Perplexity is shaking up the tech industry with a fresh approach to digital advertising. The company is testing a new ad model that blends seamlessly into its search platform, prioritizing user experience over intrusive ads. This strategy could challenge the dominance of giants like Google and Microsoft.
At the helm of Perplexity’s ad division is Taz Patel, who’s driving the effort to create a distinctive ad offering. Unlike traditional search engines, which rely on bids and often disruptive ads, Perplexity focuses on relevance and organic integration. The company’s ad model is based on sponsored questions that appear in the “People also ask” section after a user’s query. The AI-provided answers remain intact, but additional questions generated by AI are introduced at the end of the page, some of which may be sponsored.
For instance, if a user searches for “What’s the best ice cream?”, Perplexity might show a sponsored question related to Whole Foods and its desserts. Patel emphasizes that relevance is key: “Our goal is not to flood the platform with irrelevant ads, but to offer content that genuinely adds value to the user’s experience.” This approach marks a significant shift in digital advertising, prioritizing utility over interruption.
Perplexity is currently working with fewer than a dozen advertisers in this experimental phase, but plans to expand the initiative in the coming months with a second wave of advertisers as it refines its model. The company is also exploring the integration of e-commerce into its search experience, opting for a cost-per-thousand impressions (CPM) model over cost-per-click (CPC). This suggests a focus on brand awareness rather than direct conversion.
Perplexity has introduced “shoppable ads” for certain product searches, allowing users to interact with brands like Bob’s Discount Furniture and Walmart. The startup also launched a program in November to facilitate retailer integration, enabling businesses to share product specs in real-time and providing users with updated details on prices, shipping, and features. With Perplexity’s existing access to users’ credit card information and shipping addresses, the buying process is streamlined further.
As Perplexity’s model continues to evolve, it could potentially revolutionize the digital advertising landscape. The integration of AI-powered ads that are relevant and non-disruptive opens up new opportunities for both advertisers and consumers, who may benefit from a more useful and less invasive search experience. Patel envisions the next big step as transforming the search experience into a transactional tool, enabling users to purchase products without leaving the platform. “When a user is searching for an answer and also progressing through the buying process, it’s an opportunity to offer real utility,” he concludes.
