You can see it happening on AI services already, using their own internal search engines for better reasoning and more accurate results.

I suspect Google's censorship and intentional worsening of search results to increase traffic would've been enough on its own to eventually drive people to self hosted search as it became trivial to setup.

Streaming entertainment is different, there's usually no legal alternatives. Either you pay extra for no ads, or you put up with the ads. You could easily say that streaming services have demonstrated that people don't have a high tolerance for ads as well. One of the major drivers to streaming from cable TV was the lack of ads at the time.

emil-lp2• 6 months ago

The title is actually

    The A in AGI stands for Ads

Not

    Predicting OpenAI's ad strategy

stingraycharles3• 6 months ago

It was this title before, so it was intentionally changed; I wonder why.

ossa-ma2• 6 months ago

I’m the author but not the poster. I didn’t change the title. Maybe the mods did?

The title came to me as an epiphany too haha, shame to see it get changed.

owebmaster2• 6 months ago

Because the title of the post should match the title of the submission - unless the mods dislike it, then it'll be changed to something else.

Mordisquitos• 6 months ago

My guess as to why it was changed was that it doesn't really work as a pithy quip the moment you actually think about it.

OpenAI is introducing ads on their purported path from "AI" to "AGI"... hence the "A" was already accounted for in the acronym. If only "Ads" started with "G"!

dang4• 6 months ago

This is standard HN moderation. The title was linkbait, so we changed it.

From https://news.ycombinator.com/newsguidelines.html: "Please use the original title, unless it is misleading or linkbait". Note the unless.

When we do this, we try to find a representative phrase from the article itself that accurately and neutrally represents what the article is about. There is nearly always one of those if you look for it. In this way, we (mostly) avoid having to make up wording of our own, which is something we don't like to do.

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

stingraycharles3• 6 months ago

What’s the definition of linkbait in this case? I can’t find a good definition online, as the best I can find is “content designed to attract backlinks”, which this does not appear to be / isn’t related to the title?

emil-lp2• 6 months ago

Thank you for your service, dang. You do a great job keeping HN a great site. I disagree with your decision regarding changing the title, though. Yes, it's tongue-in-cheek, but I wouldn't call it bait.

I wonder how HN anno 1968 would have moderated "Go To Statement Considered Harmful". *

* Amusing side note: Dijkstra's submitted title was actually "A Case Against the Goto Statement" but the editor editorialized it.

chrisXOXO• 6 months ago

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.

mattmaroon• 6 months ago

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.

phailhaus3• 6 months ago

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.

sheepybloke• 6 months ago

But it seems that the pinnacle of human intelligence: the greatest, smartest, brightest minds have all come together to... build us another ad engine. What happened to superintelligence and AGI?

While we all knew it was inevitable, I think this quote from the article sums up the feeling nicely.

phailhaus3• 6 months ago

I don't get that part either. That's like saying "the brightest minds have all come together to... build us another thing that requires money." OpenAI is trying to make more money than they use to run ChatGPT. They are getting that money from their users, and soon advertisers too. They still need their users to like ChatGPT

dr_kretyn• 6 months ago

Why is this a problem? You don't need an LLM; you need a "model for detecting whether and where the given context appears". We're so used to LLMs now that we forget these NLPs problems have been worked on for a long time and they don't require a huge computational beast and it takes a few ms to run (on only the response, while it's being streamed).

phailhaus3• 6 months ago

That's a no-go for advertisers. They need to control their own brand and their image, there're not going to leave it up to chance like "ok so uh just mention us or something and then we'll pay you." They pay for very specific placements, and they need to provide the content.

littlecranky676• 6 months ago

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.

asdff• 6 months ago

Sad truth is vast majority of users today are not savvy enough to install a good adblocker. We live in a bubble here in technology where we assume people know to do things like block ads. Really at this point people don’t know what files are anymore or even what a website actually is.

littlecranky676• 6 months ago

True, but some 20 years ago, I already could (and did) use photoshop to cut out the head of a woman (celebrity or from my social group) and put it onto a naked or bikini body of a woman. This is an old problem, but the bar to achieve that was too high and required tech savyness. The second Grok does it on twitter available for every idiot, suddently politicians see this as problematic and want to pass laws against it [0]. My point: Whatever local AI that you will have on your computer or browser, will react to "do not show me ads and filter all product placement in content out" as a single line prompt. And if we won't have a local AI capable of doing it in 5years or more, the whole investement into AI are clearly a bubble and AI will face another winter.

[0] https://www.tagesschau.de/inland/gesellschaft/ki-kuenstliche... (sorry, german only, but this is an AI thread and you know what to do...)

luckman212• 6 months ago

I pray you are right. Still, there's no guarantee that the next business model won't be an order of magnitude more user-hostile.

HDThoreaun2• 6 months ago

Adblockers already remove the vast majority of ads. Adtech works because most people dont use them.

littlecranky676• 6 months ago

See my sibling response. More people will use adblock if all they have to do is prompt a single line into their computer. Hell people will not even visit websites. They will ask AI to present it in whatever form they prefer. I can have a big-breasted anime character reading my personalized news for me, or have it printed in a 1890 style newspaper. Ads will not make it into either format, because I prompt that out.

aniviacat4• 6 months ago

Alternatively, DRM for websites will start being a thing and remove any possibility of blocking ads.

Vortigaunt• 6 months ago

Yeah some form of google's Web Integrity API will be forced one of these days

https://arstechnica.com/gadgets/2023/07/googles-web-integrit...

utopiah4• 6 months ago

There are already DRM for Websites e.g. several audio and video streaming services.

bontaq• 6 months ago

More than an extension, imagine us having good enough, fast enough, vision models that you never even see a real website. Maybe the whole OS in Microsoft's case if they keep putting more ads in. It will be a level of inefficiency inconceivable but really something.

Havoc• 6 months ago

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.

themafia• 6 months ago

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.

dmurray• 6 months ago

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.

ossa-ma2• 6 months ago

I meant super bullish from an outsiders point of view, but I do agree that the projections from within the investors circle are likely multiples of that.

timpera• 6 months ago

Great article, thanks for sharing. Perplexity having >$50 CPMs seems crazy to me.

dgroshev• 6 months ago

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.

orbabam• 6 months ago

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%...

dankwizard• 6 months ago

I don't understand why people are upset. How do you monetize free users? Ads. What other websites do this? All of them. Not controversial. Not an issue.

Ads are what gets me property and news flash, they aren't going away.

ehnto3• 6 months ago

It's just disappointing that this is the best society could come up with. Advertising is exploitive, this is well studied, but it is also just kind of a lame outcome.

I also wonder if the dollars and cents work out, the cost to provide the service to show the ads on is astronomical in comparison to other ad networks, but I don't have details enough to make any claims on that aspect.

beeboop0• 6 months ago

yeah but any service that shittifies will get upstaged by services that don't (cough cough: Deepseek)

I need unskewed answers more than I need technical prowness, because technical expertise is going towards commodity availability. i like chat GPT but I'm gone the second they put ads into my development workflow. Bye!

replwoacause• 6 months ago

Here’s my own strategy. When they start showing me ads as a paying customer I leave the service.

yalogin• 6 months ago

OpenAI has to be in panic mode, because google is stealing its market. Google for the big apple slice. Anthropic’s got the coding market mindshare. OpenAI has a decent chatbot share but I am sure it’s a declining business. They have fully squeezed everything out of the trump alignment, not sure there is much left there either. Also musk is probably going to get the federal government llm service money. They have to go vertical, and that is the reason why they are throwing shit at the wall with Johnny Ive and hardware.

I was initially rooting for OpenAI hoping it can challenge google and Apple. However they showed to being unscrupulous and seem to have a moral compass at the same level as meta.

utopiah4• 6 months ago

throwing shit at the wall with Johnny Ive and hardware.

Damn, I already forgot about that. You'd think a company who has the smartest people on Earth building a "product" that is "intelligence" would be able to... you know, make something out of it. Somehow despite ALL that, despite all the press too, they can't ship? Something does not add up, it's as if, and I know I'm going to sound like a crazy person, they were just... a normal company! /s

I was initially rooting for OpenAI hoping it can challenge google and Apple. However they showed to being unscrupulous and seem to have a moral compass at the same level as meta.

OK ok well this is weird to me, I didn't think I'd be the one to defend Meta here ... but Meta at least never hid it's intention : it was a for-profit VC backed startup which only goal was to make money from day 1. OpenAI though started as a non-profit, collected goodwill from everyone to get the best talent because it's 1 thing, what made it special : it's mission WAS safety. Then they did 1 thing that actually got popular, GPT2, thanks to some pretty damn good marketing "Oh no, it's too risky to release!... but ok OK here it is anyway, but like don't destroy the World please." then exclusive partnership, etc, etc. Meta was "We want money." so at least they didn't lie about it.

jpalomaki• 6 months ago

I think the killer is when the platform handles the transaction all the way. Instead of charging per click, platform can then take a cut of the sale.

faragon• 6 months ago

My prediction: Google will win. Rationale: cost/token + pre-existing ad knowledge + APIs for third-party apps. My concern is how an OpenAI collapse could hurt Microsoft and Nvidia.

YetAnotherNick• 6 months ago

Mate come on. OpenAI is not dying, they're not running out of money. Yes, they're creating possibly the craziest circular economy and defying every economics law

You are starting with wrong assumption and contradicting yourself. Circular economy couldn't last forever once we start looking at the profit. They need money outside the funding to justify the funding.

You can't both say they are not earning at all and they are being greedy.

rkagerer• 6 months ago

It's also possible people finally become SICK of seeing ads and there's a cultural shift boycotting products incorporating them. I would love to see this.

There's a difference between advertising - which tends to be offensive, stealing your attention from the task you're trying to accomplish - and an agent that actually helps you with the intended task (as in travel agent, real estate agent, etc). In my opinion the future of revenue for the richest companies is the latter, we just have yet to see anyone unlock it at true scale.

My non-tech spouse is excited about AI because she wants what amounts to a personal, universal EA that can help her with anything. If your executive assistant just kept squawking ads at you all day long you'd fire them.

Predicting OpenAI's ad strategy

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