Early this past Saturday morning I got an email from OpenAI titled “Update to our privacy policy and more controls.” I don’t recall ever getting email from the company – I signed up for ChatGPT when it launched, but haven’t used the service much since switching to Claude several years ago. But the email reminded me of a story I read from The Information last week, and I think it’s fair to say the two are related: OpenAI Sees $8 ChatGPT Driving Consumer Subscribers to 122 Million This Year.
I’ve written several posts about OpenAI’s audacious advertising ambitions, which I believe history will judge as the most audacious and potentially damaging expansion of the Internet’s data-driven advertising model since the invention of AdWords, Google’s original cash cow. OpenAI plans on scaling its advertising revenue from zero in 2025 to more than $100 billion by 2030. As I pointed out earlier, it took Google nearly two decades to reach that milestone.
The Information’s reporting gives us some insights on how OpenAI is planning to hit those lofty goals. Step one is to build out as much advertising inventory as possible by leaning on its free and low-cost subscription models. According to The Information, OpenAI is forecasting that “consumer subscribers to ChatGPT Go, which costs $8 a month in the U.S. and around $5 monthly in other countries such as India, would surge about 36 times to 112 million this year.”
If those numbers make you shrug, pull those shoulders down, and let’s do a bit of math. Two months ago, OpenAI announced it has around 50 million paying subscribers – 62 million fewer than its goal of 112 million for this year. That’s quite a mountain to scale.
But OpenAI is the fastest growing consumer application in the history of the Internet, no? Well, yes, it was. Now? Not so much. Over the past few quarters, OpenAI’s subscriber growth has hit a wall. A report in the Wall Street Journal last week put it starkly: “OpenAI missed an internal goal of reaching one billion weekly active users for ChatGPT by the end of last year, according to people familiar with the goals. The company still hasn’t announced that milestone, unnerving some investors. It also missed its yearly revenue target for ChatGPT as well after Google’s Gemini saw massive growth late last year and ate into OpenAI’s market share.”
So how does OpenAI plan on adding 62 million new paying subscribers this year? That’s where that Saturday morning email comes into play. The email main point is to inform us that OpenAI is now using cookies, those much-maligned pieces of code that drive programmatic advertising across the Internet. “We wanted to let you know that we’ve updated our Privacy Policy to include how we use cookies and other similar technologies,” read the first line of the email.
At first, I figured OpenAI was adding cookies to ensure its still-nascent advertising platform would meet with the expectations of nearly all of its potential marketing customers. Regardless of repeated efforts to kill them, cookies still form the backbone of how marketers measure ad performance. Why is OpenAI making such a big deal about using them?
That’s when it hit me: OpenAI plans on marketing itself out of its subscriber growth problem. Here’s another line from that aforementioned email: “We’ll now use cookies to promote OpenAI products and services on other websites.”
Will they ever! Dig into the company’s updated privacy and cookie policies, and you’ll learn even more: OpenAI employs hundreds of cookies, including more than 40 “marketing measurement” cookies placed on six distinct third-party websites. Those sites- LinkedIn, Reddit, Meta, Google, TikTok, and Bing/Microsoft* – form the foundation of today’s Internet advertising infrastructure.
Put another way, OpenAI is going to use aggressive, performance- and data-driven Internet advertising tactics in an attempt to build the world’s fastest growing … performance- and data-driven Internet advertising business. It reminds me of how TikTok built its US business by flooding Facebook and Instagram with ads to drive TikTok downloads. But unlike TikTok, which has a free service, OpenAI has to convince 62 million more folks to pay a subscription fee. Bon chance!
We all thought OpenAI was using all that recently acquired capital to build more data centers, but at least a few billion of those dollars will certainly be aimed directly at the company’s much more pressing problem: Acquiring customers. Grab some popcorn and get ready for a blitzkrieg of OpenAI marketing, folks. This will be a show worth binging.
*I can only imagine the folks at Apple and Amazon are pissed they’re not included on OpenAI’s initial media plan. Not to worry, I’m sure they’ll get optimized in!
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Low key savage post. JB not missing a beat.