The news: Perplexity is taking a step back from its advertising initiatives amid struggles to monetize AI search.

Head of publisher partnerships for Perplexity Jessica Chan said at Advertising Week New York that the startup is not “taking any new advertisers.” In addition, ads are not currently part of the plan for Perplexity’s browser Comet, per Adweek.

News of Perplexity’s ad struggles comes shortly after its ad sales head Taz Patel departed the company, a year and a half after Perplexity introduced ads.

Monetization woes: Perplexity’s decision to pause its ad strategy reflects broader industry struggles to monetize AI search through ads.

• Trust remains a barrier. Only 14% of consumers trust genAI search results “a lot more” than organic search results, per Attest. An EMARKETER and CivicScience study found that only 9% of consumers are highly confident in AI search results, and 37% show a strong disinterest in AI search.
• Publishers and advertisers have similar holdups. Paid opportunities in AI search remain nascent, and not enough progress has been made to prove AI’s ad potential. Advertisers using assets like Google’s AI Mode have limited access to performance data, while publishers state AI Mode “deprives” them of traffic and decreases clickthrough rates (CTRs).
• Perplexity hasn’t proven its worth in AI search ads. Two ad buyers cited by Adweek stated that they’ve struggled with measuring key metrics like CTRs and return on ad spend because the startup doesn’t have tools that meet the standards set by established ad offerings.

What Perplexity is facing: Perplexity’s ad struggles come amid broader company issues. It’s facing lawsuits from Encyclopedia Britannica, News Corp, and other publishers over allegations that it scraped content without permission, per Ad Age, and a cease-and-desist from The New York Times for the same reason. Meanwhile, a Cloudflare report stated that Perplexity used deceptive crawlers to avoid website blockers.

What marketers can do: Pause planned investments in AI search until search ads are measurable and proven to be effective. AI adoption may be growing, but there remains no clear evidence that ad formats in AI search provide returns. Perplexity’s step back indicates that much work still needs to be done until AI search delivers on ROI.

For Perplexity, future ad ambitions must address publisher concerns—something that’s unlikely until the company proves it doesn’t scrape content without authorization and finds a new ad leader who can point the startup in the right direction.