After struggling to gain traction with ads, Perplexity is throwing in the towel – for now.
The company is reportedly moving away from building an ad-supported offering due to concerns about consumer trust (i.e., that ads inside an AI chat experience could undermine credibility). The operative phrase, however, is “right now.” Here’s some additional context from The Verge:
Perplexity began phasing out ads late last year and isn’t exploring any new ad deals at the moment, executives said on Monday at a roundtable event, according to Business Insider and the Financial Times. It is a noteworthy U-turn for the US startup, which became one of the first generative AI companies to test ads on its platform in 2024.
“The challenge with ads is that a user would just start doubting everything . . . which is why we don’t see it as a fruitful thing to focus on right now,” said an unnamed executive cited by the FT. Instead, the company will focus on producing something consumers are “willing to pay for,” in particular business customers and high-powered users like finance professionals, lawyers, doctors, and CEOs.
The company added that serving ads was “misaligned with what users want.” Somewhere, Sam Altman is weeping into a pillowcase filled with money from $200,000 campaigns.
Why This Matters:
This comes, of course, just as OpenAI has announced plans to introduce ads in ChatGPT, with a debut expected any day now. It also follows recent commentary from both Google and Anthropic questioning the role of ads in chat interfaces (Anthropic’s criticism was obviously more direct).
This may be the hottest debate in advertising right now: trust and ads in AI chat interfaces. Adding to that, a new Forrester poll of more than 400 respondents found that 83% of adults would accept ads in AI chatbots in exchange for free access. However, people were “generally sensitive” to ads that blur the line between helpful information and paid promotion. Only 6% said they would pay to avoid ads, suggesting most will tolerate them but care about implementation.
If we’re being honest, though, ads will likely win out, right? It’s hard to imagine a major AI chatbot not offering some kind of free, ad-supported tier. OpenAI — whose CEO has historically been skeptical of advertising — appears to have reached that conclusion.
Experts React:
There’s no shortage of opinions on this — see some of our favorite takes from X here:
Our Take:
We like Perplexity. The product is strong, if not underrated. And while the hype has cooled a bit (remember the Apple acquisition rumors?), it remains a great example of AI search.
That said, the current anti-ad posture feels more reactive than principled. After struggling to build an effective ad experience, Perplexity now appears to be leaning into an anti-ad narrative that has resonated with some of its competitors (some call this clout chasing).
But… we suspect this won’t be permanent. More than many competitors, Perplexity’s interface is viewed as search-adjacent — and users understand that search engines include ads. Positioning itself as firmly anti-ad may be opportunistic and short-sighted. Don’t be surprised if there’s another pivot within the next year.
