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Perplexity AI, the artificial intelligence startup that’s been embroiled in controversy due to accusations of plagiarizing content from media outlets, plans to start running ads on its search app in the fourth quarter, CNBC has learned.
The company, which specializes in AI-assisted search, is circulating a pitch deck, promoting the app’s reach and increasing usage. The company says its app has been downloaded more than 2 million times and has 230 million monthly users, while U.S. queries have increased eightfold in the past year, according to the presentation, which was viewed by CNBC.
Perplexity raised new funding in April that valued the company at more than $1 billion, doubling its valuation from three months earlier. But the app’s increasing popularity has highlighted concerns surrounding the ways the company surfaces content from other sources.
Forbes reported in June that it found a plagiarized version of one of its stories on Perplexity with no reference to the media outlet other than a small “F” logo at the bottom of the page. Weeks later, Wired said it also found evidence of Perplexity plagiarizing Wired stories, and reported that an IP address “almost certainly linked to Perplexity and not listed in its public IP range” visited its parent company’s websites more than 800 times in a three-month span.
The company told CNBC that, following the allegations, it made changes to how Perplexity’s Pages feature cites sources and also made updates so that its responses are better at citing outlets directly within the generated copy.
Last month, Perplexity debuted a revenue sharing model, giving publishers an opportunity to make money through the company’s search engine. Any time a user asks a question and Perplexity generates ad revenue from citing an article in its answer, Perplexity will share a percentage of that revenue with the publisher.
Media outlets and content platforms including Fortune, Time, Entrepreneur, The Texas Tribune, Der Spiegel and WordPress were among the first to join the company’s “Publishers Program.” Dmitry Shevelenko, Perplexity’s chief business officer, told CNBC in a July interview that if three articles from one publisher were used in one answer, the partner would receive “triple the revenue share.” He said the company had been working on the feature since January and that its goal is to have 30 publishers enrolled by the end of the year.
With advertising, Perplexity will follow a model called CPM, or cost per thousand impressions, according to a person familiar with the matter who asked not to be named because the details aren’t public. CPM prices will be more than $50, the source said. Search marketing firm Semrush wrote in a blog post last year that display ads on desktop typically have CPMs of around $2.50, while mobile videos have rates of about $11.10.
Perplexity said in its pitch deck that its key advertising categories initially would include topics like technology, health and pharmaceuticals, arts and entertainment, finance, and food and beverage. Advertisers will be able to sponsor “related questions” below answers and buy display ads to the right or a Perplexity-generated answer.
According to the presentation, more than eight in 10 Perplexity users have an undergraduate degree, while three in 10 are in a “senior leadership position,” and 65% are in “high-income white-collar professions,” such as medicine, law and software engineering.
AI-assisted search has been viewed by investors as one of Google’s key risks, as it potentially changes the way consumers access information online. OpenAI, which started the generative AI craze in late 2022 with ChatGPT, introduced a search engine last month called SearchGPT. In May, Google launched “AI Overviews” in search, allowing users to see a quick summary of answers at the top of results.