“To fully deliver on our mission to spark the world’s curiosity, we need to invest in building not just a beloved product, but a robust and self-sustaining business. That’s why starting this week, we will begin experimenting with ads on Perplexity.”
It was 2024 when Perplexity first announced in a release that it would test advertising in the United States, and now, the company has walked away from that experiment in favour of a subscription led model.
Why Did Perplexity Introduce Advertising In The First Place?
In November 2024, Perplexity said it would begin experimenting with ads as it built what it called a self sustaining business. The company insisted that “the content of the answers you receive on Perplexity will not be influenced by advertisers.” It added that users came to the platform for “a more efficient, uncluttered, and unbiased search experience, and that isn’t changing.”
Ads were designed to appear as sponsored follow up questions and paid media placed to the side of an answer. Perplexity said advertising material would be clearly marked as sponsored and that answers to Sponsored Questions would be generated by its technology, not written or edited by brands. The company said it chose these formats to protect “the utility, accuracy, and objectivity of answers.”
It also justified advertising as a financial necessity. The company said subscriptions alone did not generate enough revenue to support a sustainable revenue sharing programme with publishers. Advertising, it said, was the best way to secure a steady and scalable revenue stream as its publisher programme grew.
What Changed This Year?
According to Search Engine Journal, Perplexity has now phased out the ads it began testing in 2024 and has no plans to bring them back. The Financial Times reported that the company could revisit advertising or “never ever need to do ads.”
Perplexity previously reported that it handles 780 million monthly queries. Search Engine Journal reported that it has more than 100 million users and about $200 million in annualised revenue, according to executives. If it stays ad free, brands lose paid access to that audience and must rely on organic citations within answers.
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Executives told the Financial Times that perception carries as much weight as policy. “A user needs to believe this is the best possible answer,” one executive said, adding that once ads appear, users may second guess response integrity. Another executive said, “We are in the accuracy business, and the business is giving the truth, the right answers.”
The publication also reported that Perplexity sees subscriptions as its core business. It offers a free tier and paid plans ranging from $20 to $200 per month. The company has also introduced shopping features but does not take a cut of transactions, which Search Engine Journal described as another sign of caution around revenue models that could create conflicts of interest.
What Does This Mean For AI Business Models?
Chris Jones, Managing Director at PSE Consulting, said the reversal carries weight across the sector. “Perplexity’s decision to step back from advertising reflects a growing awareness across the tech sector of the risks of AI ‘enshittification’ – where platforms gradually degrade the user experience in pursuit of monetisation. For AI products that position themselves as sources of trusted, authoritative information, even the perception of commercial influence can undermine credibility.”
He added, “By prioritising subscriptions and enterprise revenue over ads, Perplexity is signalling that long-term trust may be more valuable than short-term yield. At the same time, it underlines the importance of monetising commercial outcomes in ways that can scale effectively with usage, rather than relying on ‘aggressive’ ad models. This is a notable departure from the traditional ad-funded internet model and suggests a maturing phase for generative AI, where users – particularly in business, finance and professional services – are willing to pay for accuracy, transparency and reliability.”
Jones also spoke about lessons for fintech and digital platforms. “For fintech, payments and digital platforms, it underlines how quickly ‘aggressive’ monetisation can erode trust and how difficult it is to win it back. There will not be a single dominant business model for AI, but credibility is fast becoming a competitive differentiator.”
Perplexity’s change of direction places trust at the heart of its commercial strategy. The company tested ads, measured the reaction and chose subscriptions as its main source of income. That choice sets it apart from rivals experimenting with sponsored placements and raises a direct question for the sector. Can AI search engines fund growth without advertising, or will commercial pressure return?
