Perplexity AI, the “answer engine” startup, announced it will begin incorporating advertisements into its chatbot responses. Starting next week, users in the U.S. will see ads appearing as “sponsored follow-up questions” and “paid media” alongside answers, a departure from traditional ad formats. The company has partnered with Indeed, Whole Foods, Universal McCann, and PMG for this advertising initiative.
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Perplexity AI explained its decision in a blog post, stating that ad revenue will be shared with publisher partners and is crucial for a sustainable revenue-sharing program. Subscriptions alone, the company noted, are insufficient for generating the necessary revenue. Advertising, they argue, provides a more stable and scalable income stream.
How Perplexity AI Will Implement Ads
Perplexity AI emphasizes that all sponsored answers will be clearly labeled and generated by its AI model, not written or edited by advertising partners. The chosen ad formats, the company claims, maintain the utility, accuracy, and objectivity of the answers. Perplexity AI assures users that this move will not compromise its commitment to providing unbiased and direct answers.
Competition and Legal Challenges
This move comes as Perplexity AI faces growing competition from OpenAI’s SearchGPT and grapples with legal challenges. Multiple lawsuits allege copyright infringement on a “massive scale” due to the company’s data scraping practices. Perplexity AI has also received cease-and-desist letters from The New York Times and Conde Nast. Whether advertisers will be deterred by these issues remains to be seen. If so, Perplexity may be reliant on its Perplexity Pro subscription, currently priced at $20/month, as its primary revenue source.
The Future of Perplexity AI’s Advertising Strategy
The success of this advertising strategy will depend on various factors, including user acceptance, advertiser confidence, and the ability to navigate legal challenges. Only time will tell whether these “sponsored questions” and “paid media” alongside AI-generated answers will prove a sustainable revenue model for Perplexity AI.
