The slogan "Disrupt Google" is loud, and the financing valuation is high, but the commercialization progress of "AI Search" Perplexity is "very poor."

Despite the soaring valuation of AI search star company Perplexity to $20 billion and its bold claims of "disrupting Google," its commercialization process has stalled, facing severe setbacks in its two core monetization channels: advertising and e-commerce.

Recent developments indicate that the company's commercialization exploration is facing multiple challenges. On September 15, according to The Information, Perplexity's advertising experiment project has seen minimal results due to its extremely cautious strategy, accepting less than 0.5% of advertiser applications. More concerning is the departure of Taz Patel, the executive in charge of its advertising business, last month, which may signal a significant adjustment in the company's advertising strategy.

Meanwhile, Perplexity's e-commerce business is also hindered by a lack of basic functionalities. Its shopping service currently lacks the most fundamental "shopping cart" feature, preventing users from purchasing multiple items at once. This design flaw not only affects user experience but also disappoints merchants hoping to increase average transaction value.

Advertising Business Stalls

Perplexity's advertising experiment has progressed far below expectations. The company's advertising revenue for the fourth quarter of 2024 is only $20,000, a stark contrast to its $20 billion valuation.

A company spokesperson revealed that of the thousands of advertisers who directly applied to advertise on Perplexity, less than 0.5% were approved. To avoid disrupting user experience, its advertising project strategy is extremely cautious.

Dan Roberts, Global Vice President of Search at advertising agency Assembly Global, also confirmed that some of his clients were rejected when applying to advertise on Perplexity.

Even clients who successfully placed ads are not fully satisfied with the experience. Perplexity's ads appear below search results in the form of "sponsored follow-up questions," but advertisers cannot make their brand logos more prominent, leaving some clients disappointed.

Of greater concern is the departure of Taz Patel, the executive responsible for the advertising business, last month. In March of this year, Patel revealed at an industry event that the company was only collaborating with about 12 advertisers. The company has recently also adjusted its revenue-sharing plan with publishers, shifting from ad revenue-based to new subscription service-based revenue sharing, which is seen as a signal that it may abandon its advertising business.

E-commerce Functionality Severely Lagging

Compared to its advertising business, Perplexity has a more positive attitude towards e-commerce, but the execution results are equally disappointing. The shopping service launched last year promised users the ability to "research and purchase products" without redirecting to external websites, but the actual experience has fallen far short of expectations.

The biggest issue is the lack of functionality. Reports indicate that Perplexity still lacks a shopping cart feature, allowing users to purchase items only one at a time, rather than enabling bulk purchases like on other e-commerce sites. This limitation frustrates retailers, as they hope to persuade consumers to increase purchases and manage and deliver orders more effectively Owen Spencer, the Director of Direct-to-Consumer Applications and AI Empowerment at outdoor retail company Revelyst, stated: "The single-point purchase model allows us to deliver a pair of socks, a pair of gloves, and a T-shirt separately, which is not aligned with our goals."

In addition, merchants not part of the Perplexity partnership program lack direct channels to upload product information. The company currently relies on web crawlers to obtain product data, but this information is often not timely or accurate enough. To address this issue, Perplexity is collaborating with e-commerce software company BigCommerce to improve data quality.

Although traffic from Perplexity has grown exponentially over the past six months, Spencer pointed out that this traffic is still far below that of ChatGPT and cannot be compared to Google traffic.