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> the ad-word business model does not scale linearly with market share – e.g. the market leader collects a disproportionate share of the available profit Why i
by dri_ft 10y ago
> the ad-word business model does not scale linearly with market share – e.g. the market leader collects a disproportionate share of the available profit
Why is this so?
- AznHisoka 10y agobecause it is a waste of time optimizing/setting up campaigns for such a miniscule return.
- always_good 10y agoBecause the market leader has all the publishers. If you have space for a single banner ad, you're going to use the network with the highest payout, which is the one with the most competitive bidders.
- dredmorbius 10y agoEssentially: network effects, efficiencies of scale, and costs of managing multiple small relationships (from the advertising buyer's PoV). Google's real monopoly at this point is ad-side.
- Animats 10y agoAlong with Facebook, yes. About 65% of online ad spend is to Google and Facebook.[1] The remainder is to a bunch of little guys, mostly selling to bottom-feeder sites. Except on mobile. Banner ads on mobile are growing. [1] http://fortune.com/2017/01/04/google-facebook-ad-industry/ http://fortune.com/2017/01/04/google-facebook-ad-industry/