So there are two broad models for ad monetization:

1. In-result or first-party ads; and

2. Display or third-party ads.

In Google terms, (1) is SERPS ads and (2) is DoubleClick/AdSense. (1) is still ~10x the size of (2) for Google.

I'm skeptical of the effectiveness of inserting ads into an AI chat mode. I think this will be a terrible user experience and will cause people to really dislike AI assistants. Part of the problem here is that conversation isn't a great medium for conveying ads. If you look at a Google search result, there are ads strategically placed on the top and side but they don't waste that much time because you can scan with your eyes to the organic search results.

So would OpenAI ads be part of the conversation or would there be a sidebar? If it's a sidebar, what happens when the interface inevitably switches to voice-first?

To be clear, I'm not anti-ads on Google search results. If I search for "Ryzen 9800X3D" a site selling CPUs is a relevant result, for example.

Intent here is the biggest part of ad effectiveness. By doing a search the user wants to know or get something. That's huge. But another part is all the context and behavioural information. Where you are, inferred demographics and interests, etc.

People will say OpenAI knows a lot about you but I'm not sure that's true. For a start, LLMs have a context window beyond which they remember nothing. I'm sure people are working on taking that context and summarizing it down into base knowledge for the LLM a bit like what happens with your Google activity. I would guess this approach has a long way to go.

So this brings us to display and having essentially an OpenAI pixel. This has the same issue of compressing your context down into characteristics but I actually think this could be pretty successful but it would still have to compete with Google. And that's not easy to do. Google has significant ad buying and selling infrastructure and a deep marketplace.

But remember too that display ads are a fraction of Google's other markets and I don't htink you get to the required revenue OpenAI needs on display alone.

Of course it's worth adding that with unlimited money and the brightest minds of our generation all we can come up with for monetization is advertising.