The news: AI search engine Perplexity is facing potential ad business struggles with the departure of its head of advertising Taz Patel. The departure comes as Perplexity eyes new avenues for growth and is faced with legal pressures, per Adweek.

AI search ad ambitions in peril: Perplexity, which introduced ads last year, has seen only slight gains from its ad business so far. The company recently deprioritized advertising, per Ad Age—and the departure of a key figure only months after his hiring echoes the broader struggle in monetizing AI search.

Perplexity isn’t alone: Even search giant Google is grappling with the challenges of AI search monetization. Despite introducing ads in AI Mode, marketers remain cautious about Google’s genAI ad ambitions amid transparency concerns.

Behind the scenes: Several factors are contributing to ongoing difficulties in monetizing AI search through ads.

• AI leaders are struggling to win advertiser confidence in AI search ads. Trust remains a massive barrier with consumers, with only 14% trusting genAI results “a lot more” than organic search results.
• Publishers and advertisers are also concerned as paid opportunities in genAI search remain nascent. Some claim AI results lead to lost traffic and limited access to critical performance data, making it challenging to assess ROI—concerns bolstered by studies claiming AI search results notably decrease clickthrough rates.
• Ad monetization overall is lagging behind traffic growth for AI search engines. Perplexity remains an outlier in search engines that have started monetizing with ads, and overall advertising monetization in AI search is still in early stages and has yet to prove it can scale.