AI-Powered Search Engine Perplexity to Launch Ads in Q4, TargetingHigh-Income Users
SAN FRANCISCO, Aug. 23,2024 – Perplexity AI, a burgeoning artificial intelligence (AI) search startup, has announced plans to introduce advertising on its search application inthe fourth quarter of this year. The company, which has garnered significant attention for its AI-driven search capabilities, is aiming to capitalize on its rapidly growing userbase and attract advertisers seeking to reach a highly engaged and affluent audience.
According to sources familiar with the matter, Perplexity will employ a cost-per-mille (CPM) advertising model, with rates exceeding $50.CPM, which refers to the cost an advertiser pays for every thousand impressions of an ad, offers greater control over ad frequency and cost for advertisers, while providing publishers with a more lucrative revenue stream.
Semrush, a search marketing company,reports that desktop display ad CPMs typically hover around $2.50, while mobile video CPMs average $11.10. Perplexity’s higher CPM reflects its confidence in its user base, which boasts a high concentration of highly educated and affluent individuals. Over 80% of Perplexity users hold a bachelor’s degree, while 30% occupy senior leadership positions. Additionally, 65% of users are categorized as high-income white-collar professionals, including those in fields like medicine, law, and software engineering.
Perplexity’s initial advertising categories will include technology,health and pharmaceuticals, arts and entertainment, finance, and food and beverages. Advertisers will have the opportunity to sponsor related questions displayed beneath answers and purchase display ads on the right-hand side of the search results page.
The company’s foray into advertising was initially announced in April, but a specific launchdate was not disclosed until now. Perplexity, founded in 2022, positions itself as an AI search engine company, challenging Google’s dominance in the search landscape, much like ChatGPT. It has emerged as one of the fastest-growing generative AI applications, attracting a significant user base.
Perplexity recently secured $250 million in new funding, led by SoftBank Vision Fund 2, the investment arm of SoftBank Group. This investment catapulted the company’s valuation from $1 billion in April to $3 billion, a threefold increase.
The company’s growing popularity has not beenwithout controversy. Perplexity’s data collection practices have faced scrutiny from media outlets such as Forbes, which accused the company of plagiarism. Perplexity subsequently modified its approach to citing sources.
In an effort to address concerns about content attribution and foster collaboration with news publishers, Perplexity launched a revenue-sharingmodel last month. The company will share a double-digit percentage of revenue from sponsored articles with the news publishers whose content is referenced. Perplexity has already secured partnerships with publications like Time, Der Spiegel, and Fortune.
As Perplexity navigates the evolving landscape of AI-powered search, itsforay into advertising marks a significant step in its monetization strategy. The company’s focus on a highly engaged and affluent user base, coupled with its unique revenue-sharing model, positions it to attract both advertisers and publishers, potentially reshaping the future of online search.
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