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There are good points here and the flow diagrams certainly apply to startups in the Adtech space. And particularly those targeting other startups. But these s

There are good points here and the flow diagrams certainly apply to startups in the Adtech space. And particularly those targeting other startups. But these startups are trying to take market from the incumbent Google, and increasingly Facbeook. These established businesses have paid back their investment and are now cash cows for their owners. The flows for Adsense for example will be in balance between cash in from advertisers, and cash out to publishers and Google shareholders. I've been in all three of those positions, often simultaneously, and been happy with the outcome. When the VC tide goes out Adtech startups will be running up the beach trying to cover their white bits. But with less loss-making competition it could be very good for Adsense and Facebook. As an aside, I see a future where digital advertising is equally split between Google for transactional (buy something today) adverts, and Facebook for brand awareness and engagement. I think Facebook today is in the same position that Google was when it was only selling ads against its search result pages. When Facebook launches adverts beyond its own property then the cash is really going to start flowing.

bendmorris 11y ago
> When Facebook launches adverts beyond its own property then the cash is really going to start flowing. They already do this: https://www.facebook.com/business/news/audience-network https://www.facebook.com/business/news/audience-network
lsc 11y ago
I think the theory the article puts forward is that the cost of advertising has been bid up by venture-backed advertising companies. If this is true, all advertising companies will suffer; a drop in the price of advertising probably won't sink the big players, sure, but it will probably cause them to cut some of their fat.
- jacquesm 11y ago
  > I think the theory the article puts forward is that the cost of advertising has been bid up by venture-backed advertising companies. I don't think that's the path the money takes. The path the money takes is that maybe some venture backed companies buy advertising to advertise their products. If that capital dries up then that particular segment will diminish but it will certainly not cause the industry to implode (though it definitely has challenges to deal with all its own).
  - lsc 11y ago
    I don't see how what you wrote conflicts with what I wrote. "bid up" and "buy" are synonyms in this context. If you take buyers out of the market the price for whatever it is they buy is going to come down. If the buyers who are taken out were the least price-sensitive buyers, (the theory being that people who aren't venture-backed generally have to spend what they earn) prices are going to come down a lot.

bendmorris 11y ago

> When Facebook launches adverts beyond its own property then the cash is really going to start flowing. They already do this: https://www.facebook.com/business/news/audience-network https://www.facebook.com/business/news/audience-network

lsc 11y ago

I think the theory the article puts forward is that the cost of advertising has been bid up by venture-backed advertising companies. If this is true, all advertising companies will suffer; a drop in the price of advertising probably won't sink the big players, sure, but it will probably cause them to cut some of their fat.

jacquesm 11y ago
> I think the theory the article puts forward is that the cost of advertising has been bid up by venture-backed advertising companies. I don't think that's the path the money takes. The path the money takes is that maybe some venture backed companies buy advertising to advertise their products. If that capital dries up then that particular segment will diminish but it will certainly not cause the industry to implode (though it definitely has challenges to deal with all its own).
- lsc 11y ago
  I don't see how what you wrote conflicts with what I wrote. "bid up" and "buy" are synonyms in this context. If you take buyers out of the market the price for whatever it is they buy is going to come down. If the buyers who are taken out were the least price-sensitive buyers, (the theory being that people who aren't venture-backed generally have to spend what they earn) prices are going to come down a lot.