Editorial illustration for Perplexity abandons ads as investors once eyed billions of users
Perplexity Ditches Ads, Bets Big on AI Trust Model
Perplexity abandons ads as investors once eyed billions of users
Perplexity’s decision to scrap its advertising plans has caught the attention of anyone watching the AI‑driven search space. The move arrives after months of speculation about how the startup intends to fund its ambitious product roadmap without the revenue stream many of its peers rely on. While the company has touted strong engagement metrics in private briefings, analysts note that its user base has not exploded in the way some backers imagined when they first signed on.
The shift raises questions about whether the lack of ads reflects a deeper strategic recalibration or simply a response to unmet growth targets. Investors who once envisioned the platform scaling to hundreds of millions—or even billions—of users now hear a different story from insiders.
But there may be other reasons Perplexity is not pursuing advertising. Early investors in Perplexity once believed the startup could reach hundreds of millions or even billions of users, but the startup's growth hasn't met expectations, according to a source close to the company. When the startup ra
But there may be other reasons Perplexity is not pursuing advertising. Early investors in Perplexity once believed the startup could reach hundreds of millions or even billions of users, but the startup's growth hasn't met expectations, according to a source close to the company. When the startup raised its Series B funding in 2024, board member and investor Cack Wilhelm said in a blog post that Perplexity was "capable of bringing the power of AI to billions." Two years later, that goal still seems a long way off. Data from the third-party analytics firm Similarweb suggests Perplexity had just over 60 million monthly active users across its website and mobile app in January.
Perplexity’s decision to drop advertising from its AI‑search offering marks a clear pivot in its business playbook. The move aligns with a broader industry search for revenue streams that preserve user trust, yet the company offers no detailed roadmap for how it will fund ongoing development. A senior executive, speaking anonymously, noted that Google appears to be adopting features reminiscent of Perplexity more than the startup is directly challenging the search giant.
Early backers once imagined a user base in the hundreds of millions, perhaps even billions, but a source close to the firm says growth has fallen short of those projections. Whether the abandonment of ads is primarily a response to under‑whelming adoption, a strategic bet on alternative monetisation, or a mix of both remains unclear. The shift suggests Perplexity is recalibrating its ambitions, but without concrete data on forthcoming revenue models, observers are left with unanswered questions about the startup’s long‑term viability.
Further Reading
- Perplexity Abandons AI Advertising Strategy Over Trust Worries - MacRumors
- Perplexity says it's moving away from ads and betting on subscriptions - Business Insider
- Perplexity stops testing advertising - Search Engine Land
- Perplexity AI Drops Ads, Focuses on Subscriptions - TrustFinance
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Common Questions Answered
Why did Perplexity decide to abandon its advertising strategy?
[heise.de](https://www.heise.de/en/news/Fear-of-losing-trust-Perplexity-dispenses-with-advertising-11181767.html) reports that Perplexity is concerned about losing user trust through advertising. Company executives believe that ads could make users doubt the accuracy and neutrality of AI responses, potentially undermining the core value of their product.
How is Perplexity planning to generate revenue without advertising?
Perplexity is focusing exclusively on subscription-based models, offering paid services ranging from $20 to $200 per month. [opentools.ai](https://opentools.ai/news/perplexity-ai-waves-goodbye-to-ads-betting-big-on-user-trust) indicates that the company aims to generate annual recurring revenue between $150-200 million through these subscription tiers.
What were the initial expectations for Perplexity's user growth compared to current reality?
Early investors believed Perplexity could reach billions of users, with board member Cack Wilhelm previously stating the startup was "capable of bringing the power of AI to billions." However, the company's growth has not met these initial expectations, suggesting a more measured expansion trajectory than originally anticipated.