Interesting theory. I can think of two additional counterarguments: 1) the decline in price of advertising belies the growth in users and the steady increase i

Interesting theory. I can think of two additional counterarguments: 1) the decline in price of advertising belies the growth in users and the steady increase in advertising spend Y/Y (+14% in 2014 according to Mary Meeker's latest report). 2) the paper focuses only on advertising targeted toward the bottom of the purchase funnel. A considerable amount of display ad revenue comes from upper-funnel ads, where the objectives are not behavioral but rather perceptual. That said, I don't know what proportion of total display ad revenue falls into this category.