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> Profit doesnt matter anymore. Until it does. Also, Google etc clearly are profitable. Insanely profitable. The question is... how? I think people are right

> Profit doesnt matter anymore. Until it does. Also, Google etc clearly are profitable. Insanely profitable. The question is... how? I think people are right to question whether the majority of the employees are engaged in work which ensures this profitability. But that's not the same as saying there's no profit. It's all built on an edifice of advertising, which feels like a bit of a sandcastle to me. But I am also of the .com generation that saw the whole beach wash out into the ocean once already, and never understood how the advertising thing actually ended up yielding profits, and was initially quite pessimistic about the Google IPO (though was happy to take money from them by working there for a decade). I've seen the CPMs and the CPCs from the inside. I don't get it. I worked on ad servers and in realtime ad bidding. But I still don't understand why ads make money.

gosub100 3y ago
> But I still don't understand why ads make money. total guess here, but instead of thinking of an ad as something that actually converts someone into a paying customer, maybe it's more about buying "mental real estate"? If nobody knows your brand, you have almost no sales. If you're at least in the neighborhood, then by pigeonhole principle, at least some customers will stop at your property. So maybe ads are a sort of dilemma that (with very few exceptions), your business must burn money on advertising just to stay in business?
- cmrdporcupine 3y ago
  Absolutely, I get this impressions-as-marketing thing. But this also seems remarkably vulnerable to recession economics. Back when I worked in ads, the line was always that digital ads budget were still a fraction of what was being spent in traditional media, and so there was huge room to grow. I'm kinda guessing this is no longer the case.
rwmj 3y ago
I worked on the other end of this as a buyer of Google Ads for some large travel companies in the UK. For all the craziness and disfunction that I saw at those companies[1], fundamentally the adverts did end up selling holidays to customers, and that was why they spent the money with Google. [1] https://news.ycombinator.com/item?id=21046731 https://news.ycombinator.com/item?id=21046731

gosub100 3y ago

> But I still don't understand why ads make money. total guess here, but instead of thinking of an ad as something that actually converts someone into a paying customer, maybe it's more about buying "mental real estate"? If nobody knows your brand, you have almost no sales. If you're at least in the neighborhood, then by pigeonhole principle, at least some customers will stop at your property. So maybe ads are a sort of dilemma that (with very few exceptions), your business must burn money on advertising just to stay in business?

cmrdporcupine 3y ago
Absolutely, I get this impressions-as-marketing thing. But this also seems remarkably vulnerable to recession economics. Back when I worked in ads, the line was always that digital ads budget were still a fraction of what was being spent in traditional media, and so there was huge room to grow. I'm kinda guessing this is no longer the case.

rwmj 3y ago

I worked on the other end of this as a buyer of Google Ads for some large travel companies in the UK. For all the craziness and disfunction that I saw at those companies[1], fundamentally the adverts did end up selling holidays to customers, and that was why they spent the money with Google. [1] https://news.ycombinator.com/item?id=21046731 https://news.ycombinator.com/item?id=21046731