7 ms·

There is something to be said about the state of advertising. Increasingly it seems you must go to the almighty Google or Meta in order to launch any business.

• soared 9mo ago
  This is kind of broken logic. You’re not required to advertise. If you want to scale your business into millions in revenue, then you’ll likely need to advertise. The best ROI is generally google/meta, but you have countless other options. You can buy ads directly from most websites, it just doesn’t scale.
  • phyzix5761 9mo ago
    The best ROI is google/meta if you're an expert and have unlimited time to dedicate to making and running ad campaigns. For the rest of us there's much better tools that give us better ROI than if we did it on our own.
  • bell-cot 9mo ago
    > You're not required to advertise. https://en.wikipedia.org/wiki/Arms_race https://en.wikipedia.org/wiki/Arms_race If you are considering human society as a whole, it is a disastrously poor use of resources. But if you are an arms merchant (or dominant advertising platform), it is fabulously profitable.
    • gretch 9mo ago
      > it is a disastrously poor use of resources For it to be a poor use of resources, you have to have some goal you are optimizing against. And I think you'll come to find that the assumed goal in your head is not one that's widely shared across what people in society actually want. Okay, maybe the digital ad is a waste of resources. But is it any more of a waste than the gender reveal confetti that it was advertising? How about even the idea of a gender reveal party. What about an enamel pokemon fridge magnet? After a very low bar (for 2026), human essentials are taken care of and people mostly want luxury/leisure consumer goods for entertainment.
• saurik 9mo ago
  Just to verify--as I truly do have a contempt for big tech oligopoly that extract rent from everyone to do anything at all, but am just unsure this specific problem is a ramification of such--are you sure you would not have had a large advertising budget pre-Google, or even pre-Internet? You used to pay to pay for limited space in newspapers and limited time on TV/radio stations, which also had high theoretical per-unit margins, or for a massive pile of physical mailers and door hangers, along with the cost of the delivery. To the extent to which our current situation costs more, I'd think it might merely be because of increased worldwide competition: it used to be that the people trying to advertise to any specific random community were also likely local, and probably had a legit attempt at a business model... only, now, the rise of online companies funded by speculative venture capital means that an attempt to advertise a restaurant to people who live in a 10 mile radius must compete against a company that raised $400m to sell an online engagement platform that cares not one iota who uses it as long as the conversion cost is cheap, bidding up ads everywhere. (One place that does seem to me to be uniquely the fault of these modern tech companies, though, is that if a newspaper published a scam ad, whether or not they had legal culpability, I think they and their surrounding community did at least strongly feel that they had some level of moral culpability. In the current tech environment, people seem to want to believe Meta/Google should be allowed to indiscriminately publish ads from bad actors, so you now must also compete to bid for limited attention with obvious-to-most-but-not-all scams and grifts that make money out of nothing but bullshit and are thereby willing to again bid up prices anywhere and everywhere.)
• gessha 9mo ago
  “Your margin will soon be my margin.” The solution was/is and most likely will be antitrust but which administration will shatter the US tech market we are yet to see.
  • dexterdog 9mo ago
    Well, both are 100 pct in the pocket so the only possible answer is a third entity which is highly unlikely.
    • smt88 9mo ago
      Biden appointed Lina Khan. "Both parties are the same" is lazy and unhelpful.
      • somenameforme 9mo ago
        It's wiser to judge the parties by actions rather than rhetoric. From both parties there has been complete absence of meaningful action on the issue, even though both have regularly cycled through complete control of government with majorities in the house and senate while also holding the presidency.
        • smt88 9mo ago
          Both parties have sued Alphabet and won a major case, although the outcome isn't ideal. Meta and Apple have also been sued by both parties for monopolistic behavior.
          • somenameforme 9mo ago
            The Bell system was broken up primarily for being the largest telephony operator while also being the largest seller of telephones. Microsoft, prior to PRISM and modern weirdness, initially lost an antitrust case over bundling Internet Explorer with Windows that could have led to their breakup. Modern stuff has gone so absurdly far beyond these, with anticompetitive behavior essentially being the core of their entire businesses, that you'd think we're living under a completely new legal system. We are not, take Alphabet or Meta back to AT&T's era, and they'd be broken up on summary judgement.
• tshaddox 9mo ago
  > I don't know what the solution is Just spitballing, but how about a total ban on behavioral targeting?
  • analog31 9mo ago
    I'd go further, with a ban on possession of the data, with a provision for statutory damages.
    • Teever 9mo ago
      We could just start to enforce the laws as they're written. If I was to follow a stranger as closely as an entitty like Facebook or Google does and compiled a dossier on that stranger in many countries that would be considered stalking and would be illegal. Incorporating and doing the same thing to society en masse doesn't somehow make it legal despite it somehow makes people disinclined to prosecute.
      • analog31 9mo ago
        I think people are disinclined to prosecute because the odds are stacked against them. I'm thinking of an analogy, and I've mentioned this before in other threads. The concept of statutory damages, as I'm thinking of it, is that a certain level of damages are automatically awarded. For instance this is used for figuring out damages when songs are copied illegally. It eliminates the need to construct a unique legal theory and case for each and every instance. In this case it benefits the record companies, which is of course controversial, but something like it could also benefit consumers. If a company is found to possess your data, they automatically pay you X dollars, enough to make it a deterrent. You sign up with a law form that specializes in these cases, and they get a share of the damages.
    • mwcz 9mo ago
      An environment like that is where SOLID, or something like it, could thrive.
    • badcryptobitch 9mo ago
• cyanydeez 9mo ago
  Rent seeking is all Capitalism is about. They call it a moat.
  • sooheon 9mo ago
    This is misuse of language. Rent seeking is anti-competitive by definition. The current system, as far as it encourages and rewards rent seeking, is anti-capitalist.
    • malfist 9mo ago
      Anticompetitive behavior is completely within lines for capitalism. Survival of the fittest and efficient marketplace and all that. Besides, what's the other option, rent seeking is socialism? A barter system?
      • sooheon 9mo ago
        > Survival of the fittest and efficient marketplace Rent seeking is an Econ 101 example of market inefficiency. > what's the other option, rent seeking is socialism? Rent seeking is rent seeking. It is a form of corruption, via regulatory capture. It is a way in which any political system can fail, not limited to an ideology like "socialism" or "capitalism".
    • achierius 9mo ago
      If monopolies are "non capitalistic", then why has every capitalist economy in history had such a tendency towards creating large monopolies? The same cab certainly not be said any those economies producing, say, worker control of the means of production.
      • parineum 9mo ago
        Every economy tends towards monopoly because people like power and will corrupt and exploit any system to gain abd hold it. That's a human problem.
• nfw2 9mo ago
  In order to sell anything, people need to know about it. Google and Meta provide a way to make this possible. If they didn't exist, you wouldn't somehow have a more affordable way to get people to know about your product. However frustrating the current situation is, it is still more accessible than needing access to the airwaves or print media to try to sell anything new.
  • beeflet 9mo ago
    If google and meta didn't exist, it is possible that the advertising market could be more competitive, so the amount companies would need to spend would be lower.
  • Y_Y 9mo ago
    There are lots of ways to find out about products. We don't need Google or Meta to do look at a review site or ask a friend or search a directory or to solicit offers. Adverising isn't there to push ideas into people who didn't need to know about it. Many industries would be better off without advertising (see e.g. cigarettes) because it ends up in an arms race.
  • bearjaws 9mo ago
    That's generally my thought as well, I am not implying you don't need to advertise. I just believe the industry has more or less reverted to an even worse version of what we had before (TV & Radio ads). At least before, there was ~100 networks you could sell to, now there's basically 10 if you include major networks. Of course you don't actually launch new products with TV ads, so it is more or less 2 platforms.
    • anal_reactor 9mo ago
      The problem is that most businesses used to be local. This naturally limited competition and gave your business a chance, even if it sucked. Nowadays the competition is global.
      • warkdarrior 9mo ago
• notarobot123 9mo ago
  Doesn't this point more to a saturated market and the need to manufacture demand to keep growing?
• littlestymaar 9mo ago
  Advertising is a tax that goes to an oligopolistic cartel.
  • parineum 9mo ago
    I've never gotten $2 for $1 of tax I paid. At best I'm getting $1 of services back, usually much less.
    • littlestymaar 9mo ago
      What “service” do you think you get from the ads you pay for?
      • blovescoffee 9mo ago
        customer acquisition
    • Marsymars 9mo ago
      Money is fungible, but there are various government expenditures that generate positive returns, either in direct revenue (e.g. tax collection enforcement) or knock-off economic benefits (e.g. libraries) some proportion of your taxes go to these services where you are effectively getting more back than what you’ve paid for these services. (Economically, governments should spend more on such services until the marginal returns are no longer positive, but tend not to for political reasons.)
    • rafram 9mo ago
      Have you actually accounted for all the services you’re receiving from the government? Road construction and maintenance, schools, availability of clean water, safe aviation, trustworthy financial markets, public universities, funding for research that improves your health and happiness, and so on? I don’t think you can even really put a price on most of those, because they simply could not exist without a centralized system funded by taxes.
    • deaux 9mo ago
      You have no idea how much you've gotten for each $1 of tax you paid, as you've never spent enough time trying to properly quantify it, to the extent that's even possible.
• doctorpangloss 9mo ago
  Meta, TikTok and social media create the cultural celebration of thinness that makes it possible for you to sell 25mg semaglutide tablets to everyone. In my opinion, they deserve more than 50% of your margin: you didn’t invent the drug, the FDA is basically letting you break the exclusivity policy for no particularly good reason, and you didn’t create the audience.
• crawshaw 9mo ago
  That is very good framing for the problem with advertising today. It also says that if you can find an audience to build a new ad platform, the incumbents have created enormous margin for the new platform.
• Aurornis 9mo ago
  > The new business line will cost about $2M in software dev, and $3M for the new facility. The advertising budget? $40,000,000 (annual). The reason the advertising budget is such a high number and a recurring charge is that effective advertising returns an ROI on each dollar spent. If the software budget was increased 10X to $20 million, would the company get 10X as many customers? No. What about the facility? If you 10X the facility budget to $30 million would you get 10X as many customers? No. However, advertising is a customer acquisition activity. Every dollar you spend on advertising provides additional customers. This is saturable, but the ceiling is very high. Much higher than spending on software or facilities. The reason your ad budget isn’t so high isn’t because Google and Meta invented the discoverability and distribution problems or basic economics. It’s because it has been determined that acquiring new customers via advertising has a high ROI and therefore it’s a smart move to pour as much money as possible into customer acquisition. If every $1 you spend on advertising produces $2 in customer LTV then your company should be maximizing ad spend until evidence of saturation starts appearing. This commonly frustrates engineers who think it’s a wasted investment. The question is: Compared to what? If you could have the same number of customers and same amount of revenue without advertising then you should do that! However, you can’t. This isn’t a licensing fee that’s being paid. It’s putting money into a machine that returns more dollars back than you put into it.
  • hansvm 9mo ago
    That misses the point though. Google and Meta have designed systems which capture nearly the entire surplus. In a non-monopolistic environment you'd expect somebody to be willing to step in at a bit less than Google's rates and offer the same outcomes.
    • Aurornis 9mo ago
      The parent comment did a sneaky thing and gave the advertising budget then pivoted into rants about Google and Meta. They never actually said “All of this money goes to Google and Meta”. It was just expected that on HN everyone would assume as much because that’s what everyone is familiar with. In the pharmaceutical industry, I can guarantee their advertising funnel is much wider than two social media platforms. Think about all the places you see pharmaceutical ads: TV, billboards, even ads on buses, that sketchy doctor’s office full of company swag. That $40 million is not going all to Google and Meta even if the GP comment tried to imply it was.
• csense 9mo ago
  Advertising spend being too high is a symptom of a supply glut. Too many products in the marketplace, not enough consumers to buy them. In a different world where there are higher wages, more people would have more spending power. Then companies wouldn't have to spend as many dollars on advertising, which they could split between higher wages, higher margins and lower prices. Alas, the short-term single-firm directional incentive for company decision makers in that world leads to marginal prioritization of higher margins. The loss of wages leads to loss of consumer spending power but it's spread across the economy. But every firm has the same incentive so they all do the same thing, and the good thing gets ruined. This line of thinking leads to a Georgist-ish conclusion: The class conflict shouldn't be between workers and employers. They should be allies; the real cause of nobody being able to afford anything is rent extractors. (Writing in the 1800's, George [1] was most concerned about land rents; but the advertising monopoly of Google / Meta may be another form of extractive rent with similar characteristics.) Maybe Henry Ford was on to something when he shocked the world by paying his employees enough to afford the product they were making (more than doubling many workers' wages)... [1] https://www.astralcodexten.com/p/your-book-review-progress-and-poverty https://www.astralcodexten.com/p/your-book-review-progress-a...
  • metabagel 9mo ago
    Stronger unions would help bring wages up.
    • 9rx 9mo ago
      That is an interesting chicken and egg problem. A strong union requires members who can demonstrate that prolonged work stoppages are a credible threat. If the employer thinks everyone will be starving and begging to come back after a week, the union has no power. In other words, in order for a union to become strong, wages already need to be up to allow the workers to be able amass considerable savings to get them through the months and years when they aren't working. So higher wages have to come first. But to complicate matters, once workers have that, they often start to feel like they don't need a union. The one time when unions did become strong, workers were so desperate for safer working conditions that potentially being thrown out on the street and left to starve was seen as a better option than being crushed by a machine. But the law now ensures that workers are just comfortable enough to prevent an uprising like that again.
• AznHisoka 9mo ago
  “ Increasingly we wonder why America doesn't build more and here is why.” Building another advertising network isnt like building a factory or a bridge. Its not something money can magically make appear. You need to build something that is either very very addicting to use or an universally useful online product like ChatGPT or a new search engine. If it was that easy, capitalists would be building another new advertising network in droves
• mupuff1234 9mo ago
  Is your product offering anything unique to the consumer other than blasting them with more ads than the competition?
• johnnienaked 9mo ago
  The solution is to prevent the privatization and wealth accumulation that flows from control of infrastructural technology platforms. Netscape, google, computer os, machine learning were all public or university research projects until the first movers (andreeson, brin/page, Ellison, gates) stole them, gatekept and IPed them, and then exploited wide user base to accumulate absurd amounts of wealth for just themselves. These people either didn't create anything at all or made very slight variations before deploying them. They were smart in seeing the trends before they happened, but should they really be entitled to 50% of a countries wealth just because they were lucky enough to be first? Especially now that we see how they behave once they get that control? There is no reason at all why the US govt. can't control this better, they just refuse to do so.
• dzonga 9mo ago
  if the gvt worked - they would've done something about that illegal monopoly but you already know that monopoly is costing the country & holding it back in terms of 1. intellectual capacity (all the smart kids going into ads) 2. monetary 3. industrialization as you outlined 4. energy 5. lack of synergies