Perplexity ads coming using a CPM model + sponsored "related questions" -> In a pitch deck, AI search engine Perplexity told advertisers it plans to start running ads in Q4; a source says Perplexity's CPM prices will be $50+
"Advertisers will be able to sponsor “related… pic.twitter.com/teYooFrkIK
— Glenn Gabe (@glenngabe) August 22, 2024
Perplexity AI, a startup specializing in AI-assisted search, plans to start running ads on its app in the fourth quarter. The company has seen significant growth, with over two million downloads and 230 million queries per month, despite facing controversy over plagiarism allegations. In April, Perplexity raised new funding, boosting its valuation to over $1 billion.
Those cpm estimates sound very high. I’d be surprised if the paid cpms exceed 5$ (specially in a cpm sold world with minimal targeting).
https://t.co/8pAnzsn3FN— Vivek Raghunathan (@vivek7ue) August 23, 2024
However, concerns have been raised about how the company surfaces content from other sources, leading to incidents of plagiarism from platforms like Fortune and Wired. To address these issues and foster better relationships with publishers, Perplexity launched a revenue-sharing model. Media outlets such as Fortune, Time, Entrepreneur, The Texas Tribune, Der Spiegel, and WordPress were among the first to join.
Perplexity’s plans for competing in the ad world is now a bit less perplexing.
I wrote about @perplexity_ai’s new pitch deck that sheds light on the AI search startup's plans for ads in Q4. (Also looked back at how it talked about ads in April.) https://t.co/DPO0OuAeGS
— Marty Swant (@martyswant) August 23, 2024
Under this model, when Perplexity generates ad revenue from citing an article, it shares a percentage of that revenue with the respective publisher. Perplexity’s advertising model, following the CPM (cost per thousand impressions) approach, is expected to feature CPM prices higher than $50. The company plans to target key advertising categories, including technology, health, pharmaceuticals, arts and entertainment, finance, and food and beverage.
Perplexity AI ad rollout plans
Advertisers will have options to sponsor “related questions” below search answers and buy display ads alongside generated responses. According to the pitch deck, more than 8 in 10 Perplexity users hold an undergraduate degree, around 30% are in senior leadership positions, and 65% are in high-income white-collar professions.
The rise of AI-assisted search is considered one of the key shifts in how consumers access information online. Competition in the sector is heating up, with players like OpenAI and Google introducing their AI-driven search features. However, Perplexity AI’s ad integration plan has drawn shock and mockery from some analysts.
Technology pundit and marketing executive Ed Zitron expressed his disbelief on social media platform X, pointing out that there is nothing stopping a competitor, such as OpenAI, from launching its own cheaper program. While consumers have shown interest in generative artificial intelligence products, the exact number of subscribers to various AI model platforms is unclear, and analysis suggests they do not approach the numbers seen by top social media platforms. The integration of ads into generative AI products could provide an additional revenue stream for startups, helping them recoup funds spent on infrastructure and training.
However, this only holds true if consumers flock to these products in large enough numbers.
Cameron is a highly regarded contributor in the rapidly evolving fields of artificial intelligence (AI) and machine learning. His articles delve into the theoretical underpinnings of AI, the practical applications of machine learning across industries, ethical considerations of autonomous systems, and the societal impacts of these disruptive technologies.
