Perplexity, an AI search startup, is revealing its strategy to compete in the advertising space against giants like Google and other startups like ChatGPT. The company plans to integrate ads directly into users’ queries and answers by late 2024, aiming to offer brands the opportunity to engage with an educated and affluent user base.
Their pitch emphasizes high-leverage moments to “reach, educate, and spark curiosity” in potential customers. While specific pricing wasn’t detailed, Perplexity is reportedly targeting a cost-per-thousand (CPM) above $50.
The pitch deck reveals that Perplexity’s monthly U.S. query volume has surged to 230 million, a significant increase from the previous year. The deck showcases examples of how brands like Nike and Marriott could use sponsored content within search queries, such as video ads or branded explanatory text alongside relevant search results.
This strategy is intended to blend advertising seamlessly into the user experience, providing value while maintaining relevance.
Perplexity plans to focus on a wide range of advertising categories for its initial launch, including technology, health, entertainment, finance, and travel. The startup is also promoting its features through a new video ad, which bears a resemblance to a classic Google ad, underscoring its potential to rival established players in the search space.
Perplexity Reveals Strategy to Compete in Ads Space with Google and ChatGPT Integration by Late 2024
However, the company’s approach is distinct, aiming to avoid the pitfalls of traditional search engines by offering a more conversational and integrated user experience.
The company’s advertising model emphasizes transparency and fairness, with a commitment to not allowing payment to influence the ranking of search results. This principle is part of Perplexity’s broader strategy to differentiate itself from competitors like Google, which often prioritizes sponsored content over organic results.
Perplexity’s pitch deck highlights this distinction by comparing its approach to Google’s traditional “ten blue links” model, positioning itself as a more user-friendly alternative.
As part of its Q4 launch, Perplexity is seeking partnerships with select advertisers, offering early input on the platform’s ad product roadmap and exclusive category ownership.
The pitch also hints at innovative ad placements, such as out-of-home advertising and integration with third-party sites like The Wall Street Journal. Perplexity is also keen on brand safety, with plans to offer advertisers control over the terms and content associated with their ads.
Measurement and analytics are key components of Perplexity’s strategy, with plans to offer eight initial metrics to advertisers, such as query volumes and click-through rates.
The company aims to provide data that enhances personalization and relevance, though it has yet to disclose any third-party measurement partners or specific privacy protections. This focus on analytics reflects a broader trend in the industry, where data-driven insights are increasingly crucial for effective advertising.
Despite Google’s dominance, Perplexity is starting to attract attention from SEO experts and marketers. According to Jim Yu, CEO of BrightEdge, startups like Perplexity and OpenAI’s SearchGPT are beginning to generate meaningful referral traffic.
While still small compared to Google, these platforms are carving out niches in research-intensive use cases, where their focused, in-depth approach offers a competitive edge. Google’s vast reach, while an advantage, also makes it vulnerable to more targeted competitors like Perplexity.
