OpenAI Abandons "Ad-Free" Idealism to Feed its $1.4 Trillion AI Engine

OpenAI introducing advertising on ChatGPT in the United States marks a decisive break from its earlier promise of staying ad-free. More importantly, it signals the start of a completely new phase for digital advertising, one where conversations replace search boxes and algorithms replace keywords.

For India, the move is expected to reshape how brands think about discovery, targeting and consumer intent.

Gowthaman Ragothaman, media veteran and CEO of Saptharushi, believes the decision changes the very nature of what ChatGPT represents as a platform.

"The moment it becomes an ad-funded model, three or four key things immediately come into play," he says.

"First, advertisers come in because of the eyeballs. The number of subscribers and profiles using the platform becomes the core asset. That real estate, the interface, turns into advertising inventory."

"So naturally, there will be CPM-based pricing for advertisers to place ads on the platform."

According to Ragothaman, geography will become the next defining factor. "Then the next question becomes: where are those eyeballs? Are they in India, the US, or other markets? That determines the kind of ads that will be shown. If 60 percent of the viewers are in the US, why would an Indian advertiser spend money there? Advertising automatically becomes market-specific."

This creates an immediate operational challenge for OpenAI. "It means different ads have to be created and served for different geographies. And once you think at that level, you realise that OpenAI will need a full-fledged advertising engine, an ad-serving technology, if this has to work at scale and speed."

Until now, OpenAI has largely behaved like a product company rather than a media platform. Advertising changes that mindset entirely. "They will also have to start measuring stickiness. Are users coming back regularly, or are they just one-time, fly-by-night users? That kind of audience measurement becomes critical. Until now, OpenAI has not really thought from that perspective."

Ragothaman compares the moment to Facebook in its early years. "Thirdly, it becomes similar to how Facebook was ten years ago. The big question then becomes: what percentage of OpenAI business will be funded by advertising?"

"And once advertisers enter the picture, another issue arises, will they start influencing what appears on the platform?"

He expects the platform to gradually evolve toward contextual advertising. "Slowly, contextual advertising will begin. Advertisers will say: I will spend money only when consumers are querying for travel, or finance, or automobiles. That is how ad models evolve."

But this model, he warns, runs straight into India legal and regulatory realities. "There is a contradiction with privacy laws like India DPDP Act. If advertisers want targeting based on queries, OpenAI will have to disclose consumer behaviour, either at a granular level or at least at a cohort level."

"Someone else will say: I will pay more if you allow me to target specific kinds of audiences."

For Ragothaman, the conclusion is clear. "The moment you move into an ad-funded approach, it becomes a completely different business model."

"Logically speaking, an ad-funded internet is good because it democratizes access. It allows services to be free for consumers instead of being controlled by a single subscription gatekeeper."

But, he adds, free services always come with strings attached. "Nothing comes for free. If an advertiser is paying money to put ads on the OpenAI platform, OpenAI has to give something back in return. What they give, and in what form they give it, becomes extremely important."

He also points to the irony in OpenAI current shift. "In 2024 Sam Altman himself said advertising on ChatGPT would be dystopian and a last resort. Now they are doing exactly that. So clearly, those earlier statements do not mean much anymore."

The competitive implications, he says, are equally significant. "Does this put OpenAI in direct competition with Google or with Perplexity? Every other AI engine today is either funded by a tech company like Microsoft or by a consumer platform like Google."

"Meta uses AI for its own ecosystem. OpenAI is not really OpenAI anymore. It is funded by large investors and partners. That is why I think this move is very big."

From an India perspective, he expects advertising to follow user growth. "Initially OpenAI will be open for advertising mostly in America, because that is where most of the paying subscribers are."

"But it is also possible that, like Perplexity and other AI platforms, a large portion of adoption is actually coming from emerging markets like India, Indonesia and South Asia." If that happens, India cannot be ignored.

"They will need different ads for different consumers, split by geography and behaviour. To do that, they will have to invest heavily in ad tech infrastructure and ad-serving platforms. They will also need a sales and marketing team to sell this inventory, just like Facebook or Google do today. Ads are not going to come automatically."

For users, he believes caution is justified.

As a ChatGPT user, people might have to be worried that their data might is shared with advertisers, even if OpenAI keeps giving disclaimers. "You should be worried, because we do not yet know how much of your data will be shared and in what form. Without proper consent management and compliance with DPDP in India and GDPR in Europe, this shift toward advertising becomes problematic."

A cautious but inevitable path to India

Most industry leaders agree that while ads have begun in the US, India will see them only after a phase of experimentation.

Akshay Mathur, founder and CEO of Unpromptdnsays the move feels inevitable rather than sudden. "Ads entering ChatGPT in the US feels less like a sudden disruption and more like an inevitable evolution. Running large language models at scale is expensive, and advertising remains the most sustainable way to support that infrastructure."

"India is likely to follow, but cautiously. Platforms will want to understand user response, advertiser value, and regulatory comfort before rolling this out meaningfully in a market as large and sensitive as India."

He believes India success will depend on localisation. "If conversational ads are designed only for large global advertisers, adoption will be slow. But, if they are structured to be accessible, measurable, and outcome focused, they could unlock a new layer of high intent demand that today sits between search and performance media."

Execution, he says, will decide the outcome.n"Users here are highly pragmatic. They do not reject ads by default, but they are quick to disengage if answers start feeling biased or overly commercial.nClear labeling, relevance, and a strong separation between organic responses and paid placements will be critical."

From search boxes to conversations

For many in the Indian advertising ecosystem, ChatGPT ads represent a deeper behavioural change. Rubeena Singh, MD India at NP Digital, calls it a turning point. "The introduction of ads in ChatGPT in the US is a landmark moment, signalling that generative AI has moved from an experimental tool to a mature, ad-supported media channel."

"Given India massive user base and the recent rollout of the ChatGPT Go plan here, a similar rollout in the Indian market seems inevitable."

She describes it as part of a broader shift in digital behaviour. "The industry has moved away from Search, Compare, Click towards Ask, Reason, Recommend."

"Unlike traditional search that relies on keywords, ChatGPT ads will be contextually woven into conversational journeys."

For brands, she says, this changes the role of advertising completely. This allows brands to move away from broad broadcasting and instead appear at the exact moment of user intent. It is a shift from interrupting the consumer to becoming a relevant part of their decision-making process."

New rules of performance advertising

Rajiv Dingra, Founder and CEO of ReBid, believes India will require a different playbook. "If ads are being introduced in the US, it is very likely they will eventually come to India but not as a simple copy-paste."

"India ad market is far more price-sensitive and privacy-regulated, so any rollout here would need stronger consent frameworks and clearer value exchange for users."

The real impact, he argues, is deeper.

"When discovery, comparison, and decision-making happen inside ChatGPT, advertising moves from keyword bidding to influence within answers, recommendations, and commerce moments."This will redefine how success is measured.

"That will fundamentally change how performance is measured from clicks to outcomes and reward advertisers who have clean first-party data, strong product relevance, and trust signals, rather than just deep pockets."

Digital marketing executives expect OpenAI to move slowly in India.

Prashant Puri, Co-Founder & CEO, AdLift (acquired by Liqvd Asia) says ads will likely arrive only after the model stabilises. "AI is the future, and ChatGPT has already created space for itself. Ads in ChatGPT will likely arrive in India eventually, once OpenAI completes testing and refines its model."

"Ads will be context-aware and clearly labelled and will not alter how ChatGPT answers. For digital advertising, this shift could create a powerful new channel for intent-driven marketing and challenge the dominance of existing search and social ad platforms."

A new battlefield

Taken together, experts agree that ChatGPT advertising is not just another media option. It is the beginning of a new competitive arena. If OpenAI manages to balance monetisation with user trust, conversational advertising could become one of the most powerful channels for brands in India.

If it fails, it risks turning a revolutionary technology into just another cluttered advertising platform. Either way, the Indian advertising landscape is about to change, and brands, regulators and users will all have a stake in how that change unfolds.