How a Perplexity agency partner is pitching brands on AI search

Since AI platform Perplexity kicked off its advertising program last month, UM has been busy promoting the product to clients interested in getting in on the ground floor of the next iteration of search advertising. But Perplexity’s ad offering is not a traditional search ad product, a fact that presents challenges for how UM, part of Interpublic Group of Cos.’ IPG Mediabrands, is pitching prospective brands. Whereas typical search advertising is about driving conversions, Perplexity’s incipient product is geared toward brand building in the eyes of a tech-savvy, early adopter audience, said Chad Stoller, UM’s global chief innovation officer. UM is being open with clients about the constraints of the current offering, while at the same time being clear about its value as one of the first opportunities in a growing advertising space, Stoller said. Perplexity’s ad business offers an early look into how marketers will show up on AI platforms that are becoming discovery and shopping hubs for millions of users. The emergence of AI is affecting ad platforms beyond Perplexity, such as Google, which offers advertising in its search summary tool—called AI Overviews—and OpenAI, which is exploring how to incorporate ads into ChatGPT. Just this week, Reddit launched “Answers,” an AI-powered search product within the app. Also: Google, ChatGPT and Perplexity are forcing brands to adapt By virtue of being an early mover, Perplexity faces the pressure of making a good first impression on brands that have only practiced traditional search advertising. Perplexity’s ad program is sparse, offering two basic ad formats: sponsored “related questions” and paid media that appears alongside a search result. Related questions appear as follow-up questions below search results, and those that are sponsored are visibly marked as such. For example, if a user queries Perplexity about, say, “looking for a job,” one of the follow-up questions they receive may be a sponsored one by Indeed, which is a pilot partner for the program. Sponsored links are the primary product within traditional search advertising, typically appearing above and below the organic results. They link directly to the brand’s website or a product listing, further encouraging purchasing behavior. Perplexity’s ad model is not about driving clicks, though. With Perplexity’s related questions, a brand can mention its products, but the format is primarily meant to provide helpful, follow-up information to users by serving as credible pieces of advertising, Stoller said. Moreover, brands have little power over the related question itself. Perplexity’s AI model writes the copy of the questions, not the brand, Stoller said. Brands also can’t edit questions once they’ve been created. Stoller did not disclose the costs of these ads. Adding to the ad program’s sparseness is that Perplexity is currently allowing one brand to advertise per category, according to a pitch deck it has circulated to prospective advertisers. These categories include technology, health, pharma, food, beverage, automotive, beauty and fitness. The program’s first batch of advertisers, in addition to Indeed, includes Whole Foods, with both IPG’s UM and independent PMG as agency partners. Nike and Marriott were among the brands in discussion to launch ads on the platform, per Financial Times, although they were not announced as pilot partners. Omnicom-IPG—everything agencies and marketers need to know “We’re building a new advertising paradigm from scratch, including new ad formats, creative elements, and reporting and insights, so we wanted to be mindful of the right number and mix of early brand partners to learn and grow with,” said Dmitry Shevelenko, Perplexity’s chief business officer. Who the program is and is not for The brands that are the best fit for the program are those that are looking for extra reach to Perplexity’s high-achieving audience, Stoller said. Roughly 65% of Perplexity’s users work in high-income, white-collar professions, and 30% maintain senior leadership positions, according to the pitch deck. Moreover, these users tend to be interested in technology and act as early adopters, Stoller said. The size of this audience is significant, but relatively small compared to the number of users on other AI platforms. As of the summer, Perplexity had roughly 15 million monthly users; for comparison, ChatGPT has more than 300 million users per week. The current ad offering is also “not the most efficient thing,” Stoller said, which he attributes to Perplexity’s limited audience, as well as the fact that the AI search channel is new and thus relatively untested. The ad program also does not make sense for clients that have been hesitant when it comes to AI, Stoller said. But for those who are interested, UM and Perplexity are hoping to sell them not only on the current offering but also on the program’s future. In its pitch deck, Perplexity teased additional ad formats, including display ads on third-party properties. These could appear as a Perplexity ad featuring another brand’s content. Further, Perplexity is testing a shopping feature that could bring the kinds of lower-funnel marketing opportunities available through traditional search to AI-generated search. The shopping feature, which is currently open for Perplexity Pro users, provides product recommendations and the ability to purchase those products directly in the platform via an integration with Shopify. While Perplexity has made clear that this is separate from its ad offering, the platform has rolled out a merchant program alongside its shopping feature. Those brands that enroll will have a better chance of appearing in Perplexity’s product recommendations, the company said. Brand considerations Not all marketers are convinced of Perplexity’s current value to brands. Damian Rollison, director of market insights for marketing platform SOCi, sees little early adopter advantage to buying “sponsored questions” on a relatively untested platform. “It’s not like we’re talking about a radically new ad category,” Rollison said. However, brands that have reached a plateau on traditional search platforms may find Perplexity worth testing, Rollison said. Even then, Perplexity should be viewed as an entirely different channel compared to traditional search, Rollison said, adding that the amount of money advertisers should allocate to the platform is case-dependent. For the brands that are still receiving value from traditional search, AI search may be better understood as an experimental opportunity within an existing search strategy, Rollison said. Some brands could want to experiment with Perplexity from the start in a bid to stay relevant with tech-savvy consumers. But in order for more traditional search marketing stalwarts to jump in, Rollison expects there needs to be a tipping point proving Perplexity’s staying power, such as the platform gaining a significant market share compared to other AI chatbots. More: Watch Perplexity’s Jim Harbaugh commercial Given the nascence of the AI search space, forthcoming developments could have a big impact on how the channel matures. In particular, brands should be keeping an eye on Google’s antitrust suit as a key indicator for AI search, Rollison said. One possible outcome of the suit against Google—which claims the tech giant is an ad tech monopolist—could be a forced sale of the Chrome browser. That scenario could vastly open up competition in the internet search space, allowing AI platforms like Perplexity much more room to grow market share. Another trajectory to watch will be how Perplexity continues to deal with news publishers. The platform has received backlash—and cease-and-desist letters—over allegedly plagiarizing content from outlets including The New York Times, Forbes and Wired. These allegations have already compelled Perplexity to make some changes, including launching a revenue-sharing model with outlets whose content the platform uses. As Perplexity courts brands to its ads business, so too will other AI search platforms, including those of bigger players like OpenAI. Mike Ford, CEO of advertising data platform Skydeo, said that as long as Perplexity shows a clear ability to provide value, brands are not going to wait for other platforms to roll out their options. To this end, Perplexity’s first-mover position may turn out to be a major advantage. “Google’s ad model succeeded because it worked so well from the beginning,” Ford said. “If Perplexity works for brands, that’s going to be the holy grail.” Become an All Access subscriber Get access to exclusive resources including Leading National Advertisers, World’s Largest Advertisers, Agency Report, Agency Review Tracker and TV Pricing Report. Click here

How a Perplexity agency partner is pitching brands on AI search

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