The whole internet runs on ads, so why not AI?

From American Public Media, this is Marketplace Tech.

I'm Megan McCarty Carrino.

Search engines, social media, e-commerce, mobile games, they all make money by selling advertising.

But making ads work in AI search might not be so straightforward. Perplexity, for instance,

reportedly pulled back on plans to integrate ads into their AI search engine,

and internal documents showed the company made only $20,000 in ad revenue in the fourth quarter last year.

We spoke with Garrett Johnson, a professor of marketing at Boston University,

to get a sense of why jumping into the ad business is difficult.

There's a lot of challenges. I think there's challenges of competition. There's intense competition

for users, maybe more so than we saw in search engines and in social. And there's also competition

on the advertiser side because they have to compete with mature digital ad platforms like

meta and Google and Amazon. And if you look at like the challenge of setting up an ad model,

I think there's many approaches they can take. They could do something that looks kind of like

what Google does or something that looks more like meta with infeed ads or, you know,

something totally new that's better suited to AI platforms,

but increasingly it may be all of the above.

And then the last thing is just the difficulty of scaling these models.

So you need to onboard many advertisers, including small and medium-sized businesses.

You need to build this personalization flywheel.

And that's why if you look at like OpenAI and their partnerships with Walmart and Shopify,

that's really valuable.

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