The potential for OpenAI's advertising business is staggering. A back-of-the-envelope calculation suggests that at their scale, monetizing just 0.22 ads per prompt (one in five) at a plausible $50 CPM for high-intent discovery would generate $25 billion in revenue, rivaling established ad giants.

Ben Thompson argues AI apps should adopt a Meta-style advertising model based on deep user understanding, rather than Google-style contextual ads tied to prompts. This avoids conflicts of interest and surfaces products users didn't know they needed, creating more value for both users and advertisers.

Unlike short search queries, AI conversations provide thousands of words of context on user intent. This rich data enables superior ad targeting and monetization potential, creating a market opportunity so large that it can support new players alongside giants like Google and OpenAI.

To effectively sell ads, OpenAI must provide advertisers with targeting tools and performance data. This will inadvertently open up a treasure trove of analytics for all marketers, offering the first real glimpse into user behavior, popular topics, and prompt trends within ChatGPT.

A contrarian view suggests Google's core search ad product has degraded for a decade, relying on its monopoly. In contrast, talent from more innovative ad platforms like Meta, now at OpenAI, could enable OpenAI to be more agile in creating a new, more compelling advertising model for the LLM era.

OpenAI's potential $100B advertising business has a unique moat. It can combine search-like query intent (what users want, like Google) with deep conversational context (who users are, like Meta). This fusion of data types creates a powerful targeting capability that neither search nor social platforms possess alone.

OpenAI is quickly moving beyond impression-based ads to offer click- and conversion-based campaigns. This addresses advertiser feedback on high initial costs and is essential for achieving its ambitious revenue goals ($2B this year, $11B next). The company is racing to build the features expected of a major ad platform to compete with incumbents.

OpenAI plans to personalize ads not just on immediate queries but by analyzing a user's entire chat history. This creates a powerful hybrid of Google's intent-based advertising and Meta's interest-based profiling, going beyond simple sponsored links to offer deeply contextual promotions.

AI conversations capture high-intent moments, allowing ads to target active decision-making rather than passive attention-grabbing like social media. This fundamental difference could lead to significantly higher average revenue per user (ARPU), making social media's ad performance a floor, not a ceiling for AI platforms.