OpenAI is rapidly evolving ChatGPT from a groundbreaking AI tool into a significant advertising platform. Just six weeks after introducing ads to the free version of ChatGPT in the United States on February 9th, the company reported over $100 million in annualized revenue from the pilot program by late March, drawing more than 600 advertisers while reaching less than 20% of eligible users. Now, OpenAI is partnering with Smartly, a Helsinki-based advertising automation platform, to develop more sophisticated, conversational ad formats, signaling a major escalation in its advertising strategy.
This collaboration aims to move beyond the initial static, labeled ad placements that appeared as sponsored cards beneath relevant queries – an air fryer ad following a question about kitchen appliances, for example. The new approach, as described by Smartly, will allow users to click on an ad and enter a chatbot-like experience, effectively creating a secondary dialogue within the ChatGPT interface. This represents a fundamental shift in how advertising could function within an AI-powered conversational environment.
A New Era of Conversational Advertising
Smartly, valued at approximately $300 million and reporting roughly $101 million in revenue in 2025, specializes in optimizing advertising campaigns across major platforms like Meta, Google, TikTok, and Snapchat. Their role in the ChatGPT partnership will center on performance optimization, dynamically adjusting ad creative and targeting based on user interactions. This focus on real-time adaptation is crucial for maximizing the effectiveness of these novel ad formats.
OpenAI isn’t relying solely on Smartly. The company has also onboarded Criteo, a French commerce-media company, as its first formal ad-tech partner. Since March 2nd, Criteo has connected approximately 17,000 advertisers to ChatGPT’s advertising inventory. Discussions are also underway with The Trade Desk to potentially further scale ad sales, according to reporting from The Information, though a deal hasn’t been finalized.
Building an Advertising Infrastructure
The pace of development is striking. In late March, OpenAI hired David Dugan, formerly a Vice President at Meta leading their global clients and agencies division, to head its new global advertising solutions team. Dugan reports to Chief Operating Officer Brad Lightcap and joins a leadership team that already includes Fidji Simo, CEO of OpenAI’s applications division and a former Facebook executive, and Denise Dresser, appointed Chief Revenue Officer in December 2025 after previously leading Slack.
These hires suggest a decisive move beyond experimentation and towards building a permanent, robust sales organization dedicated to advertising. As The Next Web reported, OpenAI is no longer simply testing the waters; it’s building a long-term advertising business.
Revenue Projections and Expansion Plans
OpenAI has projected to investors that ChatGPT consumer revenue will exceed $17 billion in 2026, with advertising playing a significant role in generating income from its vast non-paying user base. Currently, ChatGPT boasts over 800 million weekly active users, but only around 5% subscribe to paid plans. To broaden access, OpenAI plans to launch self-serve advertising tools this month, removing the current $200,000 minimum commitment and opening the platform to small and medium-sized businesses.
Initial pilots are planned for Canada, Australia, and New Zealand, with broader international expansion anticipated throughout the year. The initial pricing for ChatGPT ads is aggressive, at roughly $60 per thousand impressions, a premium justified by early performance data. Criteo reports that users referred by large language models convert at 1.5 times the rate of other channels.
Privacy Concerns and Competitive Responses
The success of these conversational ad formats hinges on maintaining user trust. OpenAI states that conversations remain private and are not shared with advertisers, who only receive aggregate performance data like views and clicks. Ads are restricted from appearing near sensitive topics such as health, mental health, and politics, and users under 18 do not see them. However, these safeguards haven’t quelled all concerns.
Zoe Hitzig, a former OpenAI researcher, has publicly argued that the company is building an economic engine that could eventually override its own rules, given the unprecedented archive of personal conversations ChatGPT holds. Purchase-tracking data can be linked to OpenAI when a user clicks an ad and completes a transaction, and the company’s privacy policy allows for contact-syncing features that could process a user’s phone number even without explicit consent.
Competitors are already responding. Anthropic, the creator of the Claude chatbot, ran Super Bowl advertisements implicitly contrasting its ad-free model with OpenAI’s approach. The message was clear: one company prioritizes users, while the other treats them as a product. Whether this distinction resonates with ChatGPT’s hundreds of millions of users remains to be seen, but the reputational risk is significant for a company positioning itself as a responsible steward of artificial intelligence.
The Future of AI-Powered Advertising
The conversational ad format Smartly is helping to build represents a genuinely new approach to digital advertising – a dialogue that mimics the user’s experience within ChatGPT. If successful, it could blur the lines between commercial and organic content more effectively than anything seen on platforms like Google or Meta. However, eroding the trust that fueled ChatGPT’s rapid growth could be a costly trade-off. The $100 million annualized revenue suggests a willingness to take that risk, and the influx of experienced advertising leadership from Meta signals OpenAI is committed to realizing its vision for a commercially-driven AI future.
The next key milestone will be the launch of self-serve advertising tools this month, followed by the international pilots in Canada, Australia, and New Zealand. These developments will provide a clearer picture of the platform’s potential and the broader market response to this new form of AI-powered advertising.
What are your thoughts on the introduction of ads into ChatGPT? Share your opinions and experiences in the comments below.
