3 ms·

Is this article a joke? Suppose for the sake of the argument that instead of drawing an arrow from the consumer to ad tech, I drew an arrow to... any other mar

by punee 11y ago

Is this article a joke? Suppose for the sake of the argument that instead of drawing an arrow from the consumer to ad tech, I drew an arrow to... any other market. Couldn't I make exactly the same argument? People pay a "consumption tax" to fund every part of the products they buy. That money flows into the pockets of myriad companies with intricate supplier/client links. Investors pour money into that market and create new companies hoping to make money back on their investment. That happens when their investment manages to get market share by "cannibalizing" competitors. Some investors lose their shirt. Some companies go bust. My question is: so what? It seems like there's little more in the article, not to mention the complete absence of any numbers to back the claims that are made or give a sense of scale. So my conclusion is that what the author really wants to talk about is how these bad companies own private data, yadda yadda. Nothing new here. So I guess the author is just doing this to push his own ad-free product. Inception.

estomagordo 11y ago
The difference of course being that the transportation market isn't being economically upheld by venture capitalists in hopes of one day cashing in on increased transportation revenue.
- anilgulecha 11y ago
  Uber?
- punee 11y ago
  First, numbers would be required to see exactly how the market is "economically upheld" by VCs. Second, I'm not sure if you're being sarcastic, but your example seems poorly chosen. Uber and Lyft live off of venture capital. Even absent Uber/Lyft, the transportation market was/still is one of the most cartelised around. Third, you could certainly find satisfactory counter-examples where the money "ends up" (money keeps flowing, btw, that's why simplistic diagrams aren't very interesting) in the hands of a larger pool of companies. But if the point of the article is to tell us that social networks is a highly concentrated industry, that's hardly an upvote-worthy revelation. Judging by the language used in the article, it is apparent that the author has a beef with advertising. I'm glad he can have a lifestyle business sustained by earned advertising he gets with mentions on Hacker News, but it seems a little disingenuous to pretend that can work for all businesses.
coldtea 11y ago
>People pay a "consumption tax" to fund every part of the products they buy. Yeah, only those other parts: a) are not relevant to the topic discussed. If I discuss where ad money go, I don't have a reason to show where money for packaging go. b) are essential to the production of the item (besides the fact that there are millions of products that are sold without ANY advertising at all -- e.g. all no-brand-name items) [edit: fixed "not essential"] >Some investors lose their shirt. Some companies go bust. My question is: so what? So, when it comes to online advertising, it's the basis for tons of tech-related activity (the reason d'etre of most typical web startups for example, most online media, etc.), and if it goes bust there will be a lot of blood. The impact to HN's crowd and the web as we know it in general is not even comparable to what happens if some market like "PVC supplies" for products goes bust.
- punee 11y ago
  Your message is a little disjointed. Are "other parts" marketing or not-marketing? Take your pick. Anyway, the article doesn't discuss where ad money goes. It would need to use figures for that. Instead, it tries to paint a market as some sort of a conspiracy that purposely creates complexity to steal money from consumers. It's essentially FUD. You seem to suffer from the very common bias of "build it and they will come." It's irrelevant whether a cost is "essential" to the production of the item. Distribution is a cost that's not part of production. Would you say that people pay a "consumption tax" on freight transport when they buy any physical product? You say "most" web startups are based on advertising. That would require proof. I recall seeing someone breaking down the list of the current "unicorns" by revenue model. A minority is financed by advertising.
  - coldtea 11y ago
    >Your message is a little disjointed. Are "other parts" marketing or not-marketing? Take your pick. Oh, I see what you mean. I meant to write: "are essential to the production of the item" (scrap "not"). >Anyway, the article doesn't discuss where ad money goes. It would need to use figures for that. It would only need figures to do that in detail, whereas the article wants to give an overview of where money goes, not go into numbers. >It's irrelevant whether a cost is "essential" to the production of the item. Distribution is a cost that's not part of production. Well, even if I got the wording wrong, I obviously consider "distribution" an essential cost too. It might not be part of production per se, but it's necessary for getting the item to the buyer. Advertisement, much less so. There are tons of products that are sold without any advertising, but very few sold without distribution (e.g. some products you get directly from their makers' facilities), and it's totally inconvenient for larger items or items manufactured abroad. >You seem to suffer from the very common bias of "build it and they will come." Well, if we're to discuss my preferences on the matter, that (non advertising) is how most commerce worked for milenia, and how it's working even now for millions of non-advertised products. Sure, for people to know and buy specifically an X brand, it takes advertisement. But that's neither essential to society's functioning, nor beneficial (e.g. allows crappy products to advertise more than good ones, and be preferred over them, and also makes people over-buy with ads as constant reminders for consumption). As a consumer why should I care whether brand X sells -- except if I'm its owner? People can still buy whatever they want and need, without advertising. And in that world the best products can get word of mouth and organic growth unobscured by paid advertisement. As for further "discovery" there are always articles and posts about upcoming products, reviews, etc.
lmm 11y ago
It makes sense for an industry to grow if the consumer base is growing. E.g. maybe all these home-cleaning startups make sense because a whole lot more people are now getting their homes professionally cleaned than were a few years ago. But how can advertising "consumption" increase in the same way? Either people buy more stuff (unlikely, because people already spend all of their money on stuff), or advertisers spend a bigger proportion of their revenue on advertising (which also seems unlikely, because their business models haven't changed). It seems more likely that most successful advertising companies are making their money by cannibalizing the rest of the industry. In which case, why is the industry growing?
- punee 11y ago
  I'm not sure I understand exactly what you're asking. How is which industry growing? If you mean how is ad tech growing, it's growing because digital advertising as a share of total advertising is growing. It's mainly eating up advertising budgets that used to go to newspapers. You can check out this article linked somewhere else in the thread for more data: 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...
brchsiao 11y ago
While "a few winners and a whole fuckin' lot of losers" applies anywhere, the difference, the article says, is that in this case the losers have a lot more potentially malicious power over consumers, and you never want to be standing next to a desperate dying animal.

by punee 11y ago

estomagordo 11y ago

The difference of course being that the transportation market isn't being economically upheld by venture capitalists in hopes of one day cashing in on increased transportation revenue.

anilgulecha 11y ago
Uber?
punee 11y ago
First, numbers would be required to see exactly how the market is "economically upheld" by VCs. Second, I'm not sure if you're being sarcastic, but your example seems poorly chosen. Uber and Lyft live off of venture capital. Even absent Uber/Lyft, the transportation market was/still is one of the most cartelised around. Third, you could certainly find satisfactory counter-examples where the money "ends up" (money keeps flowing, btw, that's why simplistic diagrams aren't very interesting) in the hands of a larger pool of companies. But if the point of the article is to tell us that social networks is a highly concentrated industry, that's hardly an upvote-worthy revelation. Judging by the language used in the article, it is apparent that the author has a beef with advertising. I'm glad he can have a lifestyle business sustained by earned advertising he gets with mentions on Hacker News, but it seems a little disingenuous to pretend that can work for all businesses.

coldtea 11y ago

>People pay a "consumption tax" to fund every part of the products they buy. Yeah, only those other parts: a) are not relevant to the topic discussed. If I discuss where ad money go, I don't have a reason to show where money for packaging go. b) are essential to the production of the item (besides the fact that there are millions of products that are sold without ANY advertising at all -- e.g. all no-brand-name items) [edit: fixed "not essential"] >Some investors lose their shirt. Some companies go bust. My question is: so what? So, when it comes to online advertising, it's the basis for tons of tech-related activity (the reason d'etre of most typical web startups for example, most online media, etc.), and if it goes bust there will be a lot of blood. The impact to HN's crowd and the web as we know it in general is not even comparable to what happens if some market like "PVC supplies" for products goes bust.

punee 11y ago
Your message is a little disjointed. Are "other parts" marketing or not-marketing? Take your pick. Anyway, the article doesn't discuss where ad money goes. It would need to use figures for that. Instead, it tries to paint a market as some sort of a conspiracy that purposely creates complexity to steal money from consumers. It's essentially FUD. You seem to suffer from the very common bias of "build it and they will come." It's irrelevant whether a cost is "essential" to the production of the item. Distribution is a cost that's not part of production. Would you say that people pay a "consumption tax" on freight transport when they buy any physical product? You say "most" web startups are based on advertising. That would require proof. I recall seeing someone breaking down the list of the current "unicorns" by revenue model. A minority is financed by advertising.
- coldtea 11y ago
  >Your message is a little disjointed. Are "other parts" marketing or not-marketing? Take your pick. Oh, I see what you mean. I meant to write: "are essential to the production of the item" (scrap "not"). >Anyway, the article doesn't discuss where ad money goes. It would need to use figures for that. It would only need figures to do that in detail, whereas the article wants to give an overview of where money goes, not go into numbers. >It's irrelevant whether a cost is "essential" to the production of the item. Distribution is a cost that's not part of production. Well, even if I got the wording wrong, I obviously consider "distribution" an essential cost too. It might not be part of production per se, but it's necessary for getting the item to the buyer. Advertisement, much less so. There are tons of products that are sold without any advertising, but very few sold without distribution (e.g. some products you get directly from their makers' facilities), and it's totally inconvenient for larger items or items manufactured abroad. >You seem to suffer from the very common bias of "build it and they will come." Well, if we're to discuss my preferences on the matter, that (non advertising) is how most commerce worked for milenia, and how it's working even now for millions of non-advertised products. Sure, for people to know and buy specifically an X brand, it takes advertisement. But that's neither essential to society's functioning, nor beneficial (e.g. allows crappy products to advertise more than good ones, and be preferred over them, and also makes people over-buy with ads as constant reminders for consumption). As a consumer why should I care whether brand X sells -- except if I'm its owner? People can still buy whatever they want and need, without advertising. And in that world the best products can get word of mouth and organic growth unobscured by paid advertisement. As for further "discovery" there are always articles and posts about upcoming products, reviews, etc.

lmm 11y ago

It makes sense for an industry to grow if the consumer base is growing. E.g. maybe all these home-cleaning startups make sense because a whole lot more people are now getting their homes professionally cleaned than were a few years ago. But how can advertising "consumption" increase in the same way? Either people buy more stuff (unlikely, because people already spend all of their money on stuff), or advertisers spend a bigger proportion of their revenue on advertising (which also seems unlikely, because their business models haven't changed). It seems more likely that most successful advertising companies are making their money by cannibalizing the rest of the industry. In which case, why is the industry growing?

punee 11y ago
I'm not sure I understand exactly what you're asking. How is which industry growing? If you mean how is ad tech growing, it's growing because digital advertising as a share of total advertising is growing. It's mainly eating up advertising budgets that used to go to newspapers. You can check out this article linked somewhere else in the thread for more data: 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...

brchsiao 11y ago

While "a few winners and a whole fuckin' lot of losers" applies anywhere, the difference, the article says, is that in this case the losers have a lot more potentially malicious power over consumers, and you never want to be standing next to a desperate dying animal.