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?
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?
In this instance, advertising is fuelling user acquisition which fuels profit.
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.
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.
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.
I am not opposed to the idea of advertising, but what we have now is really a form of manipulation rather than information.
> If ads help with allocation closer to people's real preferences, they're a good thing.
I can name a lot of things fulfilling this role, but none of them are ads. When I built a PC, do you honestly think I looked at advertisements for components? Hell no. My primary source were subreddits like /r/BuildAPC that have guides on what to watch out for when shopping for PC components, and price comparison sites, particularly those that have a ton of filters. Those resources are either run by a devoted community, or they earn a commission when directing me to an online shop where I can buy the product of my choosing. But they're not manipulating my choice in the way that ads are designed to do.
Except that's not what ads are about. Ads are about selling stuff. People smoked cigarettes to be sexy, and then got cancer. Maybe they did get some extra sex, but I doubt it.
If ads help with allocation closer to people's real preferences, they're a good thing.
Maybe, but is there any evidence that they actually do?
Since it's not a distinguishing feature of advertisements, I think it's a pointless discussion.
So while advertising doesn't give consumers more money to spend, it can persuade them to spend higher portions of their entertainment budget on games.
The mobile gaming industry was used as an example, but even if they grow their pie by reducing some other industry's, the claim is still true.
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/advertisi... (TL;DR ad spending as % of U.S. GDP has remained relatively constant since the 1920s)
You can think of them as improved communication that connects people who are useful to each other.
Ads are an incredibly shitty solution to the as-yet-unsolved problem of discovery.
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.