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Perplexity, a generative AI search engine, is planning to implement brand-sponsored queries as follow-up suggested questions to ongoing AI conversations. These related questions account for 40% of Perplexity’s queries, and brands will have the opportunity to influence these questions to potentially steer users towards specific products. The AI engine is set to launch suggested sponsored queries in the upcoming quarters, marking a unique way for brands to connect with users through conversational AI. This move comes at a time when the rest of the generative AI industry is adopting the freemium model, offering a free version with the option to upgrade to a paid version for additional features. This shift towards incorporating ads reflects the need for companies to monetize free queries to ensure sustainability in the long term.

Running AI chatbots can be expensive, with each query costing up to 10 times more than a traditional Google search. For example, OpenAI was spending $700,000 per day on AI operations last year. While costs are expected to decrease over time as technology advances, companies like Perplexity need to find innovative ways to generate revenue. Perplexity positions itself as an “answer engine” that combines elements of ChatGPT and Google, offering a unique blend of AI chat features and search results. With investors like Jeff Bezos and former YouTube CEO Susan Wojcicki, Perplexity is valued at $522 million and is positioned as a key player in the AI industry.

In terms of functionality, Perplexity is similar to Microsoft Copilot, integrating AI chat capabilities with search links and images. Unlike ChatGPT, Perplexity has a connection to the open internet and provides links to relevant sources, including Reddit posts. This feature allows users to access a wide range of information through the AI engine, enhancing the overall user experience. However, it’s important for users to verify the sources of information provided by Perplexity, as the introduction of advertising may introduce additional filters that could impact the accuracy of the answers provided.

The integration of brand-sponsored queries into Perplexity’s AI conversations represents a novel approach to advertising in the AI industry. By allowing brands to influence related questions, Perplexity creates a unique opportunity for companies to engage with users in a more personalized and interactive way. This advertising strategy aligns with the growing trend of conversational marketing, where brands are leveraging AI technologies to enhance customer engagement and drive conversions. As Perplexity continues to develop its platform, the introduction of sponsored queries could pave the way for new monetization opportunities and partnerships with brands looking to leverage AI for marketing purposes.

Overall, Perplexity’s decision to integrate ads into its AI engine reflects the evolving landscape of AI technology and the need for innovative revenue models. As the cost of running generative AI systems decreases and technology advances, companies like Perplexity will need to explore new ways to monetize their services and ensure long-term sustainability. By incorporating brand-sponsored queries and providing users with valuable, relevant information through its answer engine, Perplexity is positioning itself as a key player in the AI industry and a pioneer in the realm of conversational AI advertising.

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