Perplexity's plans to compete in the advertising arena are becoming a little clearer.
New advertiser pitch decks show how the AI search startup is hoping to differentiate itself from rival startups like ChatGPT and larger players like Google in order to win over advertisers later this year.
The plan is to embed ads into user questions and answers, which could happen as early as the fourth quarter of 2024, according to a copy of the presentation obtained by Digiday. One page of the presentation said that buying ads on Perplexity allows brands to “reach, educate and spark curiosity in high-impact moments.” The company also targets a knowledgeable, affluent and engaged demographic. Pricing was not mentioned in the presentation, but a source within Perplexity confirmed that the goal is to target CPMs “above $50.”
According to the document, total monthly queries in the U.S. are now 230 million, eight times higher than just a year ago.
In one example from the pitch deck, a Nike ad appears as a sponsor of a related question when a user asks about basketball shoes, as well as a sponsored video option alongside the desktop version. Another example shows a sponsored Marriott Bonvoy video ad next to a user asking about “best European travel destinations for families.” Another option shows “branded description text” above a sponsored organic related question.
According to the presentation materials, there are more than 12 key ad categories for the initial launch, including technology, health & medicine, arts, entertainment & finance, food & beverage, sports, science & travel, business, industry & B2B, internet & communications, gaming, automotive, home & garden, beauty & fitness, retail, shopping, and more.
Perplexity is showcasing its features in a new video ad this week, which explains some of the platform's features that help users search, find locations, and translate languages. (The ad bears a striking similarity to an old Google ad, a 2010 Super Bowl commercial called “Parisian Love,” which follows the same storyline.)
Perplexity was not available for an interview to discuss its current advertising plans, but many of the plans seem quite similar to what Perplexity had planned earlier this year.
In April, Chief Business Officer Dmitry Shevelenko told Digiday that the roadmap plans to focus on “accuracy, speed and readability.” Shevelenko also noted that the company can't use the same model as Google or pay a company like Apple $10 billion a year in search contracts, adding that the company has no plans to rank sponsored answers differently from organic answers.
“The weighting is the same. That's our 'don't do any wrong' mentality,” Shevelenko told Digiday earlier this year. “We're not buying answers. Whenever we run ads, that's something we never do. You're paying for it, so you can't pay them to change the answer.”
Differentiating David from Goliath is also part of the plan. To support its claim, one page of Perplexity's deck features a single sentence: “This era has been defined by 'search' engines, but we're taking a different approach.” Perplexity also displays a screenshot of a Google search result for “best headphones,” along with a page featuring all the sponsored product images that appear before the first editorial article. On another page, a travel query features several sponsored links to various trip-planning websites.
“For nearly two decades, the way we searched for information online was defined by the idea of 10 blue links,” the document reads. “We designed our product from the ground up to use AI to read relevant information from the web and synthesize it in a conversational format.”
For its fourth-quarter launch, Perplexity is looking to land a “small number of select partners,” including one that will give it exclusive category ownership through the end of 2024. It also offers early feedback from early advertisers on the platform's ad product roadmap. The presentation deck also shows options for different types of media, including outdoor advertising in train stations in Germany and mockups of another ad that will appear next to the T-Mobile logo.
The advertising strategy comes as Perplexity forges new publisher partnerships, having just announced a new revenue-sharing program last month with initial partners including Time, Der Spiegel, Fortune, Entrepreneur and Automattic.
The new ad pitch deck also includes ways for marketers to buy non-Perplexity ad inventory to appear on third-party pages. One page of the deck shows how advertisers can run co-branded display ads, including a Perplexity ad near the top under a headline from The Wall Street Journal. The page also appears to criticize X, posting an article about Elon Musk suing advertisers through a complaint recently filed against GARM.
Speaking of brand safety, Perplexity Deck has a page dedicated to the topic, where the company says it will allow advertisers to block terms they want to avoid and lock down answers to sponsor-related questions.
“Responses to sponsorship-related questions (and all accompanying content) are pre-approved and can be locked, so you can rest easy knowing how your brand will be portrayed in your responses,” the presentation materials state.
It's also unclear how Perplexity plans to prioritize sponsored follow-up questions over organic questions, or how sponsored pages will affect organic answers to a user's initial question — something that established rivals like Google are being asked by users and advertisers alike.
Measurement is also something Perplexity plans to emphasize, starting with eight metrics. These metrics include the total number of queries in a category, the number of queries that qualified for an ad to appear, impressions served, unique impressions, clicks on sponsored media, sponsored questions, and website links. In the future, the company plans to provide advertisers with a list of questions to be asked about their brand, as well as additional data to “improve personalization and relevance.” However, the materials do not mention third-party measurement partners for measurement or plans to safeguard privacy.
Though Google remains dominant, some SEO experts say it's worth paying more attention to what Perplexity and other startups are building in both organic and paid search. Companies like Perplexity and OpenAI's SearchGPT are starting to generate referral traffic to marketers for the first time, according to Jim Yu, founder and CEO of BrightEdge. Even if it's “still a passing phenomenon,” it's worth paying attention to, he said.
According to new research from BrightEdge, Perplexity is stronger in investigative use cases that require targeted, controlled, in-depth investigation into specific areas. Perplexity has built an answer engine with more advanced capabilities for these use cases, but Yu says Google's biggest advantage is also its biggest weakness.
“[Google]has such a large surface area that they can cover all kinds of information, every place in the world, every interest, every topic,” Yu said. “It also means they can't do everything well. There are sharp attacks in areas where it's harder for[Google]to react quickly because they're constantly balancing things.”
