Perplexity Introduces Ads to Platform
Brief:
This week the AI search engine is starting an experiment with ads. It is adding sponsored follow-up question in ads. This can help the platform to gain more money, because only subscriptions can not make huge profit.
- New Revenue Strategy
- Ad Format and Partnerships
- Concerns and Competition
New Revenue Strategy
AI-powered search engine Perplexity says it’ll begin experimenting with ads on its platform starting this week.
The site will be showing ads in the U.S. to start, and they’ll be formatted as “sponsored follow-up questions” (e.g. “How can I use LinkedIn to enhance my job search?”). These ads will be positioned to the side of answers and labeled as “sponsored.”
Brands and agency partners participating in Perplexity’s ad program include Indeed, Whole Foods, Universal McCann, and PMG.
“Ad programs like this help us generate revenue to share with our publisher partners,” Perplexity wrote in a post on its blog. “Experience has taught us that subscriptions alone do not generate enough revenue to create a sustainable revenue-sharing program. [A]dvertising is the best way to ensure a steady and scalable revenue stream.”
Ad Format and Partnerships
Perplexity asserted that answers to these “sponsored questions” will still be generated by its AI — not written or edited by the brands sponsoring the questions. Advertisers also won’t get access to users’ personal info, the company said.
“We intentionally chose these formats because it integrates advertising in a way that still protects the utility, accuracy and objectivity of answers,” the blog post read. “These ads will not change our commitment to maintaining a trusted service that provides you with direct, unbiased answers to your questions.”
Concerns and Competition
Perplexity’s embrace of ads stands in contrast to OpenAI’s decision not to launch its AI-powered search tool, ChatGPT Search, with ads. Rival Google has similarly piloted ads in its AI search experience, AI Overviews — recently showing ads for certain queries on mobile in the U.S.
Perplexity is reportedly marketing its ad products as a premium alternative to Google’s, emphasizing its platform’s ability to reach educated, high-income consumers, per CNBC. But some analysts have expressed concerns about the scale, reach, and targeting capabilities of ads on Perplexity.
Illustrating the challenge of incorporating ads into AI-generated content, Microsoft only briefly explored showing ads in the responses given by its chatbot on Bing. It quietly withdrew the “sponsored results” after a few weeks.
Perplexity has been accused of plagiarism, though, which could be another potential deterrent for advertisers. News Corp’s Dow Jones and the NY Post have sued the AI company over what they describe as a “content kleptocracy.” Many other news sites have shown evidence that Perplexity closely replicates their content, and last month, The New York Times sent the startup a cease and desist.
Perplexity, which recently said it’s serving 100 million search queries a week, claims it has changed how its platform cites sources, and continues to expand its revenue-sharing program for publishers. But the company has also argued that publishers wished its technology “didn’t exist” and they would prefer that “publicly reported facts are owned by corporations.”
There’s pressure on Perplexity to ramp up monetization. The company is reportedly in the final stages of raising $500 million in funding at a $9 billion valuation, but it has only one revenue stream: its premium subscription service, Perplexity Pro, which provides additional features for $20 per month or $200 per year.
For the full report Techcrunch, you can read the original article here:
https://techcrunch.com/2024/11/12/perplexity-brings-ads-to-its-platform/