Perplexity AI Faces Criticism Over Advertising Plans

According to Cointelegraph, artificial intelligence firm Perplexity AI is facing public scrutiny over its reported plans to introduce ads in its AI-powered search engine. While some see this as a natural progression for the generative AI industry, at least one analyst believes it could lead to the company's downfall. Perplexity AI's main product is a 'conversational search engine' that combines generative AI technology, similar to OpenAI's ChatGPT and Anthropics Claude, with search engine algorithms akin to those used by Google Search or Microsoft Bing. Recent reports indicate that Perplexity AI plans to integrate advertising into its product. A pitch deck seen by CNBC suggests the company intends to charge advertisers $50 per thousand impressions, measured as 'cost per mile' or CPM. For comparison, Facebook reportedly charges about $4.29 for every 1,000 impressions. While these numbers can vary based on factors such as site popularity or advertiser spending willingness, higher figures are typically reserved for video and influencer campaigns. Technology pundit and marketing executive Ed Zitron expressed his disbelief on the X social media platform, stating, 'I'm absolutely dying lmao, Perplexity wants $50 CPM on their ads product? Are you joking? This company is toast.' Zitron further noted that competitors like OpenAI could easily launch cheaper programs, suggesting, 'Watch OpenAI come out and be like uhh, $25 CPM on searchGPT.' While consumers have shown interest in generative AI products, the majority of revenues in the industry appear to come from B2B transactions. It remains unclear how many subscribers various platforms charging for AI model access have, but a brief analysis indicates they are far from the numbers seen by top social media platforms. The integration of ads into generative AI products could provide an additional revenue stream for startups trying to recoup infrastructure and training costs, but only if consumers adopt these products in significant numbers.