How OpenAI Ads will impact competitors like Google and Meta?

Investing.com — OpenAI’s move into advertising is set to reshape the digital ad ecosystem, with Needham & Company warning that its entry represents “a fundamental re-calibration of the intent-based economy that has historically been dominated by Google and META.”

In a note on Monday, analyst Laura Martin cited OpenAI’s Jan. 16 announcement that ads will appear in its free and mid-tier Go plans, sold on a CPM basis rather than performance-based pricing.

Needham believes OpenAI’s scale gives the initiative immediate significance. With “800 million weekly active users,” analysts estimate the company “could generate up to $20B of ad revs/year within the next 5 years,” depending on execution.

The firm argued that OpenAI needs advertising to offset “high costs of AI compute, infrastructure, and growth,” while a second major revenue stream could lift its valuation multiple.

If OpenAI reaches that revenue level, Needham stated that “at least some of it must come from the Walled Gardens,” including Google, Meta and Amazon, given that the U.S. open internet ad market is roughly $50 billion.

The brokerage will be hosting a call with Adthena CEO Phillip Thune, who has more than 25 years in online search and whose company has detected significant shifts in Google’s AI Overviews.

Needham highlighted Thune’s data showing that AI-generated answers “can trigger a 20–40% drop in click-through rates to websites,” underscoring the disruptive potential.

The key investor questions, Needham said, now centre on whether advertisers view ChatGPT’s CPM-based placements as more attractive than Google’s formats, and which platforms stand to lose the most share as AI-driven interfaces redefine user intent and ad value.

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