AI search engine Perplexity continues to be a thorn in Google’s side.
According to a report by the FT, the company is developing a new advertising model to challenge the search leader’s stranglehold. Perplexity is reportedly in talks with top brands, like Nike and Marriott, to introduce a system where advertisers can bid for “sponsored” questions with AI-generated answers that they approve. Think native but integrated into Gen AI search.
For this, Perplexity will charge on a CPM basis, with costs lower than Google’s—over $50 per 1,000 impressions compared to Google’s estimated $1,100. The FT says Perplexity’s ad-supported experience is set to launch by the end of the year.
Why This Matters:
This is another Perplexity ads report (and answers some questions about the previous ones), underscoring that the fast-growing startup wants to directly challenge Google with a possibly more cost-effective and future-proofed model. It would give premium brands an alternative to Google on traditional search, while reinforcing the idea that AI is reshaping search entirely.
Perplexity, along with OpenAI, is at the forefront of this transformation. See the company’s rapid growth: in July alone, according to the FT, Perplexity answered 250 million questions, matching half of its entire previous year’s total of 500 million. Perplexity has also seen revenue explode from $5 million in January to $35 million in August (and this is all subscriber-based, with no ads). Perplexity is delivering on the growing demand for a more intuitive, smarter search experience.
Experts React:
Eric Seufert of Mobile Dev Mo expressed skepticism about Perplexity’s model, highlighting the difficulties search advertisers may face with a CPM approach.
It “strikes me as a hasty cash grab that may do more harm than good,” he tweeted. “Search advertisers don’t generally bid on CPM, so charging that way puts the onus of total performance measurement on advertisers.”
Our Take:
As is a common message for Google this year — competition is good!
If successful, Perplexity’s new model could have big, broad implications for digital advertising and search, specifically. Scaling it and attracting spend from major brands would force legacy players like Google and Microsoft to rethink their own ad experiences, formats, and solutions. In turn, this could lead to more innovative models that benefit both brands and consumers.
Also, as Perplexity chugs along, shouldn’t Apple just buy this thing?
Buying Perplexity would help Apple deal with the fallout of the DOJ’s ruling against Google on search that will likely end Apple’s $20 billion annual deal with the company. Perplexity would give Apple a head start in creating its own search engine, instead of relying on new partners like Microsoft. It would also boost Apple’s AI credentials, an area where their marketing efforts have been underwhelming so far.
