How Does Perplexity AI Make Money?
Perplexity AI
Pic credits – Analytics vidhya
Perplexity AI is an information or knowledge discovery platform that uses its innovative search engine which works with AI. This AI search engine goes beyond keyword matches and text pages to render information that is asked for. It is launched in 2022 by an Indian entrepreneur, Aravind Srinivas who is the CEO and who happens to be an alumni of IIT Madras, India. The key members of the organization include Dennis Yarats, Andy Konwinski, Johnny Ho. All of them did their engineering and worked with backgrounds in AI, distributed systems, search engines and databases.
Check out the Perplexity AI’s UI down here
Perplexity AI leverages the power AI to understand the real meaning of the question. It analyses huge volumes of data to carve out the best and contextually relevant answer to give it to the user. The main aim of the tool is to focus on the real intent of the user, his previous interactions to understand what the user is really seeking from it. It also works best in text prompt format and gives the output in different forms such as images, texts, audios and videos in its response.
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Perplexity AI And Its Revenue Generating Models:
Business Models:
The various channels through which Perplexity AI generates revenue include Pro plan, fundraising through various rounds and enterprise services. It also offers customized chatbot services by providing Perplexity AI’s co-pilot feature to create content in turn leading to monetization. Example – scripts for videos and blog articles.
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Valuation:
The valuation of Perplexity AI is at $520 million after raising $73.6 million in Series B funding round. The round is led by Institutional Venture Partners LLC in which previous rounds investors also participated which include NEA, former Twitter VP Elad Gil and Databricks Ventures. The new investors of Series B round Nvidia Corp and Jeff Bezos also participated in this round.
Growth potential:
Perplexity AI’s annual recurring revenue is estimated to be between $5 million and $10 million at the moment, with major share coming form Pro Plan that includes advanced features like image generation. Despite not being profitable yet, the company has shown investors its growth potential by rapid growth. This indicates confidence in its business model and future growth strategies.
Marketing strategies:
Various growth strategies adopted by Perplexity AI includes growth hacking, public relations, social media, search engine marketing, content marketing and word of mouth. The company got the initial boost by the posts from influencers like Elon Musk through ‘X’, formerly known as Twitter. To attract the intent driven users it also used press coverage in tech publications like TechCrunch and runs Google nd Bing ads on keywords like ‘AI search’. To boost SEO and thought leadership, it also provides educational articles on AI search through its blog. By leveraging its AI capabilities it also handles complex data to generate best quality content. It also provides personalized recommendations to attract B2B marketers.
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Freemium Model:
Freemium model is one of their marketing and growth strategy where it provides basic services for free, while it gives advanced features and additional services at premium. This strategy helps them to gather valuable information of the users and use it for future for its growth enhancements and offerings. Such model is offered and used by many social media platforms, software companies, streaming apps and online publications to build user base, nurture user engagements and drive revenue growth.
Conclusion:
The revenue generation and business model is supported by its enterprise services, fundraising and Pro plan, while the expansion and growth strategies is driven by a mix of strategic partnerships, viral growth hacking and international expansion. The marketing strategies of the company is a combination of viral growth, social media, public relations, search engine marketing, running ads and content marketing to attract the users.
