AI search engine Perplexity.ai has backtracked on its claim that information searching should be “free from the influence of advertising-driven models” and plans to sell ads soon.
A few weeks ago, Perplexity’s About page read: “Perplexity was founded on the belief that searching for information should be a straightforward, efficient experience, free from the influence of advertising-driven models. We exist because there’s a clear demand for a platform that cuts through the noise of information overload, delivering precise, user-focused answers in an era where time is a premium.”
The company has now removed the part “free from the influence of advertising-driven models” from its About page. Its chief business officer, Dmitry Shevelenko, told Adweek, “Advertising was always in the cards for the company”.
While Perplexity touted itself as a Google competitor and had earlier vowed to free the information from the clutches of ads, it still has a long way to go to figure out a viable business model.
Perplexity AI, powered by OpenAI’s ChatGPT and a proprietary AI model, is available at a $20 monthly fee. The company claims to have over 10 million active users but to generate enough advertiser interest; they’ll need to drive this number up and increase the engagement these people bring.
Currently, the AI-powered search engine answers people’s questions based on information available on the web, coupled with data from partners like Yelp. It adds media files to its response, links sources, and also suggests related queries.
These related queries make up about 40% of the platform’s searches, and this is one of the places where Perplexity plans to introduce native advertising by allowing brands to influence these questions.
Building on its $100 million Series A round in March 2023, Perplexity raised $73.6 million in Series B funding in January 2024 from several investors, including Jeff Bezos’ Expeditions Fund. Such huge investments also come with the expectation of either short- or long-term returns for the investors.
Arguably, the year-old Perplexity doesn’t have a solid foundation right now, with only a few million people using it compared to the billions that use Google. To scale its advertising business, it needs more people actively using it, generating substantial user insights to target them for ads while keeping brand safety in mind — beginning to sound like Google’s way of doing business.
Perplexity AI’s foray into the “advertising-driven model” it shunned till a few weeks back is a classic case of becoming what you hate.
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