Perplexity Plays with Paid Ads

As someone who has worked in digital marketing, specifically the world of paid search, I found it fascinating to see the announcement on November 12 that Perplexity is experimenting with advertising. And in no way am I surprised.

With the vast costs being spent on training models alone, these players need to explore all options of revenue generation to keep going. OpenAI reportedly spends an average of $700,000 per day to keep its large language model (LLM) running. For decades, many companies have turned to advertising to support their business, so this isn't exactly unchartered territory.

Perplexity has always set itself up as a natural language search engine. A quick look at their chat page clearly shows this:

When searching on a topic such as "how do I fix a noisy washing machine", you get a summary of everything the model knows, but also with citations that are mostly links to websites and articles, (sound familiar?). The user can then explore a topic further by continuing to chat with the system using additional prompts. All very intuitive.

However, this is also going to have to appeal to advertisers. Google Adwords has been incredibly successful, not only because it provides relevant search results to its users, but it also has a ton of analytics and reporting features that give brands incredible insights into how their ad dollars are working and, therefore, how they should optimise their campaigns. At this stage, I'm not clear on what analytics Perplexity is providing, but they are going to have to invest in this side of the product if they want advertisers to not only invest for trial campaigns but to keep coming back and have Perplexity an evergreen part of their media plans.

Nonetheless, this is an exciting development for sure; let's watch this space...