9 ms·

What exactly is the end goal of these advertising platforms, exactly? Ads in my mind are zero sum, so I'm pretty clueless on this front. One thing I find inte

by tabeth 9y ago

What exactly is the end goal of these advertising platforms, exactly? Ads in my mind are zero sum, so I'm pretty clueless on this front. One thing I find interesting is the simultaneous popularity of these newfound distractions and task/project management software. Are we solving problems that were intentionally created and calling that progress?

immad 9y ago
Ads over time extract profit margins from all other industries. For example at least 50% of all profits from mobile games are spent on acquiring users from ads.
- mattbettinson 9y ago
  Do you have a source on that? I'm not challenging, I believe it, I just wanna see some proof
  - xapata 9y ago
    What's your standard of proof? Do a thought experiment and you'll find a nugget of truth to the idea. Imagine two competitors who are otherwise identical. What would their AdWords buying strategy be?
  - Denzel 9y ago
    Maybe this will do it for you: https://www.bloomberg.com/news/articles/2014-03-03/advertisings-century-of-flat-line-growth https://www.bloomberg.com/news/articles/2014-03-03/advertisi.... Ad spend as a % of U.S. GDP remains relatively constant since the 1920s.
- coralreef 9y ago
  Hmm, not sure if "extracts profit margins" is the right terminology. In mobile games, you could have a lifetime value of a user that is higher than their acquisition cost. This generates a model where you can spend money to make money. In this instance, advertising is fuelling user acquisition which fuels profit.
  - icebraining 9y ago
    The question is whether the whole mobile game industry makes more money by advertising, or whether those games that advertise just make more money at the expense of others. Imagine that in a world without ads, game revenue is: Game A: 600, Game B: 600, Game C: 600 But then A spends 300 on ads: Game A: 1200 (-300), Game B: 300, Game C: 300 In this case, game A "spent money to make money", but the overall industry's revenue was the same, and part of the profits now went to ads. And it makes sense: advertising doesn't give consumers more money to spend, so the size of the pie is fixed, all they can do it redistribute it, extracting a slice in the process.
    - arjie 9y ago
      You're assuming perfect market saturation: every consumer has a max spending budget for this good that they're constantly up against and it's just how they distribute it that matters. This seems unlikely to me based on personal experience (if there's no game I like I play no games) but if you have better data than I do then I suppose you're right. For instance, my younger brother is a fan of the Darksiders game series. I saw an advertisement for the new instance of the game. I told him about it. When it reaches a price he wants he'll buy it. But until it does, he's not going to sit around buying other games just to fill up the budget.
      - icebraining 9y ago
        Maybe not other games, but surely he spends the money somewhere. Hence the claim that ads extract profit margins from all other industries.
        arjie 9y ago
        Do you, really? For most of the people I know, our entertainment budget is fairly flexible. If I'd spend £100 on something and if I wanted it, I'm probably not going to spend £100 on my second choice thing. In fact, I may not spend anything at all and just choose to spend my time on things I've already spent money on like going out to skate or something. Mostly the cash budget is substantially higher than the time budget so people aren't going to buy a thing they don't like just to fill the time. If ads help with allocation closer to people's real preferences, they're a good thing.
BurningFrog 9y ago
Ads definitely create value. You can think of them as improved communication that connects people who are useful to each other.
- nebabyte 9y ago
  "improved" lol. Ads are an incredibly shitty solution to the as-yet-unsolved problem of discovery.
- CuriouslyC 9y ago
  Effective advertising isn't information, it's manipulation. Ads "work" by creating a sense of lack that didn't exist previously, or by co-opting your decision making process with gratuitous associations. On top of that, advertising is effectively forced on people. Given that many people actively try to avoid advertising, it seems clear that this is a negative point. If advertising was objective and unbiased, and it was only presented to people actively seeking information about products, it would be a net benefit to society. As it stands, I believe it is a net detriment.
asquabventured 9y ago
The end goal is selling ads and eyeballs are king. The money has moved where the eyeballs are.
Denzel 9y ago
You're correct, the ad industry is zero-sum. The end goal is as simple as it looks: support a new medium. First it was newspapers and magazines and mail, then the radio, next television, and finally we've landed on the web. And in the future there will probably be another new medium that ad dollars shift to. The strategy is simple -- rip market share away from the competitors. And it's working. Why? Because you can more aggressively target intent, track results easier, and garner more impressions since the inventory is both cheaper and plentiful on the web. [1] Source for zero-sum as industry claim: https://www.bloomberg.com/news/articles/2014-03-03/advertisings-century-of-flat-line-growth https://www.bloomberg.com/news/articles/2014-03-03/advertisi... (TL;DR ad spending as % of U.S. GDP has remained relatively constant since the 1920s)

by tabeth 9y ago

immad 9y ago

Ads over time extract profit margins from all other industries. For example at least 50% of all profits from mobile games are spent on acquiring users from ads.

mattbettinson 9y ago
Do you have a source on that? I'm not challenging, I believe it, I just wanna see some proof
- xapata 9y ago
  What's your standard of proof? Do a thought experiment and you'll find a nugget of truth to the idea. Imagine two competitors who are otherwise identical. What would their AdWords buying strategy be?
- Denzel 9y ago
  Maybe this will do it for you: https://www.bloomberg.com/news/articles/2014-03-03/advertisings-century-of-flat-line-growth https://www.bloomberg.com/news/articles/2014-03-03/advertisi.... Ad spend as a % of U.S. GDP remains relatively constant since the 1920s.
coralreef 9y ago
Hmm, not sure if "extracts profit margins" is the right terminology. In mobile games, you could have a lifetime value of a user that is higher than their acquisition cost. This generates a model where you can spend money to make money. In this instance, advertising is fuelling user acquisition which fuels profit.
- icebraining 9y ago
  The question is whether the whole mobile game industry makes more money by advertising, or whether those games that advertise just make more money at the expense of others. Imagine that in a world without ads, game revenue is: Game A: 600, Game B: 600, Game C: 600 But then A spends 300 on ads: Game A: 1200 (-300), Game B: 300, Game C: 300 In this case, game A "spent money to make money", but the overall industry's revenue was the same, and part of the profits now went to ads. And it makes sense: advertising doesn't give consumers more money to spend, so the size of the pie is fixed, all they can do it redistribute it, extracting a slice in the process.
  - arjie 9y ago
    You're assuming perfect market saturation: every consumer has a max spending budget for this good that they're constantly up against and it's just how they distribute it that matters. This seems unlikely to me based on personal experience (if there's no game I like I play no games) but if you have better data than I do then I suppose you're right. For instance, my younger brother is a fan of the Darksiders game series. I saw an advertisement for the new instance of the game. I told him about it. When it reaches a price he wants he'll buy it. But until it does, he's not going to sit around buying other games just to fill up the budget.
    - icebraining 9y ago
      Maybe not other games, but surely he spends the money somewhere. Hence the claim that ads extract profit margins from all other industries.
      - arjie 9y ago
        Do you, really? For most of the people I know, our entertainment budget is fairly flexible. If I'd spend £100 on something and if I wanted it, I'm probably not going to spend £100 on my second choice thing. In fact, I may not spend anything at all and just choose to spend my time on things I've already spent money on like going out to skate or something. Mostly the cash budget is substantially higher than the time budget so people aren't going to buy a thing they don't like just to fill the time. If ads help with allocation closer to people's real preferences, they're a good thing.

BurningFrog 9y ago

Ads definitely create value. You can think of them as improved communication that connects people who are useful to each other.

nebabyte 9y ago
"improved" lol. Ads are an incredibly shitty solution to the as-yet-unsolved problem of discovery.
CuriouslyC 9y ago
Effective advertising isn't information, it's manipulation. Ads "work" by creating a sense of lack that didn't exist previously, or by co-opting your decision making process with gratuitous associations. On top of that, advertising is effectively forced on people. Given that many people actively try to avoid advertising, it seems clear that this is a negative point. If advertising was objective and unbiased, and it was only presented to people actively seeking information about products, it would be a net benefit to society. As it stands, I believe it is a net detriment.

asquabventured 9y ago

The end goal is selling ads and eyeballs are king. The money has moved where the eyeballs are.

Denzel 9y ago

You're correct, the ad industry is zero-sum. The end goal is as simple as it looks: support a new medium. First it was newspapers and magazines and mail, then the radio, next television, and finally we've landed on the web. And in the future there will probably be another new medium that ad dollars shift to. The strategy is simple -- rip market share away from the competitors. And it's working. Why? Because you can more aggressively target intent, track results easier, and garner more impressions since the inventory is both cheaper and plentiful on the web. [1] Source for zero-sum as industry claim: https://www.bloomberg.com/news/articles/2014-03-03/advertisings-century-of-flat-line-growth https://www.bloomberg.com/news/articles/2014-03-03/advertisi... (TL;DR ad spending as % of U.S. GDP has remained relatively constant since the 1920s)