Agencies seem underwhelmed by Perplexity ads
I'm still perplexed by Perplexity's ad rollout strategy.
"Our approach to advertising is a paradigm shift, and so we operate outside of the typical processes for brand advertising,” Perplexity says - opaquely - in a statement in today’s article in Digiday. Perplexity has signed a few partners - including Whole Foods and a couple ad agencies - but most of the article is pretty critical of Perplexity’s attempts to build an ad business.
I found this quote from Eden Collective’s Ryan Bopp particularly damning: “When you’re getting a full 30 second screen takeover on a CTV ad for the same price as a display and sponsored question or sponsored prompt [on Perplexity AI], it feels very disproportionate.”
Launching a CPM-based ad business in the height of Q4, without a big name ad sales exec leading the charge (at least not publicly) takes balls.
As I said in the article, "the digital business models that have proven most successful over time are performance-based. Think Google and Meta — the two largest digital media companies in the world. Both have performance advertising as their core business model. Companies that launched with a premium / brand awareness model have struggled to maintain momentum.”
Perplexity could still roll out performance ads, but it really sounds like they are focused on building a brand business first. That’s a risky strategy, as I have previously noted.
“Digital media companies that launched with brand advertising often struggled to maintain momentum and then tried to pivot to direct response later on—a strategy that hasn’t always been successful. ”
I still think Perplexity gets props for being among the first AI platforms to launch an ad business. But its window to establish itself is narrowing. Many more AI platforms will follow in 2025 - I'm betting on OpenAI and Meta - and Google will get more serious about ads tied to AI overviews as well.
If you're an ad buyer and your choices are Perplexity, Meta, Google or ChatGPT, what would you choose?
