AI Startup Navigates Tension and Opportunity
Perplexity AI Ventures Into Ad-Supported Search Amid Controversial Allegations
Last updated:
Perplexity AI, embroiled in plagiarism allegations, gears up to launch ad-supported searches this fall. With a recent $1 billion valuation, Perplexity seeks to reconcile its growth ambitions with content origin controversies by updating its citation methods and offering a revenue-sharing model for publishers. Will this balance the scales of innovation and integrity?
Perplexity AI, an artificial intelligence startup, is preparing to start selling ads alongside its AI-assisted search results in the fourth quarter. This move follows a period of controversy involving accusations of plagiarism from major media outlets. These allegations pointed out that Perplexity had surfaced content from other sources without proper attribution, leading to significant concern and criticism from the media industry.
To address these concerns, Perplexity AI made changes to its Pages feature, improving how it cites sources in its responses. Additionally, the startup introduced a revenue-sharing model last month, which allows publishers to earn money through the company's search engine. This model stipulates that whenever an article is cited within a Perplexity answer and generates ad revenue, a portion of that revenue is shared with the original publisher.
Learn to use AI like a Pro
Get the latest AI workflows to boost your productivity and business performance, delivered weekly by expert consultants. Enjoy step-by-step guides, weekly Q&A sessions, and full access to our AI workflow archive.
Perplexity's new advertising strategy will employ a cost per thousand impressions (CPM) model. According to sources familiar with the matter, CPM rates for these ads will exceed $50, which is significantly higher than the average CPM rates for display and mobile video ads. The company is targeting key advertising categories such as technology, health and pharmaceuticals, arts and entertainment, finance, and food and beverage.
The company's pitch deck, which was viewed by CNBC, highlights the impressive usage statistics of its app. The app has been downloaded more than two million times and answers over 230 million queries each month. U.S. queries have increased eightfold over the past year. The deck also mentions that a significant portion of Perplexity's user base consists of individuals in senior leadership positions and high-income white-collar professions.
The move to introduce ads comes after Perplexity raised new funding in April, which valued the company at over $1 billion—double its valuation from just three months prior. However, this rise in popularity has also intensified scrutiny over how the platform handles and attributes content from other sources. Prominent examples include allegations from Forbes and Wired about uncredited use of their articles.
In response to these allegations, Perplexity has worked on improving transparency and ensuring that sources are properly cited within its responses. This effort to maintain ethical standards and build trust with content providers is crucial as the company enters the advertising market.
Learn to use AI like a Pro
Get the latest AI workflows to boost your productivity and business performance, delivered weekly by expert consultants. Enjoy step-by-step guides, weekly Q&A sessions, and full access to our AI workflow archive.
The initiative to share revenue with publishers is seen as a strategic move to mitigate tensions and build cooperative relationships within the media ecosystem. Major media outlets and content platforms like Fortune, Time, and Entrepreneur have already joined Perplexity's Publishers Program, signaling a positive reception to this approach.
Perplexity AI's entry into the advertising space could have significant implications for the broader business environment. It underscores the growing influence of AI-assisted search technologies and their potential to disrupt traditional search engines like Google. Investors view AI-assisted search as a key competitive threat to Google, which has prompted Google to enhance its own AI capabilities, such as introducing AI Overviews in search results.
As the market for AI-driven search evolves, businesses must stay abreast of these developments to understand how changes in technology might impact consumer behavior and digital advertising strategies. The introduction of Perplexity's advertising model highlights the ongoing convergence of AI and digital marketing, presenting new opportunities and challenges for advertisers and publishers alike.