Perplexity’s ad strategy perplexes me
Perplexity revealed a bit more about its fledgling ad business at Advertising Week New York this week. I'm going to go out there and say this: It's taking a risky approach.
In an onstage interview, Andrew Beck - who leads Perplexity's GTM for ads - shared that the company has lined up a few brand partners (he wasn't ready to name names - the Sonos example in the image above is just a mockup, he said).
Perplexity’s Andrew Beck and Rosenblatt Securities’ Barton Crockett on-stage at Advertising Week New York 2024
Photo by: Debra Aho Williamson
Beck also told the audience two things that caught my attention--and if I'm being honest, they also concerned me:
1️⃣ Initially, ads on Perplexity will be aimed at brand awareness goals rather than direct response.
2️⃣ Perplexity ads will link to other content on Perplexity -- importantly, not outside of Perplexity, and even more importantly, NOT to a brand's own content.
I was really surprised to hear about the focus on brand advertising vs. direct response. The two most successful digital media businesses in the world - Google and Meta - both launched with a performance-based, direct-response business model. That, combined with an easy to use self-serve platform, allowed these companies to grow quickly and become dominant.
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.
Linking to content within Perplexity that the brand isn't involved in is also a super risky move. Brands will get to review the content their ad will link to and approve it, but they won't get to change it or influence it. I wonder how many brands will be willing to accept that.
I also think Perplexity is going to run into scaling issues as the number of advertisers and campaigns grows (and we all know that advertisers can be pretty difficult to please - ahem - when it comes to brand safety).
