If you’ve been talking about the future of search advertising with your colleagues, the name Perplexity has probably been coming up a lot lately. Backed by Jeff Bezos, Perplexity is an AI-powered search engine that uses large language models (LLMs) to provide direct, conversational answers to user queries.
When The Wall Street Journal recently published an article about challengers to Google’s search advertising leadership, Perplexity was discussed in the first few paragraphs alongside TikTok and Amazon. And for good reason: Perplexity continues to make waves in search, advertising, and now eCommerce.
About Perplexity
Perplexity, like other search tools built on LLMs, offers concise, synthesized responses to answers rather than traditional lists of links. The platform integrates multiple LLMs, such as GPT-4 and Claude 3.5, to generate real-time answers and provide citations for transparency.
Perplexity is positioning itself as a significant competitor to Google by addressing some of the limitations of traditional search engines. While Google primarily presents users with a list of links that they must sift through to find relevant information, Perplexity delivers direct answers in a conversational format. This approach is designed to save users time and effort, especially for queries that require complex synthesis from multiple sources.
Perplexity has plenty of competition, including ChatGPT, which rolled out its own AI search capability, SearchGPT; and of course, Google, which is incorporating AI into answers to traditional search queries via AI Overviews. What makes Perplexity stand apart is how rapidly the company is evolving into both advertising and commerce.
How Perplexity Is Incorporating Ads
Perplexity is incorporating ads as part of a broader strategy to build a sustainable business model. This move, which began in late 2024, introduces ads in the form of sponsored follow-up questions and side-positioned paid media. These ads are clearly labeled as “sponsored” to ensure transparency and are designed to complement the search experience without compromising the objectivity or accuracy of the AI-generated answers.
Perplexity Ad Features
Key aspects of its model include:
- Sponsored Follow-Up Questions: These are related questions that appear beneath a user’s query response. For example, after a job search query, a sponsored follow-up might suggest, “How can I use LinkedIn to enhance my job search?” The answers to the sponsored questions are generated by Perplexity, not the brand sponsoring the question.
- Side-Positioned Paid Media: This is a more traditional form of advertising, where banner-style ads appear alongside the main content, similar to display ads found on many websites.
- Revenue-Sharing with Publishers: Perplexity has introduced a revenue-sharing model where publishers whose content is cited in responses share in the ad revenue. This initiative aims to foster collaboration between Perplexity and content creators, ensuring that publishers are compensated when their material contributes to AI-generated answers.
- CPM-Based Pricing: The platform uses a Cost per Thousand Impressions (CPM) pricing model, with rates exceeding $50 per thousand impressions—higher than typical industry standards. This premium pricing reflects Perplexity’s focus on attracting high-quality advertisers looking to reach an affluent and engaged audience.
Perplexity’s approach to advertising seeks to balance monetization with user trust by integrating ads in a transparent and non-intrusive manner while supporting content creators through revenue-sharing mechanisms.
eCommerce Comes to Perplexity
Perplexity’s next move is to incorporate eCommerce, which could encroach on Amazon’s turf. A new feature called “Buy with Pro” allows users to purchase products directly within the app. This AI-powered shopping experience is currently available to Perplexity Pro subscribers in the U.S. and offers several key features aimed at simplifying and enhancing online shopping, such as:
- One-Click Checkout: Users can store their payment and shipping details in the app, enabling them to make purchases with a single click. Perplexity also estimates taxes and offers free shipping for Pro users.
- AI-Powered Product Recommendations: When users search for products, Perplexity presents unbiased product cards that include key details such as price, seller information, pros and cons, and reviews. These recommendations are generated by AI based on user intent, without any sponsored content influencing the results.
- Shopify Integration: Perplexity has integrated Shopify’s API, allowing it to access a wide range of products from merchants using Shopify. This integration enhances the platform’s ability to offer up-to-date product information for U.S.-based shoppers.
- Visual Search (“Snap to Shop”): Users can upload photos of items they are interested in, and Perplexity will identify similar products available for purchase. This feature adds a visual dimension to shopping queries, in theory making it easier for users to find specific items.
- Merchant Program: Perplexity has launched a Merchant Program, which allows retailers to share product details with the platform. This program helps merchants increase the likelihood of their products being recommended by providing more complete information for Perplexity’s AI models. Merchants also gain access to insights on shopping trends via a custom dashboard.
For now, Perplexity does not take a commission from sales made through its platform, and the shopping feature is not directly monetized. Instead, the company is focused on growing its user base and increasing search queries. However, future plans may include affiliate marketing or other forms of revenue generation related to eCommerce.
What Advertisers Should Do
Perplexity is hardly an immediate threat to Amazon or other quasi-search tools such as TikTok that incorporate commerce and advertising. But the company is clearly putting a stake in the ground for a broad user base that spans academics, professionals, tech enthusiasts, casual information seekers, and content creators. Consider Perplexity if you are the type of advertiser who is willing to try new formats in order to enjoy a first-mover advantage. Some specific considerations include:
Assess Strengths and Audiences for Major Competitors
Understand each platform’s unique user base and strengths:
- Google: Established dominance in search advertising and broad reach.
- TikTok: High engagement and effectiveness with younger audiences for visual-first campaigns.
- Amazon: Leader in commerce-driven advertising for purchase-ready consumers.
- Perplexity: Ideal for targeting professionals and tech-savvy users seeking quick, conversational answers.
Allocate budget to platforms aligning with specific campaign goals, whether for awareness, engagement, or conversions.
Experiment with Perplexity’s Ad Offerings
Consider Sponsored Follow-Up Questions to target users with tailored educational or exploratory content that complements their search journey. For CPM-Based Media, evaluate whether the premium CPM pricing aligns with your target demographic and ROI expectations.
Monitor Cross-Platform Data Trends
Analyze how ad performance on Perplexity compares with other platforms, focusing on click-through rates (CTR), conversions, and audience engagement. And optimize results with insights you can get from Perplexity. For instance, use Perplexity’s transparent citations and product dashboards to refine messaging and product positioning across campaign.
Focus on High-Quality Ad Formats
Perplexity integrates side-positioned paid media ads that appear alongside search results. To maximize effectiveness, design visually appealing, non-disruptive ads. Since these ads are placed adjacent to content rather than interrupting the user experience, they should be visually engaging but subtle enough not to detract from the main content.
In addition, align ad content with search intent. Ads should be closely related to the user’s search query or interests, making them feel like a natural extension of the search experience rather than an interruption.
Consider Creative and Visual Strategies
Apply Perplexity’s visual search capabilities (Snap to Shop) to align creative assets with user-generated content trends, a strength TikTok also excels in. Design campaigns with consistency across platforms, optimizing visuals and ad copy for both product discovery (Perplexity and Amazon) and engagement (TikTok).
Consider eCommerce Integration
With Perplexity incorporating eCommerce features, advertisers in retail and consumer goods sectors can ensure their products are featured in relevant searches by participating in Perplexity’s Merchant Program. This allows their products to be recommended based on user preferences and shopping behavior. In addition, highlight product benefits through personalized content. Use AI tools to dynamically generate product descriptions and images that cater to individual shopper preferences, enhancing the likelihood of conversion.
Get Familiar with Perplexity
If you are the type of advertiser who is open to trying new platforms, now is a good time to establish a presence on Perplexity while it’s still growing and advertising competition is less intense. This could yield better placement opportunities and long-term benefits as the platform scales.
True Interactive can help you. Contact us to learn how.
