7 ms·

I am ultimately skeptical of companies that get all of their revenue from advertising and who fail to make money from sales of products. The value of online adv

I am ultimately skeptical of companies that get all of their revenue from advertising and who fail to make money from sales of products. The value of online advertising is massively inflated. Of the tech giants, Apple, Amazon, and Microsoft seem to be in the best shape at the moment. They make their money from selling real products and services to real end users. Amazon is strong but not unbeatable. Walmart in particular, as well as a hypothetical alliance/merger of supermarket chains, are well positioned to break Amazon's dominance of e-commerce. But they will need the ambition and ruthlessness that has served Bezos so well. Few large American corporations still have the vigor and virility of Bezos's Amazon. Microsoft (full disclosure: my former employer) too is strong but not unbeatable. All of their products are facing tough competition from Apple (in OS and hardware sales), Google (in online services), and multiple others (in business software). Microsoft's wins are hard fought and fair, and the competition never lags too much.

soared 9y ago
So you're skeptical of every TV station and radio station too?
- marcoperaza 9y ago
  Yes! I am. They are getting ravaged by the likes of Netflix and HBO.
  - soared 9y ago
    Good point actually.
izacus 9y ago
The problem with that is that those companies can use the ad revenue to dump prices in other field and essentially drive any possible competition out of the market. This can cause a dangerous snowball where a few huge corporations control several markets and competing is impossible because they don't need to earn profit (or earn anything at all) on those secondary markets. Add vendor lockin and you just created a corporate monopoly which is terrible for consumers.
- scarface74 9y ago
  And what will happen to these companies as more people start blocking ads? Apple introduced an ad blocking framework into iOS a year or two ago and this year they are going even further with blocking tracking cookies and letting users default to reading view. So sure the "unwashed masses" will see ads but ad buyers are going to start losing their most affluent audience - the people who are willing to pay not to see ads whether it be buying an iPhone or subscribing to ad free services.
  - ocdtrekkie 9y ago
    Well, you start making your own ad blocker to block their ad blockers. And then you charge people money to see content if they're using third party ad blockers.
jhspaybar 9y ago
As a business owner whose entire revenue comes from adwords leads at this point, I can tell you it isn't a massively inflated cost. Sure, it's 90% of my expenses and half of what I even make, but I pay this because I still make money. This may not apply to all types of ads, but I'm happy paying what I do, and I can't imagine anyone else would be paying if they weren't making money.
usaphp 9y ago
But online advertisement is what drives sales of the companies which produce products. You won't sell your product if you don't advertise them. Especially for new businesses that sell products it's almost impossible to get noticed unless you advertise
- quadrangle 9y ago
  Naw, we have an attention economy here. This is a zero-sum situation. Newcomers have to compete on the same terms specifically because all the advertising noise from others drowns them out unless they advertise too. Google lists plain facts like the existence of a business without any advertising even. If all the restaurants in a town decided in solidarity to never advertise on Google, people could still look up the restaurant directory and learn about the options. All the restaurants would save money. But when some advertise at Google and got prominence, they capture more of the market, which forces others to do more advertising in order to not lose market share. And a restaurant having their own website is informational, but that's not what we mean by online advertising. We mean when third parties pay to have their ad promoted to people who aren't directly connecting with their business. If all third-party advertising went away, it would be such a shock to the internet economy that it's hard to describe. But ignoring that aspect, we would see net GAINS in new businesses being able to have people notice their products or in customers being able to find the products and resources they want.
  - usaphp 9y ago
    > people could still look up the restaurant directory and learn about the options. Then you will have premium listings in the directory. Businesses will always try to increase their revenue and advertising is and will be a tempting option for them.
    - quadrangle 9y ago
      Yeah, but maybe you missed my point. In principle, like a union / cartel, a whole sector of businesses in a market could decide together to never advertise, and the reduced overhead for everyone would mean more profit. In practice, it just takes a few deviators / scabs etc. to undermine this for everyone. Reality is more complex. Organizing in solidarity is hard, deviation is easy… the whole non-cooperative games theories etc. Markets aren't all zero-sum. But a bunch of restaurants in a town could all just promote the idea of eating out and promote their directory, and if no premium access or other advertising happens, then it will be best for everyone. The core point is to reject the simplistic argument that ads are all just information and somehow fine and productive. Maybe you just meant that, in practice, businesses need to advertise. But if we get rid of a whole form of advertising, it can just help businesses rather than harm them. Each additional means to advertise creates yet more burden in a zero-sum race-to-the-bottom fashion.
nvivo 9y ago
Google earns a lot from advertisement, but they're not just showing ads, there is a difference. You're actually paying them to find the right customer to show the ad. And that probably will always be valuable. Much different from a game that exists for the sole purpose of showing ads from google between games.
nvivo 9y ago
Google earns a lot from advertisement, but they're not just showing ads, there is a difference. You're actually paying them to find the right customer to show the ad. And that is probably always be valuable. Much different from a game that exists for the sole purpose of showing ads from google between games.
adtac 9y ago
I disagree. Advertising has been around since the 1800s and I don't really think it'll be going away anytime soon. And besides, Google is diversifying its portfolio these days anyway (GCP, Google Home, Waymo, and tons of moonshots).
- arbuge 9y ago
  Actually advertising has been around alot longer in one form or another. The need has always existed to somehow inform consumers of the availability of products and services: https://en.wikipedia.org/wiki/History_of_advertising#Pre-modern_history https://en.wikipedia.org/wiki/History_of_advertising#Pre-mod...
- scarface74 9y ago
  Correction they are trying to diversify but they are still making 90% of their profit from ads.
- ThrowawayR2 9y ago
  Actually, Google's diversification efforts haven't amounted to much. There was an interesting article recently that compares the revenue streams for the top 5 tech companies: http://www.visualcapitalist.com/chart-5-tech-giants-make-billions/ http://www.visualcapitalist.com/chart-5-tech-giants-make-bil... Interestingly, Microsoft has the most diversity in that regard.
supremesaboteur 9y ago
> Microsoft's wins are hard fought and fair Was giving Internet Explorer away for free along with Windows and bankrupting Netscape fair ?
- mciancia 9y ago
  Yes.
  - chinathrow 9y ago
    Why? Also, that's not the view of the court within the EU antitrust case against MS.
- kauffj 9y ago
  Yes.
- scarface74 9y ago
  I think you have rose colored glasses on about Netscape around the time that IE was given away for free. I remember an article that came out in the late 90s comparing how badly NS crashed on every platform that it ran on. Why is it anti competitive for MS to give away IE for free but not anticompetitive for Google to give away Chrome and Android for free or Apple to give away IOS/MacOS for "free". Every tech company "commoditizes their complements". IBM supports free operative systems to sell hardware and services, Apple gives away IOS updates to sell hardware, Google gives everything away for free to sell ads, etc. Is it also wrong for open source software to be free?
- EduardoBautista 9y ago
  For consumers this later lead to other great free browsers.
jacquesm 9y ago
> Microsoft's wins are hard fought and fair No, they were unfairly fought. Don't let the fact that it is your former employer cloud your vision. Not many companies have such a sordid history of unfair competition as Microsoft does.
- pembrook 9y ago
  If the Justice department hadn't bungled the antitrust case over the wrong target (focusing on IE instead of their OEM rebate strategy used to corner the market) Microsoft might not have existed today in the same form.
- ThrowawayR2 9y ago
  I'm sorry but I laughed. Amazon and Google are doing things today as we speak that are as sordid as anything Microsoft has done. The warehouse conditions and pressure cooker culture at Amazon have been repeatedly reported to be appalling and Google's planned Chrome ad blocker and compensation scheme is outright abuse of their dominance in search and ads.
  - quadrangle 9y ago
    But Amazon and Google are power-abusive sordid companies that make GREAT products. In the past, it was easier to recognize Microsoft's bullshit because their power-abuse was combined with shitty products. I think it was Eben Moglen I heard point out that the places in which software freedom has won over Microsoft turned out to be easier than might have been suspected 20 years ago because it was easy enough for free software to outdo Microsoft garbage. Now, with Google, Amazon, and Apple the power issues remain but the products they make are so much better, it's much harder to compete. It was easy for Firefox to beat IE, not so easy to beat Chrome. And lots of people who were pissed off about Microsoft's power abuses give Google a pass because it's easier to go explore Google Earth and ignore the issues compared with just frustration about Microsoft's shitty software. Unfortunately, Microsoft is just as into abusing their power but has learned to be a bit less shitty in their product quality…
  - dredmorbius 9y ago

soared 9y ago

So you're skeptical of every TV station and radio station too?

marcoperaza 9y ago
Yes! I am. They are getting ravaged by the likes of Netflix and HBO.
- soared 9y ago
  Good point actually.

izacus 9y ago

The problem with that is that those companies can use the ad revenue to dump prices in other field and essentially drive any possible competition out of the market. This can cause a dangerous snowball where a few huge corporations control several markets and competing is impossible because they don't need to earn profit (or earn anything at all) on those secondary markets. Add vendor lockin and you just created a corporate monopoly which is terrible for consumers.

scarface74 9y ago
And what will happen to these companies as more people start blocking ads? Apple introduced an ad blocking framework into iOS a year or two ago and this year they are going even further with blocking tracking cookies and letting users default to reading view. So sure the "unwashed masses" will see ads but ad buyers are going to start losing their most affluent audience - the people who are willing to pay not to see ads whether it be buying an iPhone or subscribing to ad free services.
- ocdtrekkie 9y ago
  Well, you start making your own ad blocker to block their ad blockers. And then you charge people money to see content if they're using third party ad blockers.

jhspaybar 9y ago

As a business owner whose entire revenue comes from adwords leads at this point, I can tell you it isn't a massively inflated cost. Sure, it's 90% of my expenses and half of what I even make, but I pay this because I still make money. This may not apply to all types of ads, but I'm happy paying what I do, and I can't imagine anyone else would be paying if they weren't making money.

usaphp 9y ago

But online advertisement is what drives sales of the companies which produce products. You won't sell your product if you don't advertise them. Especially for new businesses that sell products it's almost impossible to get noticed unless you advertise

quadrangle 9y ago
Naw, we have an attention economy here. This is a zero-sum situation. Newcomers have to compete on the same terms specifically because all the advertising noise from others drowns them out unless they advertise too. Google lists plain facts like the existence of a business without any advertising even. If all the restaurants in a town decided in solidarity to never advertise on Google, people could still look up the restaurant directory and learn about the options. All the restaurants would save money. But when some advertise at Google and got prominence, they capture more of the market, which forces others to do more advertising in order to not lose market share. And a restaurant having their own website is informational, but that's not what we mean by online advertising. We mean when third parties pay to have their ad promoted to people who aren't directly connecting with their business. If all third-party advertising went away, it would be such a shock to the internet economy that it's hard to describe. But ignoring that aspect, we would see net GAINS in new businesses being able to have people notice their products or in customers being able to find the products and resources they want.
- usaphp 9y ago
  > people could still look up the restaurant directory and learn about the options. Then you will have premium listings in the directory. Businesses will always try to increase their revenue and advertising is and will be a tempting option for them.
  - quadrangle 9y ago
    Yeah, but maybe you missed my point. In principle, like a union / cartel, a whole sector of businesses in a market could decide together to never advertise, and the reduced overhead for everyone would mean more profit. In practice, it just takes a few deviators / scabs etc. to undermine this for everyone. Reality is more complex. Organizing in solidarity is hard, deviation is easy… the whole non-cooperative games theories etc. Markets aren't all zero-sum. But a bunch of restaurants in a town could all just promote the idea of eating out and promote their directory, and if no premium access or other advertising happens, then it will be best for everyone. The core point is to reject the simplistic argument that ads are all just information and somehow fine and productive. Maybe you just meant that, in practice, businesses need to advertise. But if we get rid of a whole form of advertising, it can just help businesses rather than harm them. Each additional means to advertise creates yet more burden in a zero-sum race-to-the-bottom fashion.

nvivo 9y ago

Google earns a lot from advertisement, but they're not just showing ads, there is a difference. You're actually paying them to find the right customer to show the ad. And that probably will always be valuable. Much different from a game that exists for the sole purpose of showing ads from google between games.

nvivo 9y ago

Google earns a lot from advertisement, but they're not just showing ads, there is a difference. You're actually paying them to find the right customer to show the ad. And that is probably always be valuable. Much different from a game that exists for the sole purpose of showing ads from google between games.

adtac 9y ago

I disagree. Advertising has been around since the 1800s and I don't really think it'll be going away anytime soon. And besides, Google is diversifying its portfolio these days anyway (GCP, Google Home, Waymo, and tons of moonshots).

arbuge 9y ago
Actually advertising has been around alot longer in one form or another. The need has always existed to somehow inform consumers of the availability of products and services: https://en.wikipedia.org/wiki/History_of_advertising#Pre-modern_history https://en.wikipedia.org/wiki/History_of_advertising#Pre-mod...
scarface74 9y ago
Correction they are trying to diversify but they are still making 90% of their profit from ads.
ThrowawayR2 9y ago
Actually, Google's diversification efforts haven't amounted to much. There was an interesting article recently that compares the revenue streams for the top 5 tech companies: http://www.visualcapitalist.com/chart-5-tech-giants-make-billions/ http://www.visualcapitalist.com/chart-5-tech-giants-make-bil... Interestingly, Microsoft has the most diversity in that regard.

supremesaboteur 9y ago

> Microsoft's wins are hard fought and fair Was giving Internet Explorer away for free along with Windows and bankrupting Netscape fair ?

mciancia 9y ago
Yes.
- chinathrow 9y ago
  Why? Also, that's not the view of the court within the EU antitrust case against MS.
kauffj 9y ago
Yes.
scarface74 9y ago
I think you have rose colored glasses on about Netscape around the time that IE was given away for free. I remember an article that came out in the late 90s comparing how badly NS crashed on every platform that it ran on. Why is it anti competitive for MS to give away IE for free but not anticompetitive for Google to give away Chrome and Android for free or Apple to give away IOS/MacOS for "free". Every tech company "commoditizes their complements". IBM supports free operative systems to sell hardware and services, Apple gives away IOS updates to sell hardware, Google gives everything away for free to sell ads, etc. Is it also wrong for open source software to be free?
EduardoBautista 9y ago
For consumers this later lead to other great free browsers.

jacquesm 9y ago

> Microsoft's wins are hard fought and fair No, they were unfairly fought. Don't let the fact that it is your former employer cloud your vision. Not many companies have such a sordid history of unfair competition as Microsoft does.

pembrook 9y ago
If the Justice department hadn't bungled the antitrust case over the wrong target (focusing on IE instead of their OEM rebate strategy used to corner the market) Microsoft might not have existed today in the same form.
ThrowawayR2 9y ago
I'm sorry but I laughed. Amazon and Google are doing things today as we speak that are as sordid as anything Microsoft has done. The warehouse conditions and pressure cooker culture at Amazon have been repeatedly reported to be appalling and Google's planned Chrome ad blocker and compensation scheme is outright abuse of their dominance in search and ads.
- quadrangle 9y ago
  But Amazon and Google are power-abusive sordid companies that make GREAT products. In the past, it was easier to recognize Microsoft's bullshit because their power-abuse was combined with shitty products. I think it was Eben Moglen I heard point out that the places in which software freedom has won over Microsoft turned out to be easier than might have been suspected 20 years ago because it was easy enough for free software to outdo Microsoft garbage. Now, with Google, Amazon, and Apple the power issues remain but the products they make are so much better, it's much harder to compete. It was easy for Firefox to beat IE, not so easy to beat Chrome. And lots of people who were pissed off about Microsoft's power abuses give Google a pass because it's easier to go explore Google Earth and ignore the issues compared with just frustration about Microsoft's shitty software. Unfortunately, Microsoft is just as into abusing their power but has learned to be a bit less shitty in their product quality…
- dredmorbius 9y ago