Perplexity to launch ads in Q4, but marketers may be hesitant to invest

Generative AI Search Engine Perplexity said it will launch ads in the fourth quarter, but the platform will have to conquer Advertisers and convince them that their search ad spend will go further than it does on Google.

Perplexity’s new ads will be video ads and sponsored questions, Search Engine Land reports. With only 15 million active users as of March, Perplexity’s ads will reach a small user base. A presentation shared with CNBC indicates that the platform is emphasizing its ability to reach educated, high-income professionals who may be in senior leadership positions at their companies.

This “educated, niche and discerning” audience could allow Perplexity to completely differentiate itself from Google, wrote Gareth Cleevely, executive vice president of corporate strategy at Dentsu. LinkedInAt the same time, positioning Perplexity ads as a premium alternative to Google could limit their scalability and long-term sustainability, Cleevely wrote.

Advertisers aren’t eager to test the new platform just yet, according to Zac Woolfolk, associate director of paid search at VML. “While we’re proactively introducing new ad formats to our clients, many are cautious about change and slower to embrace new platforms like Perplexity,” he said. “With privacy being a major concern, clients need assurances that platforms like Perplexity are providing the right content, accurately displaying ads, and directing users to relevant landing pages.”

To attract these wary advertisers, Perplexity must demonstrate success with early adopters on the ad platform. It will also need to build trust with advertisers. Perplexity has faced plagiarism allegations, which pose brand safety concerns for advertisers. “Balancing trust and transparency with an ad-based model is no small feat,” Woolfolk said.

If it could gain this trust, the opportunities for search advertising would be enormous.

  • We forecast that U.S. search ad spending will reach $124.59 billion this year.
  • Google’s advertising revenue makes up about half of that search spend (50.5%) and retail media platforms represent another considerable slice, equal to 27.2%.

Google’s share of traditional US search ad spend will grow in the genAI era, we predict. Google’s AI investments will allow it to evolve alongside innovations from challengers like Perplexity, as noted in our H1 2024 Technology Trends relationship.

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