OpenAI, the developer of ChatGPT, is accelerating profitability improvements ahead of an initial public offering (IPO), hiring a former Meta executive to strengthen its digital advertising business and pursuing investment for a joint venture (JV) with private equity.
On the 23rd (local time), industry sources said David Dugan, who served as vice president of the advertising institutional sector at Meta, said on LinkedIn that he will join OpenAI as head of advertising solutions. He is a veteran of the advertising industry who worked at Meta for more than 10 years, building a network with major advertisers and agencies.
Dugan said of ChatGPT, "the fastest-growing consumer application in history, used by more than 900 million people each week," adding, "I'm excited to help build a new model that will reshape the industry landscape." He added, "While maintaining an information environment that users trust, we will also operate advertising under clear principles to add value."
He also said OpenAI's advertising strategy will be fundamentally different from existing platforms, based on artificial intelligence (AI). The organization is expected to operate under Chief Operating Officer (COO) Brad Lightcap.
Earlier, in January, OpenAI announced plans to introduce ads for users on free and low-cost plans and began a pilot service in the United States in early February. However, the current ad exposure scale is limited, and observers say more time is needed to prove effectiveness. The company plans to gradually expand the audience for ads.
These moves are seen as a strategy to diversify the revenue structure with an eye on an IPO within the year. The aim is to ease the financial burden of the AI business, which requires large-scale investment, and enhance investment appeal through advertising revenue.
At the same time, OpenAI is pursuing investment in the form of a JV with private equity. Through the JV, it will build customized AI models for corporations held by private equity and share revenue. OpenAI is said to have proposed conditions including a minimum return of 17.5% and early access to the latest AI models.
This approach is expected to spread the expense needed for customized model development and increase sales from corporate clients. It is also seen as a strategic move to keep Anthropic, a competitor in the enterprise AI market, in check.
However, some investors are reportedly cautious about participating, questioning the structure's profitability and flexibility.