40 ms·

At first glance, it seems very logical. Why do you need a middle man, these companies will all die out. The problem with this argument is that he doesn't realiz

At first glance, it seems very logical. Why do you need a middle man, these companies will all die out. The problem with this argument is that he doesn't realize advertising is 600B globally. Each of the small boxes there is 1b-40b depending the bucket (from tag management to mobile (100b)). When you realize that there's only 15 companies serving a 1 billion dollar market, you realize that it's not that small. Granted. There will be companies that will die in the ecosystem, but the logic is poor. It's like saying why do you need a CRM system, it's just a tool standing between the sales person and the customer.

anon1385 11y ago
The current claimed size of the market is irrelevant to the argument. The argument is that there is more money being made from advertising than actual advertisers are paying and that this isn't sustainable.
- jacquesm 11y ago
  That's more or less impossible by definition. What isn't sustainable is that advertisers tend to see over time lower returns for an equal investment in ads and that this trend has been fairly steady ever since online advertising became a commodity. Each new technology sees an initial (sometimes huge) uptick in clickthrough/engagement/conversion and then after a short while (and ever shorter it seems) the initial uptick transforms into a reversion to the previous mean and a subsequent steady trend downward. It has been exactly this phenomenon that has driven ad-technology and targeting forward and it's the equivalent of turning up the volume on an amplifier because the people intended to listen are going deaf from the sound levels.
- mc7457 11y ago
  If that's the argument, the writer needs to put up some numbers. Here's an attempt at some numerical estimates: http://www.bloomberg.com/bw/articles/2014-03-03/advertisings-century-of-flat-line-growth http://www.bloomberg.com/bw/articles/2014-03-03/advertisings... Spoiler: ad spending in the US has grown roughly proportional with the growth of the economy, no bubble in sight.
fraserharris 11y ago
The HN community has an outspoken minority that believes: a) ads do not make money, b) ads do not work, and c) ads (targeting) are morally wrong. My sense is that the silent majority recognizes just how massive the advertising business is (its demand generation, nothing more complicated) and how important it can be to all types of businesses across every sector of the economy. Global advertising spend (est. 2015): $592B Global digital ad spend (est. 2015): $170B Global VC investment (est. 2014): >$48B [1] http://www.emarketer.com/Article/Advertisers-Will-Spend-Nearly-600-Billion-Worldwide-2015/1011691 http://www.emarketer.com/Article/Advertisers-Will-Spend-Near... [2] http://www.pwc.com/us/en/press-releases/2015/annual-venture-capital-investment-tops-48-billion.html http://www.pwc.com/us/en/press-releases/2015/annual-venture-...
- TheLogothete 11y ago
  Ads will die soon. Any day now. Doomed business model.
- jacquesm 11y ago
  Ads make an enormous amount of money, but ads are also (at least the online ones) undergoing a trend where the same amount of effort by advertiser, creatives and agencies leads to less and less user engagement and $ spent on product over time. More and more people are experiencing a disconnect with advertising and the advertising industry, rather than doing some introspection sees this is a technological thing that needs 'fixing' rather than as a basic problem with their approach. It will be interesting to see how they plan to fix this long term, for now it does not look - to me - as if they are on the right path, another focus group or user panel is not going to magically solve this. Until then the money is good.
  - fraserharris 11y ago
    Part of the explosion in ad-tech companies are alternative ad-formats and methods. The future lies in native ads - TripleLift (among others) is doing interesting things. You'll see more and more "sponsored stories". With Taboola/Outbrain, brands can create their own content (giving new life to agencies). We've experimented with embedding sponsored stories into digital properties (ex: a shoppable gift guide within a digital magazine's website).

anon1385 11y ago

The current claimed size of the market is irrelevant to the argument. The argument is that there is more money being made from advertising than actual advertisers are paying and that this isn't sustainable.

jacquesm 11y ago
That's more or less impossible by definition. What isn't sustainable is that advertisers tend to see over time lower returns for an equal investment in ads and that this trend has been fairly steady ever since online advertising became a commodity. Each new technology sees an initial (sometimes huge) uptick in clickthrough/engagement/conversion and then after a short while (and ever shorter it seems) the initial uptick transforms into a reversion to the previous mean and a subsequent steady trend downward. It has been exactly this phenomenon that has driven ad-technology and targeting forward and it's the equivalent of turning up the volume on an amplifier because the people intended to listen are going deaf from the sound levels.
mc7457 11y ago
If that's the argument, the writer needs to put up some numbers. Here's an attempt at some numerical estimates: http://www.bloomberg.com/bw/articles/2014-03-03/advertisings-century-of-flat-line-growth http://www.bloomberg.com/bw/articles/2014-03-03/advertisings... Spoiler: ad spending in the US has grown roughly proportional with the growth of the economy, no bubble in sight.

fraserharris 11y ago

The HN community has an outspoken minority that believes: a) ads do not make money, b) ads do not work, and c) ads (targeting) are morally wrong. My sense is that the silent majority recognizes just how massive the advertising business is (its demand generation, nothing more complicated) and how important it can be to all types of businesses across every sector of the economy. Global advertising spend (est. 2015): $592B Global digital ad spend (est. 2015): $170B Global VC investment (est. 2014): >$48B [1] http://www.emarketer.com/Article/Advertisers-Will-Spend-Nearly-600-Billion-Worldwide-2015/1011691 http://www.emarketer.com/Article/Advertisers-Will-Spend-Near... [2] http://www.pwc.com/us/en/press-releases/2015/annual-venture-capital-investment-tops-48-billion.html http://www.pwc.com/us/en/press-releases/2015/annual-venture-...

TheLogothete 11y ago
Ads will die soon. Any day now. Doomed business model.
jacquesm 11y ago
Ads make an enormous amount of money, but ads are also (at least the online ones) undergoing a trend where the same amount of effort by advertiser, creatives and agencies leads to less and less user engagement and $ spent on product over time. More and more people are experiencing a disconnect with advertising and the advertising industry, rather than doing some introspection sees this is a technological thing that needs 'fixing' rather than as a basic problem with their approach. It will be interesting to see how they plan to fix this long term, for now it does not look - to me - as if they are on the right path, another focus group or user panel is not going to magically solve this. Until then the money is good.
- fraserharris 11y ago
  Part of the explosion in ad-tech companies are alternative ad-formats and methods. The future lies in native ads - TripleLift (among others) is doing interesting things. You'll see more and more "sponsored stories". With Taboola/Outbrain, brands can create their own content (giving new life to agencies). We've experimented with embedding sponsored stories into digital properties (ex: a shoppable gift guide within a digital magazine's website).