Perplexity AI introduces ads, drawing mixed reactions from buyers

The emerging AI search platform Perplexity AI has begun rolling out its first advertising offerings, marking a significant step in its monetization strategy while facing mixed reactions from potential advertisers.

Initial rollout and key players: Perplexity AI’s advertising debut features prominent brands including Whole Foods, with support from major agencies McCann and PMG.

• The platform is introducing a unique “answer engine” approach to advertising that differs from traditional search advertising models
• A new “Buy with Pro” feature is being tested to enable direct product purchases from search queries
• Universal McCann has emerged as an early agency partner testing the platform’s advertising capabilities

Pricing and format concerns: The platform’s advertising rates and structure have raised eyebrows among potential advertisers.

• CPMs range from $30 to $60, which many consider premium pricing for an unproven platform
• The decision to sell ads based on CPM rather than CPC has surprised advertisers, given the platform’s search-based nature
• Some advertisers express concern about the ad format and its effectiveness

Current challenges: Several significant hurdles are impacting advertiser adoption.

• A lawsuit filed by NewsCorp against Perplexity AI in October has made some advertisers hesitant
• Questions persist about the experience and capabilities of Perplexity AI’s ad sales team
• The platform’s relatively modest scale presents a barrier for major advertisers

Platform metrics and growth: Despite challenges, Perplexity AI has shown promising user engagement statistics.

• The platform reports 1.1 million monthly active users in the U.S.
• U.K. usage stands at 965,600 monthly active users
• Total website visits have reached 90.8 million, representing a 199.2% increase from the previous year

Market dynamics and adoption: Advertiser response reflects a cautious but interested approach to the platform.

• Many potential advertisers are taking a “watch and wait” stance before committing significant budgets
• Some see potential in the platform’s unique positioning as an “answer engine” for brand-building
• The platform describes its advertising approach as a “paradigm shift” from traditional digital advertising

Future implications: While Perplexity AI’s advertising rollout represents an important milestone for AI-powered search platforms, its success will likely depend on addressing advertiser concerns about pricing, scale, and effectiveness while demonstrating clear differentiation from traditional search advertising models.