Perplexity Shut Down Ads at $50 CPM: What That Tells Us About AI Monetization
About this episode
Only 3% of AI app users pay for subscriptions. Inference costs scale with every interaction. The math doesn't work, and Nic Baird watched it kill company after company at South Park Commons. So he built Koah Labs: a native ad network for AI apps that hits 2% CTR (4x industry average), charges ~$5 CPM, and only serves ads 30-35% of the time. At 28, he's raised $26M to fix AI monetization. Here's t
Key moments
- 0:00 Why AI apps keep dying
- 1:14 Who is Nic Baird?
- 2:21 Can you explain AI advertising to a five-year-old?
- 4:56 Will OpenAI ever run ads?
- 8:31 Why did he start Koah Labs?
- 10:44 What do AI ads actually look like?
- 15:15 Why did Perplexity kill their ad program?
- 17:30 How does Koa find the right ad to show?
- 19:24 Why leave 70% of ad slots empty?
- 23:24 Can you set up the SDK in two hours?
- 25:33 Who should use Koah Labs?
- 26:38 When should founders start monetizing?
- 29:36 The revenue math for an AI app
- 32:34 What types of apps work best with native ads?
- 40:05 Does AI hallucinate in ad copy?
- 41:14 Why you can't just build your own ad system
- 43:38 How do you prove AI ads work?
- 48:23 What's next for Koah Labs?
- 49:43 What is the "dynamic internet"?
- 51:25 Books for your 20s, 40s, and 60s
- 54:33 outro