AI Search Startup Perplexity Dives Into Ad Game

Perplexity AI, a billion-dollar artificial intelligence search startup, is reportedly preparing to monetize its platform through ads in the fourth quarter.

The move comes as AI-powered search engines increasingly influence eCommerce, potentially reshaping how consumers discover products and businesses allocate their marketing budgets in the digital marketplace.

The startup’s entry into advertising follows a meteoric rise. Perplexity reported millions of app downloads. This growth has attracted investor interest, with the company’s valuation doubling to over $1 billion in an April funding round.

Caitlin Halpert, vice president of growth at performance marketing agency Journey Further, told PYMNTS that platforms such as Perplexity could seamlessly integrate ads without compromising user experience.

“I can see ads blending in nicely with how the platform works today,” Halpert said, suggesting that ads could appear alongside source documents in Perplexity’s interface.

However, Halpert warned of potential difficulties.

“The primary challenge will likely be ensuring users can clearly distinguish between ads and legitimate sources, maintaining the integrity of the search experience,” she said.

Introducing advertising on AI search platforms could reshape competition in the digital ad market. Halpert advised marketers to adapt their strategies, emphasizing the need to “prioritize earned media coverage and create content that deeply resonates with users, rather than merely optimizing for algorithms.”

A New Frontier in AI-Powered Advertising

The company’s move into advertising represents a shift in the AI search landscape. Perplexity has gained popularity for its ability to provide concise, synthesized answers to user queries, a feature that sets it apart from traditional search engines.

Yet the company’s ascent has been subject to controversy. Major media outlets have accused the company of plagiarism, raising questions about content ownership and fair use in the AI era. The company has adjusted its citation practices and introduced a revenue-sharing model for publishers.

Some industry experts drew parallels with existing search engines.

“Ads inherently pollute the organic order of information, turning the search results into a carnival of distractions,” CUDO Compute Chief Marketing Officer Lars Nyman told PYMNTS. “Google has been selling off objectivity for years, auctioning off the prime real estate at the top of your search results to the highest bidder, crudely speaking.”

Market Disruption

Some observers said they see risks in the rise of AI search.

“Once advertising becomes a revenue model, there is a risk that the platform might prioritize content that generates higher ad revenue over purely relevant or accurate results,” Ross Kernez, founder of SEO consulting firm Rossk.com, told PYMNTS.

The introduction of advertising to AI-powered search platforms also raises privacy concerns.

“AI search platforms process and analyze vast amounts of data from user queries, which often include sensitive or personal information,” Kernez said. “The introduction of targeted advertising introduces new privacy concerns, particularly around how this data might be used or shared.”

The data analysis could go deeper than traditional search engines.

“Traditional search engines already infer user intent based on obvious data such as past searches and site visits, but can AI take this a step further; not just deducing that you’re interested in buying a car, but also picking up on your anxiety about the environment, your preference for electric vehicles, and your penchant for weekend road trips,” Nyman explained.

Such insights could lead to what Nyman described as “hyper-targeted ads that feel almost intrusive like a salesman whispering in your ear about your deepest desires.”

The implications extend beyond simple search queries to potentially revealing intimate details about users’ personalities and preferences.

The entry of AI-powered platforms into the advertising market could also reshape the competitive landscape.

“Traditional search engines and social media platforms will feel the heat as AI-driven platforms offer advertisers a more nuanced, precise way to reach consumers,” Nyman predicted.

Industry watchers expect a potential shift in marketing strategies.

“If AI search platforms successfully capture a significant share of the advertising market, it could lead to a realignment of marketing budgets away from traditional search engines and social media toward these new platforms,” Kernez said.

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