AI-powered search engine Perplexity announced it'll begin experimenting with ads on its platform, starting with sponsored follow-up questions positioned to the side of answers and labeled as "sponsored." And honestly? If you're surprised by this, you haven't been paying attention.
The "We're Different" Phase Is Over
Remember when Perplexity was the scrappy AI search engine that was going to disrupt Google without ads? Yeah, that lasted about a year. The company says experience has taught them that subscriptions alone don't generate enough revenue to create a sustainable revenue-sharing program.
Translation: turns out running AI infrastructure is really expensive and $20/month subscriptions don't cut it when you're burning through GPU cycles like they're going out of style.
I tried Perplexity when it first launched specifically because it didn't have ads. Clean interface, straight answers, no nonsense. It felt like using Google from 2005. But deep down, we all knew this was coming, right? Free products that cost millions to run don't stay free forever.
How the Ads Actually Work
Ads will be formatted as sponsored follow-up questions like "How can I use LinkedIn to enhance my job search?" with answers still generated by Perplexity's AI—not written or edited by the brands sponsoring the questions. Brands and agency partners participating include Indeed, Whole Foods, Universal McCann, and PMG.
So if you're searching for job advice, you might see a sponsored question about LinkedIn. If you're looking up healthy eating, maybe Whole Foods pops up with a sponsored question about organic produce. The AI still generates the answer, but the question itself is paid placement.
It's... actually kind of clever? Instead of shoving banner ads everywhere or messing with search results directly, they're introducing commercial intent through the question flow. It feels less intrusive than traditional ads, but make no mistake—it's still advertising.
The CPM Numbers Are Wild
Here's where it gets interesting. Early Perplexity advertisers are seeing CPMs between $30 to $60. For context, that's expensive. Netflix tried to start at $60 CPM and had to come down. Most display advertising sits way below that.
But Perplexity's pitch is that 65% of their users are in high-income white-collar professions like medicine, law, and software engineering. They're betting on quality over quantity—targeting educated, affluent users who might actually act on premium products.
Someone I know in ad tech said these CPMs are basically "early adopter tax"—brands paying premium rates to experiment with a new platform before everyone else figures it out. Whether it sticks at these rates long-term is anyone's guess.
The OpenAI Comparison
Perplexity's embrace of ads stands in contrast to OpenAI's decision not to launch its AI-powered search tool, ChatGPT Search, with ads. OpenAI has Microsoft money backing them. Perplexity doesn't. That changes the calculation significantly.
Perplexity is reportedly in the final stages of raising $500 million in funding at a $9 billion valuation, but it has only one revenue stream: its premium subscription service, Perplexity Pro. When you're trying to justify a $9 billion valuation with one revenue stream, adding a second one makes sense—even if your early users aren't thrilled about it.
Will Users Actually Leave?
The big question: will people abandon Perplexity over ads? There are 100 million search queries conducted per week on Perplexity. That's not nothing, but it's also not massive. ChatGPT Search, Google, and now even Claude with web search are all competing for the same users.
My guess? Most people won't leave. The ads are relatively subtle, answers remain useful, and switching costs are low but so are the stakes. If the ads get intrusive or start degrading answer quality, then we'll see movement. But "sponsored follow-up questions" feels manageable.
The Broader Trend
This is part of a pattern. Every AI company eventually has to figure out monetization beyond subscriptions. OpenAI has Enterprise plans. Anthropic has their API and Claude Pro. Google has… everything. Perplexity chose ads.
The platform promises that ads won't change their commitment to maintaining a trusted service that provides direct, unbiased answers. We'll see. That's what everyone says until revenue pressure starts influencing product decisions.
My Take
Look, I get why people are annoyed. Perplexity positioned itself as the anti-Google, and now it's monetizing like Google. But the economics of AI search don't care about our idealism. These models are expensive to run, and venture capital expects returns eventually.
The real test isn't whether Perplexity adds ads—it's whether the ads make the product worse. So far, they seem relatively unobtrusive. If it stays that way, fine. If sponsored questions start pushing users toward specific brands regardless of quality, then we've got a problem.
For now, I'm watching to see if ChatGPT Search stays ad-free, or if OpenAI eventually caves too. Because if Perplexity can't make it work without ads, I'm skeptical anyone else can either.