5 ms·

Its so bizarre to me. You'd think there would be a finite appetite for advertising, but apparently not.

by vasaulys 10y ago

chillydawg 10y ago
Still a lot of print magazines to kill and ad dollars to move from TV to online.
- mschuster91 10y ago
  Yeah but TV ads have the nice advantage that you can't easily block them - unless you're timeshifting, that is. And muting, well, it blocks the audio, but you still see the video that can get a message across. Also, print ads, given a sufficient niche-ness of the magazine, are way better targeted to actual customers than web ads.
  - deelowe 10y ago
    Is TV not a shrinking market? I thought subscriptions to cable and satellite were down.
    - mschuster91 10y ago
      For a small part of the population, yes, but it's still mass media.
      - rocqua 10y ago
        Comcast was really pleased that subscriber numbers only decreased by 4,000 this quarter IIRC Normally they see 40,000
        deelowe 10y ago
        That's what I thought. So the OPs premise stands that some of this is coming from revenue leaving traditional ads.
  - shostack 10y ago
    Bloomberg actually did a decent writeup on this.[1] [1] http://www.bloomberg.com/news/articles/2014-03-03/advertisings-century-of-flat-line-growth http://www.bloomberg.com/news/articles/2014-03-03/advertisin...
- mschuster91 10y ago
  Yeah but TV ads have the nice advantage that you can't easily block them - unless you're timeshifting, that is. And muting, well, it blocks the audio, but you still see the video that can get a message across. Also, print ads, given a sufficient niche-ness of the magazine, are way better targeted to actual customers than web ads.
ariwilson 10y ago
There can be both a finite appetite for advertising and increasing Google revenue as long as Google is either making advertising more effective (expanding the market), taking revenue from other publishers (controlling the market), or making money outside of advertising. Some random stats I found estimate that advertising is currently a $500B yearly industry, which means Google is only 15% of the industry.
- em500 10y ago
  Right, I found estimates of $600B yearly ad spend. To put that into context, total annual spending (aka world GDP) is over $70T, meaning that less that 1% of all spending in the world is on advertising.
  - adventured 10y ago
    And you can probably slap another one or two dozen trillion dollars onto that surface GDP figure. The underground / black market economy is very, very substantial.
- semi-extrinsic 10y ago
  Only 15%, but then they don't do TV, radio, magazine, newspaper or billboard ads.
- runeks 10y ago
  You forgot the most important part: making ads more targeted. More more targeted an ad is, the more you can charge for it. So Google can sell the same number of ads to the same number of advertisers and yet make more money, while advertisers get more bang for their buck.
- MarkMc 10y ago
  In addition, the online advertising market is growing naturally as more people get connected to the internet and already-connected people get wealthier. This is why Facebook is so keen to dominate the Indian market that they are willing to offer free (but not net neutral) internet access.
ethanbond 10y ago
I think we'd see a surge in ad purchasing right before the death of it. Why does no one see this uptick in ad spending a potential indicator that advertisers are getting less of their money's worth?
- encoderer 10y ago
  Possibly because that's not how advertising budgets are really set? Nobody says "lets throw more cash at the thing that isn't working anymore". Certainly people will accept slimmer margins if they're still making money but every ad campaign has KPIs that are optimized for and no VP of Marketing is going to keep their job by accepting a status-quo of less effective, more costly advertising.
  - ethanbond 10y ago
    Except that's the fundamental issue of advertising? Attribution has always been wickedly difficult. It was supposed to be easy with Google/FB (click -> sale, duh), but now people are clicking on fewer and fewer ads, so Google/Facebook et al. are repositioning as "oh no, they saw our ads for x seconds, we definitely swayed them."
    - disgruntledphd2 10y ago
      The issue is that views definitely have an impact. However, especially on mobile, this impact is very difficult to measure. So most of the DR industry uses last click, even though they know its incorrect, because there is nothing better.
      - ethanbond 10y ago
        The impact is difficult to measure everywhere all the time. How do you think they measure impact of billboards? Radio ads? TV ads? All by the same hand-wavy "there is nothing better" types of metrics. I didn't say they don't have an impact, I said it's obscenely difficult to gauge attribution and online ads weren't the panacea they were supposed to be because it turns out people don't click ads. Despite this, advertisers are still advertising. An increase in ad spending is not any indicator that ads are working well because no one has ever known how well they worked.
encoderer 10y ago
There is. Advertising as a share of GDP has been flat for like 75 years. But what we see here is a platform shift away from TV and print and to the interwebs. There are a lot of convergent trends happening to drive this. Older TV watchers dying off, explosion of pocket computers, fragmentation of TV ad market by rise of cable channels, etc.
choosername 10y ago
That appetite is proportional to the careless feeding of stats and the affinity to fall for the ads.
Buge 10y ago
More and more people are still coming online in third world countries.
dredmorbius 10y ago
About $500 billion globally, with ~$100 billion online, last I'd checked. Based on a global world product (GWP) of $75 trillion. Or 1.5% of the global total. If that were to be split 3 ways between Google, Facebook, and Everyone Else, Google might get $167 billion in revenue, or (at 20x PE) $3.3 trillion market cap.

Its so bizarre to me. You'd think there would be a finite appetite for advertising, but apparently not.

chillydawg 10y ago

Still a lot of print magazines to kill and ad dollars to move from TV to online.

mschuster91 10y ago
Yeah but TV ads have the nice advantage that you can't easily block them - unless you're timeshifting, that is. And muting, well, it blocks the audio, but you still see the video that can get a message across. Also, print ads, given a sufficient niche-ness of the magazine, are way better targeted to actual customers than web ads.
- deelowe 10y ago
  Is TV not a shrinking market? I thought subscriptions to cable and satellite were down.
  - mschuster91 10y ago
    For a small part of the population, yes, but it's still mass media.
    - rocqua 10y ago
      Comcast was really pleased that subscriber numbers only decreased by 4,000 this quarter IIRC Normally they see 40,000
      - deelowe 10y ago
        That's what I thought. So the OPs premise stands that some of this is coming from revenue leaving traditional ads.
- shostack 10y ago
  Bloomberg actually did a decent writeup on this.[1] [1] http://www.bloomberg.com/news/articles/2014-03-03/advertisings-century-of-flat-line-growth http://www.bloomberg.com/news/articles/2014-03-03/advertisin...
mschuster91 10y ago
Yeah but TV ads have the nice advantage that you can't easily block them - unless you're timeshifting, that is. And muting, well, it blocks the audio, but you still see the video that can get a message across. Also, print ads, given a sufficient niche-ness of the magazine, are way better targeted to actual customers than web ads.

ariwilson 10y ago

There can be both a finite appetite for advertising and increasing Google revenue as long as Google is either making advertising more effective (expanding the market), taking revenue from other publishers (controlling the market), or making money outside of advertising. Some random stats I found estimate that advertising is currently a $500B yearly industry, which means Google is only 15% of the industry.

em500 10y ago
Right, I found estimates of $600B yearly ad spend. To put that into context, total annual spending (aka world GDP) is over $70T, meaning that less that 1% of all spending in the world is on advertising.
- adventured 10y ago
  And you can probably slap another one or two dozen trillion dollars onto that surface GDP figure. The underground / black market economy is very, very substantial.
semi-extrinsic 10y ago
Only 15%, but then they don't do TV, radio, magazine, newspaper or billboard ads.
runeks 10y ago
You forgot the most important part: making ads more targeted. More more targeted an ad is, the more you can charge for it. So Google can sell the same number of ads to the same number of advertisers and yet make more money, while advertisers get more bang for their buck.
MarkMc 10y ago
In addition, the online advertising market is growing naturally as more people get connected to the internet and already-connected people get wealthier. This is why Facebook is so keen to dominate the Indian market that they are willing to offer free (but not net neutral) internet access.

ethanbond 10y ago

I think we'd see a surge in ad purchasing right before the death of it. Why does no one see this uptick in ad spending a potential indicator that advertisers are getting less of their money's worth?

encoderer 10y ago
Possibly because that's not how advertising budgets are really set? Nobody says "lets throw more cash at the thing that isn't working anymore". Certainly people will accept slimmer margins if they're still making money but every ad campaign has KPIs that are optimized for and no VP of Marketing is going to keep their job by accepting a status-quo of less effective, more costly advertising.
- ethanbond 10y ago
  Except that's the fundamental issue of advertising? Attribution has always been wickedly difficult. It was supposed to be easy with Google/FB (click -> sale, duh), but now people are clicking on fewer and fewer ads, so Google/Facebook et al. are repositioning as "oh no, they saw our ads for x seconds, we definitely swayed them."
  - disgruntledphd2 10y ago
    The issue is that views definitely have an impact. However, especially on mobile, this impact is very difficult to measure. So most of the DR industry uses last click, even though they know its incorrect, because there is nothing better.
    - ethanbond 10y ago
      The impact is difficult to measure everywhere all the time. How do you think they measure impact of billboards? Radio ads? TV ads? All by the same hand-wavy "there is nothing better" types of metrics. I didn't say they don't have an impact, I said it's obscenely difficult to gauge attribution and online ads weren't the panacea they were supposed to be because it turns out people don't click ads. Despite this, advertisers are still advertising. An increase in ad spending is not any indicator that ads are working well because no one has ever known how well they worked.

encoderer 10y ago

There is. Advertising as a share of GDP has been flat for like 75 years. But what we see here is a platform shift away from TV and print and to the interwebs. There are a lot of convergent trends happening to drive this. Older TV watchers dying off, explosion of pocket computers, fragmentation of TV ad market by rise of cable channels, etc.

choosername 10y ago

That appetite is proportional to the careless feeding of stats and the affinity to fall for the ads.

Buge 10y ago

More and more people are still coming online in third world countries.

dredmorbius 10y ago

About $500 billion globally, with ~$100 billion online, last I'd checked. Based on a global world product (GWP) of $75 trillion. Or 1.5% of the global total. If that were to be split 3 ways between Google, Facebook, and Everyone Else, Google might get $167 billion in revenue, or (at 20x PE) $3.3 trillion market cap.