Since the launch of ChatGPT in November 2022, the integration of Artificial intelligence in search engines has caught the attention of big tech companies. Today, it is already a reality, with Perplexity as a pioneer and OpenAI making its first offering with SearchGPT, its AI search engine which is for now only in beta phase.
In this scenario, Pioneer Perplexity AI has taken a major step forward by announcing plans to introduce advertising to its platform AI-powered search by Q4 2024.
Perplexity AI and its commitment to advertising
Perplexity has set the standard for innovation in AI for search engines. In April 2024, the company raised $62.7 million in a funding round with participation from existing investors including Nvidia and new ones such as Y Combinator CEO Garry Tan and Altimeter Capital CEO Brad Gerstner.
Recently, The company has launched a pilot program for publishers and advertiserswith initial partners from media outlets such as TIME, Der Spiegel and Fortune. In this program, the company plans to share the revenue generated by interactions in which the content of these publishers is referenced. This initiative not only seeks relationships with prestigious media outlets, but also opens the door to new monetization opportunities through advertising.
Chatbots vs Search Engines
Since the emergence of ChatGPT, traditional search engines, led by Googlesee AI as a potential threat to their dominance. Companies like Microsoft, which integrated OpenAI technology into its Bing search engine, or Google, which launched AI-powered consumer summaries with Gemini (still only in the US), are betting big on integrating AI into your search services.
Introducing advertising on chatbots and AI platforms seems like a natural evolution, given that current models, such as premium subscriptions (ChatGPT Plus at $20 per month or Google One’s AI Premium plan at the same price), may not be sustainable in the long term if you want to reach a massive user base. In this context, advertisements are presented as a viable alternative to monetization.
Emerging Advertising Models in AI
Perplexity AI isn’t alone in exploring this model. Adzedek, a company that markets itself as an advertising marketplace for AI chatbotsalready allows brands to run sponsored ads in personalized chatbot responses. Its business model is based on pay-per-click, where chatbot creators keep 75% of the ad revenue.
Other companies in the AI sector have also taken action:
Microsoft has been a pioneer on this front, allowing a variety of advertisers, from hotels to automakers, to place ads on its AI-powered assistant, Copilot, formerly known as Bing Chat. Additionally, it has introduced AI-specific ad experiences, such as “compare and decide” ads, which use AI to collect relevant data about various products and present it in comparison charts.
AlphabetGoogle’s parent company, is experimenting with how ads could be integrated into its AI services. On an earnings call in January, Alphabet CEO Sundar Pichai mentioned that the generative search experience (GSE) creates new opportunities to improve users’ career journeys by displaying relevant ads alongside search results.
OpenAIOpenAI, for its part, has not yet implemented advertising in its chatbots like ChatGPT, but could do so at any time. Some experts suggest that OpenAI first let smaller players experiment, which could provide lessons before implementing its own monetization model.
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