As YouTube traffic soars, YouTubers say pay is plummeting
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Short term this is all standard. The long term danger for Google and others is when lots of companies realize they probably didn’t need to make all that spend in the first place. That big “reset” is a new normal that advertising dollar driven tech companies will need to adjust to.
What you're describing may have been the case, in a number of companies, five years ago, but it's just not meaningful now-days. Companies spend marketing dollars because marketing dollars work.
Any other interpretation is ideology-driven wishful thinking. You might not like marketing, but it's silly for the conclusion to be "thus, the entire field is made of people who don't know what they are doing".
I'd be interested in an argument over whether more marketers are competent versus not, but any argument that presupposes uniformity among marketers is just silly.
Anecdotally, I happen to work for a 300 people saas company who just started drastically cutting expenses with the goal of reducing burn rate and delaying the need for another round of financing in this terrible environment: ads were one of the first few things to be dramatically cut (the second one was some super inefficient AWS spending).
The ads budget shrank from 6 figures a year to near 0 overnight, and it’s unlikely to return to its former level any time soon. Also, half of the marketing team was laid off. Having 30 people in marketing for such a small company was definitely way too much (just like engineering, sales, ...), and it anecdotally proves GP’s argument. All consequences of the fact that money was free.
All we have to go on for that is your opinion about how the company was being run, which isn't backed by any sort of data.
A couple executives just plainly admitted how crazy inefficient our spending was, so I just can’t imagine how they could possibly go back to blow nearly a million a year in ads any time soon, or ever, when 90% of our revenues come from traditional enterprise deals that don’t have anything to do with ads, for the most part. They are all just worried that they will have to accept a down round in a year, and are trying to mitigate that.
By the way, this is true for engineering as well, where I work: now that we figured out how to remain productive while cutting 40% of our AWS costs (spot instances, killing idle instances more often, ...), will we ever go back to be inefficient and leaving idle AWS clusters up at night just because “money is not an issue”? Very unlikely. And the marketing department wasn’t being run any more efficiently than engineering, budgets were just fat because money was free for nearly a decade.
I wouldn't extrapolate that experience to large companies that have weathered dozens of downturns. I'm not saying that large companies all have a clue what they are doing vis-a-vis marketing, but there are a few giants who understand their only asset is their brand. Think companies like P&G or Nestle. Largely, the biggests differentiating factor between toothpastes or frozen pizzas is brand awareness and distribution deals. These are the companies that know exactly how much more money they will make if they change the color red to yellow on a box for a product sold in Georgia.
Do you know what the CFO is telling their lieutenants about now? Cut all superfluous spending and reduce monthly expenses. That means your sales people are going to be getting calls from their clients asking for a fee reduction or a contract revision. Very few SaaS companies are critical or defensible.
This is my last week and I’ll be starting next week in a much more solid company with a much better compensation too, wish me luck :-)
And in turn, I think you're overestimating the impact of profit-limited capital dependant companies on the advertising landscape.
I was managing a 6 figure ad budget all by myself at an established but small non-tech company and had full E2E tracking flows for pretty much every £. "Burn" isn't a thing in almost all companies out there. You want to spend a dollar, you need to tell your boss exactly how it'll make you a buck fifty.
Furthermore I'd say most people with deep knowledge of the field (assuming they don't have a vested interest in arguing otherwise) would agree in a heartbeat.
I don't know if this rhetorical device has a name, but basically saying "and other smart people would agree with me unless they had a sneaky reason not to" doesn't seem like supportive evidence of your point.. (... and I suspect most people would agree in a heartbeat.. sorry! ;-))
there certainly are a lot of numbers in adtech and marketing. whether or not those actually relate to causal impact, across the industry, is not definitively answered. very few players (on the supply and demand side) have the scale and ability to properly do incrementality testing.
personally, i think people don't want to know the real results. if the numbers say it's not broken, why risk your job?
mcdonalds is actually one of the savvier players here, they know that it's hard to quantify brand advertising if you only go off in-store purchases, so they spent very heavily to promote their app and develop a consumer-brand relationship there. now, if you see a mcdonalds ad on youtube, they can (try to) match your youtube ad impression to a purchase done through the app / credit card / other PII.
https://support.google.com/google-ads/answer/6394265
Actually Google is preparing it as a product, so I would guess the result was generally positive? FB also has a similar product as well.
the google page you linked also says, "you won't be able to continue using this model if your data drops below 10,000 clicks on Google Search or below 400 conversions for the conversion action within 30 days." depends on what your market/CTA is, but a lot of SMB likely don't hit these thresholds. similarly with FB, my understanding is that you have to go through an account rep to set it up and that the minimum spend is fairly high to qualify.
i think that these measurements are possible to do with a reasonable level of certainty, but they require a particular set of circumstances to pull off.
Maybe for the Fortune 500 / tech startup crowd, but I work for small / medium businesses and there is still a ton of ad dollars being spent with no attribution / tracking.
I will routinely setup clients with tracking tools, which then discourages them as they finally see what their digital ads actually generate in terms of revenue. Many stop their digital campaigns and increase their traditional tv/radio/print budgets or, fall back to running digital campaigns with no tracking.
AKA "Brand Awareness".
Not for things like cars and toothpaste but for things like online services/games, fashion, homeware, etc
Given that you were probably smaller and not commodity priced to move I guess that sort of "honesty" helped move it better if people could closer to try before they buy.
Many of my small business owner clients hear anecdotes where a business was able to use targeting to create a veritable "money machine". The problem is these scnerios are fleetingly rare, complete bullshit or only apply to a specific niche.
The anecdote often glazes over the thousands of wasted dollars spent trying to perfect the model and a hundred other details that factored into the success.
The good thing for most is that digital advertising is no less effective than traditional advertising. Even if there's little to no targeting, or no tracking in place it's not any worse than tv/radio/print.
I can count on one hand the number of clients in my 20 years of web work that have created a model where they dump money in the top, and are able to extract more out the bottom. In all cases it didn't last more than a couple years at most.
For any small business considering hiring an ad agency that claims to have mastered this model ask yourself this: Why aren't they doing it themselves?
I think now the move is to go after territories that the major brands/agencies are afraid of. Tik Tok? I don't know, but I would trust doing DIY and examining the real numbers, I used to sell agency services, I'd say anything to win business. And 30% of the time we actually overdelivered on my absurd promises.
A sudden drop in revenue may adjust the economy of bidding and show a potential bubble. The tiny budgets and one click campaigns (with platforms inventing unique metrics & targeting woo) in social media marketing compared to traditional marketing (huge barrier to entry) feel like penny stocks vs traditional stocks. You can easily mislead individuals and tiny businesses.
Companies do tons of things that don't make financial sense. And metrics can paint 100 pictures, including the picture the advertiser wants to paint. Not to mention it's in the best interest of the marketing department of a company and the advertising liaison within the company to continue spending money in advertising whether it works or not, if they want to have a job...
And a third, and possibly the biggest, is that it may be perfectly rational to pull ads now. There are whole classes of things that people can't really consume right now. All travel. All entertainment. For many, anything they have to leave the house to get, including big-ticket items like cars. And consumer psychology in a recession drives people to minimize discretionary purchasing, stick with familiar brands, and be more skeptical of anything new or unfamiliar.
It's also important to realize that advertising is an arms race. A lot of advertising spending is only required because other people are also spending. E.g., everybody in the world already knows what Coca Cola is; they advertise not to inform, but to maintain dominance. So it's perfectly plausible that a lot of places will cut spending and see nothing change because their competitors cut spending too.
Many big campaigns are just brand awareness, or are poorly implemented with lots of supply-chain and measurement overhead competing for the cheapest impressions. Video content is increasing and leading to an oversupply of inventory. There's competition from connected TV and streaming services. Privacy regulations are affecting targeting and measurement.
A lot of budgets are also just paused in response to consumer demand, with uncertainty around the economy and shifting strategies to conserve cash and move to more efficient ads.
Most incremental lift studies I've seen are valid, looking at CTR and A/B testing as you mentioned. But as soon as you start looking at revenue and brand lift, all studies seem to come to the same conclusion - the higher the spend, the better.
Don't get me started on multi-channel attribution... garbage.
Marketing is still very much spray and pray with diminishing returns. And in most cases, marketers will claim otherwise.
I got tired of drinking the koolaid. Modern marketing is just as fraudulent as ever. Agencies are just getting better at lying.
Any DSP that could advance client goals but wasn't part of the inner circle would be overruled by senior management. Total gaslighting.
Everything goes to AppNexus or AppNexus partners. Because the parent company owns 20% or so of AppNexus. I got downvoted yesterday for this but I'll say it again, the mafia is in the tech, the tech is in the mafia. I have so many stories.
edit: The funniest bit was when I would take thoughtful, younger clients out to dinner who understood the business model. They would laugh and say "don't tell me too much, just hit the artificial KPIs and make me look good for my Christmas bonus.".
Yeah, principal-agent problem. At a previous job there was a case where we sent partial refunds to advertisers because we noticed we hadn't delivered as many impressions as they had paid for. Some of them were upset that by that, and would have preferred that we had just kept the full amount.
I also know of several (3 that I can think of on top of my head) companies who went bankrupt from buying inefficient ads.
It's not silly. Personally, I believe just that. Just because marketers use "conversion rates, A/B tests, attribution, and a lot of other techniques", doesn't mean they actually "calculate the ROI of advertising". They may be - and I believe are - mostly bullshitting themselves. Attribution is a hard problem. Doing an A/B test correctly is a specialized skill that requires some understanding of statistics most people in the industry don't have. And even the tools don't help, as evidenced by the famous case of Optimizely designing their product in a way that made people do A/B tests wrong - and in the exactly wrong way that made them feel Optimizely is helping them[0].
You can't seriously claim that all these small companies are hiring top STEM grads to trace ad spend and verify the work of top STEM grads working in small ad agencies.
--
"Did you ever buy a tooth paste brand that didn't advertise?"
Ideally you answer "no...", while a look of sudden realization comes over your face. Individual results may vary.
On this subject, though, there is more at play than just advertising. First is availability; smaller stores won't have a private label option available at all, so some chink of the market is not open to them.
Second is quality; this is not as much an issue with OTC pharmaceuticals since it's all about the active ingredient, but for products where more than just the active ingredient matters (like flavor or consistency) there is sometimes a quality difference. There definitely is with food.
That said, I frequently buy store brands over name brands. I also buy some "name brands" that I have never seen an advertisement for.
Facebook also spread mostly through word of mouth and only started doing ads when its public image deteriorated.
(Side-note: I'm in Germany, so this is about German ad campaigns. Also I have had adblockers for a long time, so when I say "they run ads", I mostly mean TV, print and billboards.)
Or why doesn't one of the marketed brands stop the advertising? If it doesn't affect sales, it's a useless expense, and any profit maximizing entity would cut it.
To me, the obvious answer is that advertising does work. Without it people don't by your product that much, and you get replaced on the store shelves by brands that produce sales.
Also note that the store brands are being advertised when the store markets itself. They're not unadvertised.
Then again, when I google tom's of maine advertising, I get many hits saying the opposite, like
https://www.youtube.com/channel/UCcfhusG_iJcQyFSBEOyeucA
I didn't check the other brands
I doubt it's financially feasible to advertise on TV for the sales they expect in their niche. I'm not sure if it's the best way to reach people interested in natural toothpaste. I don't know whether consumers would think they stand out for not advertising, but it's possible that some customers prefer a a less known brand for some sort of feeling of exclusivity.
That was in the days when I did watch adverts.
I certainly do see adverts nowadays - when I take the tube at Euston for example. Sometimes I seek adverts out (Christmas). No doubt there’s some product placement too, but I can’t think of any that is toothpaste.
I have used other toothpaste on occasion (hotels etc), but I stick with Colgate as the taste is acceptable and I’ve used it for many many years. Why would I change?
I have certainly switched brands or variants of laundry detergent, toothpaste, deodorant, etc. because I saw an ad that let me know there was something "better" to try out.
The common denominator here is that these are products I don't care that much about and am not going to invest that much time in researching. I don't really want to spend much time thinking about mattresses or toothpaste, and so I'm perfectly willing to rely on advertising as a passive way of getting information about what's available.
On the other hand - I would never buy a smartphone, or a laptop, or a car from an advertisement, because these are things I'm passionate about and I already know the market and what fits my requirements.
I'm genuinely fascinated to know what kind of support (no pun intended) you would expect for this product.
During this time what is the motivation for companies to spend on internet advertising for "non-essential" goods/services.
The longer consumers are given to adapt to a lifestyle of purchasing only "essential" goods/services, spending more time with family, cooking for themselves, staying local, enjoying simpler, less expensive pleasures and leaving a lighter environmental footprint, how susceptible will they be, in the long-term, to internet advertising that aims to motivate them to purchase non-essential goods/services.
Perhaps it is only temporary, but lockdowns are providing a paradigm shift away from internet advertising and toward increased non-commercial use of the internet.
Those who advocate web advertising as necessary in order to support a functioning internet may have to change their arguments in the event that the internet does not become "useless" as advertising spend decreases.
No, eating out is more expensive. Cooking is just as cheap as before.
If you are at-risk, there are huge groups doing mutual aid all across the city on a volunteer basis that are more than happy to do grocery runs for you. I'm in a slack group for Bed Stuy and I am seeing requests come in and get delivered all day long.
The idea that you need to rely on SV companies like Amazon or Instacart to bring you groceries is madness.
The goal of my discussion was to talk to someone who had "been there, done that" to get an idea of the time investment and the expected returns.
If they want to out themselves here they can. Independently they both have pretty robust tracking software to understand views, view time, clicks from views Etc[1]. Both have systems to measure $/views, and both used extensive "channelizing" to get focused on where the views came from and how their viewer found them. They both observed that if they had been "TV shows", as their ratings and viewer audience expanded their network would get more ad revenue per show, but for them they are consistently getting LESS and less revenue. It puts them on a treadmill of having to produce more videos to get more views to keep their revenue up but that also increases their costs.
It resonated pretty strongly with my experience with AdSense and web pages. We can speculate on why that trend is where it is, but it seems pretty clear that one (or maybe both) things are true; Advertisers don't see as much "value" in advertising on Youtube videos, and the revenue growth curve for at least these two content producers does not seem to match either the slope or the magnitude of the change in revenue that Google reports in its earnings.
[1] I got a good idea of how difficult this path could be when you are your own producer, accountant, and data science company.
Content creators are complaining about YouTube being strict but YouTube is strongly incentivized here to cut the supply of content. They want to raise advertising rates and charge advertisers more money! That means raising the bar of production value, etc, because YouTube wants to keep the same kind of viewership numbers. YouTube is now mainstream television.
The channels that will survive here are going to play ball and raise the quality of their content and production values. They're going to be family safe. They're going to provide lots of content and it's going to be shot multi-camera by a staff of people. Smaller creators days on the platform are numbered.
Thing is, the channels that do this best can do this for themselves. They don't need YouTube if they build a dedicated-enough audience.
I've been looking at how to make this process easier for people, using things like Cloudflare Stream, and think there may be some business opportunity here.
This doesn't make sense to me. The advertising rates are a connection between the advertiser and the consumer. If the content scales to infinity, there's still the same number of consumers that advertising dollars compete for regardless of available content.
> The channels that will survive here are going to play ball and raise the quality of their content and production values. They're going to be family safe. They're going to provide lots of content and it's going to be shot multi-camera by a staff of people. Smaller creators days on the platform are numbered.
> Thing is, the channels that do this best can do this for themselves. They don't need YouTube if they build a dedicated-enough audience.
Then that leaves room for the smaller creators.
The advertiser has a set budget and is looking at a supply of content. If there's a fixed supply of avenues to reach their customers, then they have to bid against lots of other advertisers to reach those customers. The rate to advertise goes up. If the supply of avenues to reach customers is near infinite, then the cost to reach those customers is almost nothing because there's no market driving up the cost of advertising. It doesn't make sense to spend more money to reach those customers. Reaching customers is cheap and easy. This is Supply & Demand 101.
In terrestrial advertising, there's only a small number of advertising slots that are valuable because that content is gated by place & time. This is not true online (caveat, read below).
(caveat explanation) Okay, I lied: It actually is really valuable. Joe Rogan's advertising slots are _extremely valuable_ and he uses them to to advertise businesses he has a partial ownership stake in (Onnit), which is brilliant. This is the same shit the Zuffa brothers did with the UFC & Xyience and it put millions upon millions of dollars in their pockets. But that's not advertisers paying for those slots, that's pocket A paying pocket B...and as a regular advertiser you can't buy that slot!
PewDiePie is probably making a small fortune off G Fuel, those chairs, and his phone games. These are the smart content creators today. Everyone relying on YouTube or Twitch partner programs for monetization is just on the dole or will be.
If you're a content creator with a reasonable following and not on a 2-3 year plan for productizing your brand, you're on a path to insolvency.
> Then that leaves room for the smaller creators.
Not on YouTube. And video hosting with a global CDN costs money and requires some know-how.
In other words, creator and content growth outstripped ad spend growth.
And by several orders of magnitude. I'm surprised at how many highly intelligent people out there have failed to grasp these basics.
It's also sort of a winner-take-all market. Established channels for each customer segment will capture all of the revenue. Everyone else fights for scraps.
If you look at art/culture trends through modern history, teens aspire to the accomplishments of the generation before them. The clearest sign of YouTube being "done" was all of the surveys of teenagers aspiring to be Youtubers.
If all 100 of the streamers creating content about diy synthesizers have an audience that also watches this larger channel about vintage amplifiers, I might be better consolidating my spend there...or if I'm a small advertiser with a tiny budget, I might be better off doing just the opposite and spending tiny amounts at the 100 small channels.
The point is that as an advertiser I'm almost fully in control over my own destiny, which is simply not true with television and radio networks.
Advertisers and Content Creators aren't really against each other...they're kind of following separate destinies, but if a Content Creator is entirely reliant on Advertisers for their funding model and the market is heavily skewed in favor of Advertisers like online content and newspapers are now, then Content Creators are going to have a really bad time. And there's a bloodbath just over the horizon.
If you look at Netflix, it's the opposite problem. Content Creators are reaping huge rewards and Advertisers have no power, but that's also financially untenable.
I don't see how Netflix model is financially untenable.
They won't keep paying that bill forever.
Think about that for a second. All of those Netflix subscriptions and it's still a flaming fourteen billion dollar crater.
How are they going to close the gap? Where are the new subscribers? How much will the rate go up?
The answer is neither of those. It's far more likely that the money faucet going to content will change first.
Instagram is where high quality content is migrated by virtue of the greater speciation of branding opportunities.
Google keeps things a bit messy so they can drive ad rates higher.
Sure, we have ad block, but digital advertising that performs performs amazingly. When you hit your segment, the money rolls in.
Google sells ad sales services utilising, in part, data collected on YouTube visitors.
An old saw amongst internet marketers was that "traffic" was the single most metric behind the financial success of any website. That idea only makes sense if the plan is to sell online ads or, in Google's case, provide online ad sales services. In lockdown, arguably the best "business plan" for a website is to sell essential goods/services.
What consumers might be reminded or become aware of during lockdown is that the internet, including the web, still continuses to work without any online ads. Ad buyers might not be buying onlne ads, but consumers are still paying for home internet access. Lo and behold, even when online ads are diminished, creative and generous people still create content and use the internet to share it.
Well, millions with a “b”.
> Perhaps it could pay YouTube content creators.
It...does.
> What consumers might become aware of during lockdown is that the internet, including the web, still continuses to work without any online ads.
It doesn't work without a revenue stream for the online service providers, whether that's ads (regular, “free” YouTube) or membership fees (YouTube Premium).
Most of that traffic is trash, yet companies still pay a lot for it.
A similar situation happened on Google Search, I believe.
Ad spending is an arms race and Google has very deliberately set it up so that the only way to succeed on their near-monopoly platform is to out-spend your competitors who are also trying to do the same to you. But it’s a zero sum game the end state of which is Google captures all of your profits while you scramble to cut costs in a race to the bottom.
The only way to win is not to play.
The only way to win is for everyone to agree as a society that advertising is harmful, and have nobody play. Enforcing that is difficult, but I think it's the right direction.
The real truth of advertising is that it is engineered to exploit flaws in the human psyche to hack a human into acting against their own best interests. To buy a product they don’t need, or to vote for a candidate that will harm them. It is toxic, and those who create it and distribute it are toxic.
It kind of makes sense. There are ads for products you can't buy at stores that are closed, for cars you won't need to commute with, insurance you're already not using, other goods that won't ship for a month, and small gadgets that are totally out of stock; and that's assuming the person viewing the ad isn't avoiding spending due to financial risks.
If ads aren't converting viewers into customers, it doesn't matter if there are 2x or 20x more viewers than there were before, the ad placements are just worth less.
In terms of ad spend reduction, How would this compare to regular media advertising spend (TV etc.) ?
Not when you're paying per impression? The way to think of this is good old supply and demand. There is a lot more supply of ad slots, and a general decrease in demand. Both of these directly mean lower ad rates.
Also I noticed a number of the youtube channels I use to watch because they have useful information and I was learning from them have now reached the end of their knowledge. Thy are now posting fluff to try and get me to keep coming back, but I don't want to waste my time watching a 30 minute video to get 5 minutes of useful information.
One channel I watch use to only post about 1 hour long videos, now they have cut back and often only post a 5-7 minute video so I keep coming back. One the other hand another channel used to and still posts 1-2 hour long video, I don't bother going there anymore. The host is smart, but he takes too long to get to the point of the video, I have other uses of my time.
Anything is possible. It might be another Great Depression that takes years to recover from. Or maybe once this external force (quarantine) is removed, things will mostly bounce back.
So those advertising dollars might have a good ROI or they might not. At a time when revenue is down (even if just temporarily) and some companies are laying off employees, it doesn't make a lot of sense to spend money on something that might or might not be worthwhile.
France has just announced extending the lockdown one full month. UK has just announced they won't end the lockdown in the coming weeks, with no dates formally given (it was expiring today).
I'm saying that "when" isn't a given; instead, it's an "if". Companies (whose cash flow just tried up) don't want to spend on "if".
That will depend on whether people will have that money to spend economy bounces back. I am not optimistic, restaurants or hospitality industry are going to suffer for a long time.
And Youtube ads are sold upon delivery, I don't think they will be retrospective revenue share, which is impossible (the conversion is intractable).
TV as deals are often worked out O(months) in advance. I expect they've seen drops in bookings, but you won't see as agile of a reaction to the pandemic in Television.
That would lead to lower ROI as operating costs are increased to serve those extra users. Sure, with more users they'll serve more ads, but as total spend by advertisers is shrinking those ads will go off at bargain prices, it's simple math.
There is an opportunity now to invest and come out ahead in the long run. Most companies are conserving and cutting back right now, given the uncertainty.
> ...channel traffic, increasing by 15%
> ...one in four media buyers and brands have paused all advertising for the first half of 2020, and a further 46% have adjusted their spending downwards
> Digital ad spending is down by a third, according to the IAB — a slightly less painful drop than the traditional media’s 39% cut
Traffic is up but ad spending is down more than the traffic increase.
You’re right that some smart execs will run into the fire as everyone is fleeing, buying up cheap adverts for a long term investment. There are some signs of this with a few companies seemingly increasing spend to take advantage of the cheap prices. Purely anecdotally I noticed a lot more adverts from Scott’s on lawn care products. Their pitch is basically “hey so the lawn care guy is on lockdown... go to our site and we’ll ship you fertilizer and tell you how to apply it.”
To all the folks saying "4 guys in a truck is low-risk" that's only true if they're the same 4 guys every time and they're not all living with other people... for instance if one lives with a nurse and another with a nursing-home health aide, then, well, not so great, huh.
The execs running into the fire with ad spend to take advantage aren’t any smarter than the rest, just better positioned for the pandemic. I doubt virtually any of them prepared or planned for this scenario.
Though from my experience there’ll be lot of companies out there cutting short cycle high ROAS campaigns, throwing the baby out with the bath water.
Lately I've been seeing a lot of (allegedly) dropshipping advertisements for "home gym" equipment, from "brands"/"stores" with no recognition.
Sure I'll buy this from you. Especially something that's heavy and from an ad teaming with jpeg artifacts and a non-local currency. I'm sure I won't pay an arm and a leg for shipping and I'll have no issues with a brand that has 3 posts on instagram.
That doesn't however stop you from acquiring more customers and increasing absolute profit.
https://www.npr.org/sections/coronavirus-live-updates/2020/0...
Also in France one big insurer started paying people back, with government asking the other companies to do the same.
https://www.lemonde.fr/economie/article/2020/04/02/coronavir...
The other comment in response about loss ratio is correct
States have pretty broad powers and I could see them forcing a disgorgement if they felt so inclined.
Source: I was a state insurance regulator for the Alaska Division of Insurance for a few years
This model seems to be doing a fairly good job keeping auto insurance costs under control. Is this regulatory model also being applied to health insurance ?
If yes, why isn't it controlling healthcare costs ?
If no, why not ?
While I haven't done a deep dive recently, I doubt health insurance administrative expenses and profit are the main driving factor in health insurance costs. Losses (utilization multiplied by price) are the main driving force. You can look up rate reviews at https://ratereview.healthcare.gov/ and probably view the entire filings on the state DOI website, altho these filings are usually not really as accessible as they should be.
There really isn't a limit to profits such as, 'we can only make $500 off of this policy anything over that we would have to refund'
You couldn't have said it better
Local big-city paper ran several days with virtually no ads. Sport and Entertainment sections still carry none, though a few are appearing in the news and. business pages. And of course, obituaries -- or as they're called in the biz, "former subscriber appreciations".
Even the Sunday edition inserts were reduced to a single druggist's circular.
Even with increased eyeballs, ad buys are likely down and both business and people are avoiding all possible expenditure.
I live a block away from a shopping complex; the "anchor store" is a chain grocery but there are other businesses ranging from restaurants, drycleaners, a smoke shop, an alcohol store, and so forth.
There is a local movie theater in this complex. It is obviously shuttered due to COVID19; no audience means no movies means no popcorn, &c. So their marquee "should" be blank or say "Closed". Instead, they are using their road-side marquee to advertise who in the complex is opened for take-out.
I don't know if this is out of "solidarity" or if they're getting a trickle of money for an otherwise unused resource, but I'm fine about it either way.
If the advertisers collude or trust that the competitors won't increases ad spend, the relative market share stays the same and all companies participating enjoy increased margins.
The first company to break gains market share, so as a result they all "overspend" and google is the only one that benefits.
The worst part is the cost of google's margin is baked into product pricing, so the end result is we pay more to have the companies compete to advertise to us.
I certainly conceded it's possible that your statement is true. I'm skeptical of most marketers claims. However, I have to acknowledge the scope of the deception if indeed it is a house of cards.
That's a lot of smart people wasting a lot of money in a lot of different ways over a century of the biggest growth phase experienced by civilization.
The trick is, the ad industry people are the ones who design all the KPIs that determine the efficacy of ad campaigns. So there's a bit of a self-serving incentive there that could be degrading the quality of the information.
There is clearly some evidence that ad spending does help, particularly with building brand awareness and goosing demand. I think the jury is still out on how much and to what extent specific user tracking/targeting strategies work though.
Do you think startups like Casper and Blue Apron want to hundreds of dollars just to get a single person in the door to buy something and pray they stay for at least 6 months / don't return the thing just so they can hit their break-even point? Like if this was all a house of cards it would have collapsed by now since there are millions of eyes trying desperately to reduce the need for their ad spend.
So yeah, that quirky overproduced Doritos TV ad probably isn't doing all that much but for businesses that don't already have a critical mass of mindshare it's your lifeline.
Is this what you want to believe or do you have data to back it up?
CMO: We spent $100,000 on AdWords.
CEO: What was the ROI?
CMO: No clue.
Mainly because selling B2B the person who clicked the ad is rarely the person who raises an order. I can use a proxy like instigating a download but that is far from perfect.
And there are also those "I spent $1k in one day by accident with no return, help!" posts.
But take a large advertiser like a Coca-Cola or Procter Gamble - they might run many thousands of ad campaigns a week across all sorts of venues. Their revenue is largely at retail, so there is no way to track directly from an ad campaign to a purchase.
How do you prove the return on any given ad dollar? You cant.
https://www.quora.com/How-can-I-reconcile-Facebook-advertisi...
Likewise, many advertisers aren't doing brand campaigns, they're doing direct response, that is, trying to get people to directly click to their site and convert.
Finally, advertisers on video sites tend to pay per "completed view" for some definition of completed view, usually at least a significant chunk of the video and not just the first few seconds before the skip button appears.
1) It's an unchecked, all-powerful evil, making people buy or believe in things they don't want or need by hoarding their data
or
2) It's a giant ineffective scam that stupid companies who aren't led by engineers waste VC money on
The two are diametrically opposed, yet, I've seen the same person argue #1 on Monday when it fits the narrative, and then on Tuesday start arguing #2--blissfully unaware of how both cannot be true at the same time.
Could it be, that both 1 and 2 are wrong, and that advertising spend is simply reduced during recessions in reaction to the reduction in spending by consumers? Why pay money to acquire customers when the customers aren't willing to spend money on new products?
Really? You remember who says what on HN?
But it happened one time. Now I get ads for chicken feet sellers on Alibaba.
I also find Overcast (podcast player) ads very useful and have discovered a lot of great podcasts because of it. Marco Arment creates his own ad network so he could control both the content and he wouldn’t have any mystery meat binary blob advertising SDK.
Suppose that if you're peddling cheap junk and snake oil, advertising is effective, because nobody will have heard of your product by word of mouth (no one would recommend it and previous victims are ashamed to admit being suckered), but if you spam enough people you'll reach enough suckers to exceed the advertising expense.
But if you're peddling a popular and quality product, everyone has already heard of it and additional advertising has low marginal utility because you were going to get most of the sales anyway.
This furthermore doesn't get you out of the prisoner's dilemma, because even if buying advertising is only break-even rather than profitable, your competitor is doing it so you have to do it too or they gain a volume advantage over you and use that to kill you on unit pricing. But then you all do it and all that happens is that everyone pays money to cancel each other out.
popular and quality product vs cheap junk and snake oil (and presumable unpopular)
An honest person would note all possible combinations in their simplified model of businesses seeking advertising
1. popular products with bad quality
2. popular products with good quality
3. unpopular (or unknown) products with good quality
4. unpopular products with bad quality
And of course the real world is more complex than this.
your analysis is bad and wrong.
Saying "your analysis is bad and wrong." comes off as dismissive and I think you should read the HN Guidelines.
Your model only includes products on the narrows of each extreme. In the middle is the wide spectrum of most products...the ones that don't meet either description.
Even if you make the exact same product as a competitor, there is no prisoner's dilemma if you're targeting a different niche market to sell that product to. Perfect competition does not exist in the real world. The only thing that comes close might be a commodity like oil or water. But even water can be targeted to different segments of the market.
There doesn't have to not exist more than A and B. If A and B both exist then 1 and 2 are each true and the further existence of C and 3 don't change that.
Moreover, even if some additional classes exist, the two examples are still central and problematic, not least because they're more likely to represent a higher percentage of ad spending.
The first because advertising is the only way to sell crummy products, since the only way to get anyone to recommend it is to pay them to, so their incentives to use it are higher.
And the second because the existence of the prisoner's dilemma is what drives up the ad spend on both sides. If you're targeting a niche that no one else is then you buy a small amount of advertising, reach those customers, make your sales and are done. If you're locked in a prisoner's dilemma with a direct competitor, you spend a little so they spend a little so you spend a little more until you're all spending a huge amount. And the fact that you're selling Fords and they're selling Chevys and they're not completely identical products doesn't really matter when they're both still cars.
The presence of pure mercenary advertising increases the global noise floor, which increases the information asymmetry by decreasing the visibility of quality signals.
The irony is that Google sees itself as a company that increases access to information.
You know what that would look like in the ad space? Product testing, reviews, and endorsements. Something like "Verified by Google" (aka Wirecutter).
Instead, Google absolves itself of responsibility via algorithms, steered by marketing folks in charge of their primary profit center.
And we're surprised by the corporate decisions they make?
I was naively surprised one time when I see quality writers shout down rating systems. Apparently making a popular quality product doesn't make scrutiny desirable.
The shortest description of the thought is: The meta data is more important than the data.
Back when google indexed peoples websites the organic ranking wasn't bad at all. People wrote niche articles about original topics, if you searched for one you would find those blog postings. I was often amazed by how specific the content addressed what I was looking for.
How well it works depends on the type of rating. It should probably start with things so obvious they are hard to game. Even self rating could work, something like: professionally affiliated with the topic 0-5 in the range 2-5 you get to provide an url.
I liked parts of PICS3.
I could see a system where we run our own rating service and rate things with a mix of original and unoriginal qualities. You use the bookmark list it generates or enjoy the persons work then subscribe to their ratings and add weight to it. We make collections of such subscriptions and use them the same way. When visiting a page the url (or other identifier) is passed around and a rating is returned. Similarly, people you've subscribed to crawl around the web and we arrive at a set of pages you should probably visit. If there is crap in the list a single click reduces weight on everything that endorses it.
For one, if you accept that advertising can sell "cheap junk" or "snake oil" then you've accepted that advertising can sell something. That could just as easily be a useful product no one has heard of so the issue isn't the advertising, it's what's being sold and advertising is effective (which invalidates (2)).
For another, you use the example of a product "everyone has already heard of". You could point to something like Coca-Cola here. But this argument has two problems:
1. There are variations companies make to keep their product "fresh". Think Vanilla Coke, Cherry Coke, Coke Zero (or whatever the current form is) and so on. By virtue of them being new, potential customers won't have heard of them and advertising solves that problem; and
2. A lot of advertising isn't about direct customer conversion but "brand lift". Now companies have dreamed of the ability to accurately measure the brand lift of advertising spend but it hasn't materialized yet.
This is also why common comments here like "I don't ever click on an ad" don't really mean anything. Now you can argue that the ability to make you desire something you don't need is "evil", which is a reasonable argument to have. I think there are cases where this is true, such as advertising to children, and these should be restricted as some countries have done.
It can sell something unknown, because then the advertising makes it sound good, they don't know anything else about it, and they wouldn't have heard of it otherwise.
Which is the opposite of what's happening in case 2 when the product being advertised is well known. It's not causing you to hear about it for the first time and if the product is low quality then the advertising is less able to overcome your existing negative impression of it than for something you've never heard of.
> There are variations companies make to keep their product "fresh". Think Vanilla Coke, Cherry Coke, Coke Zero (or whatever the current form is) and so on. By virtue of them being new, potential customers won't have heard of them and advertising solves that problem
This doesn't really explain all the ads for Coke Classic, or for that matter why so much advertising even for new products emphasizes characteristics that are either meaningless or unrelated to the product. There isn't really any information content in telling the customer that a new cola is "refreshing" or showing random people dancing.
> A lot of advertising isn't about direct customer conversion but "brand lift". Now companies have dreamed of the ability to accurately measure the brand lift of advertising spend but it hasn't materialized yet.
"Brand lift" is the prisoner's dilemma thing. When everybody does it they just cancel each other out.
Another example (this one not in advertisement) is the situation of Bloomberg. They have one of the largest financial journalism organizations and, AT THE SAME TIME, they sell overvalued software to the largest financial companies in the world. One can only guess what can happen to a financial company that stops paying the fees to Bloomberg. Even though there is no real threat (and most certainly this was never expressed by the company), every financial outlet wants to be on the good side of Bloomberg reporting. The conclusion is that having a journalist institution receiving money from companies that they are covering is a kind of moral hazard that very few people understand, unless you are part of the business.
On the other hand, there are companies with teams dedicated to make their ads as effective as possible and track/raise the ROI.
There's likely lots of companies even in between those extremes which don't even break even on the ads they pay for. (or don't know if they do or not) They may pull the ads and realise nothing changed.
>quality product, everyone has already heard of
They reached this status due to advertising, Its likely they could drop advertising for a while and coast along fine but eventually that brand recognition will start to drop.
There is also the fact that a lot of products are purchased not based on fixed needs but flexible wants. Maybe I haven't purchased a soft drink in a while and I don't think about it, an advert could make me think about it and make me want it again.
Your (1) is effective advertising that works, and your (2) is ineffective advertising that is a waste of money.
It is perfectly OK to know that both exist, and to argue against both.
A. They are thinking of what they consider an average user (most likely stupid, blissfully unaware of tracking and how companies are controlling him) whilst using ad blockers themselves or relative strong measures to avoid tracking.
B. They are thinking of themselves as the customer to some extent and knowing that they don't ever click on ads as often, it's most likely wasted money.
Again, I am not completely sure but it feels like the person is thinking of different subject in A and B when analysing.
C. It could be that the plan is to make Google look evil in both cases. By robbing both you and companies out of their money and data.
Though, to be honest, I don't think I've heard #2. I think any rational person understands that advertising has some degree of effectiveness. After all, many bright minds from a variety of hard sciences have spent decades of their lives, and extraordinary sums of money studying human behavior for the explicit purpose of selling more shit. Many of the largest companies in the world are advertising companies; before Google and Facebook there was the TV and Radio giants, who were massive, in spite of pretty serious regulations.
None of this would have happened if advertising wasn't effective. At some point in time, people would have realized it didn't work and spent their money elsewhere.
There are two big issues that I see:
1) More views have driven down bids for ad views. The ad industry is largely driven by companies bidding for views, so without a large influx of cash, the spike in views was going to depress ad impression prices.
2) Consumers have less discretionary money to spend, even if they wanted to, so the ROI on each view/click is going down.
Each of those alone would be cause for concern, but combined, they do pose a significant issue for Google, Facebook, and smaller content creators.
- A lot of advertising is effective, and a lot the effectiveness boils down to lies, manipulation and general dishonesty.
- Ad attribution - i.e. tracing how much money spent on what advertising resulted in how much profit and when - is a hard problem. It's easy to make mistakes with it, and it's also easy to lie and not get caught.
- Most people involved aren't exactly experts in statistics. That's especially true for small businesses, which don't have money or institutional expertise to hire talent just to evaluate their ad spend.
- Which means people trust they aren't being bullshitted by the very industry that specializes in lies and manipulation.
I've seen this play out in real life myself; I vividly remember working next desk to social media marketers who were clueless at maths. They'd take the numbers and graphs from Facebook's panel, write up stories that made these numbers always sound like everything is going perfectly, and send such reports to the customers who were even more mathematically clueless, and thus incapable of verifying whether the numbers and the story presented add up.
The way I see it: some advertising is effective sometimes, but you don't know which one is effective and when, it's mighty hard to figure that out, and the advertisers have every incentive to confuse the issue for you.
(Note that they'll also happily confuse the issue for themselves, too. The industry consists of a lot of players building their products and services on top of each others' products and services; there's a lot of competition happening, and there's plenty of incentive to use the same advertising tactics within the industry as outside.)
The exact same person will write 1 in one thread and 2 in another thread.
1. "Online ads are ineffective and don't work. Online ads are a waste of money".
2. "The russians bought Trump's election by spending $50K on facebook ads".
It's hypocrisy based on agenda.
You might have also noticed that when someone they disagree with gets censored, they claim "google/facebook/etc" are private companies. When someone they agree with gets censored, we cannot allow tech monopolies to drive public discourse.
There was a recent submission where france ruled that google must display and pay for news headlines. The same people saying "nobody has a right to google's platform since they are a private company" were vociferously defending france forcing google to carry news and pay for it. No doubt many of them were hypocritical news industry workers.
But that's human nature, we are all selfish.
Some companies are better than others. Instead of "buy my product" they teach consumers they look cool if they buy. We wouldn't be dealing with Apple's BS if people only cared about quality.
We live in a consumption-driven society mostly driven by aspiration, not need. We are 'induced' into keeping up with the Joneses to a very great extent. This is not a conspiracy theory.
Much of ad spend is a waste because its effectiveness cannot be measured. Marketers will tell you "I would cut my budget in 1/2 no problem I just don't know which 1/2".
And some companies will spend ads on you from you're a kid until you're an adult hoping to lure you into a few purchases (Ford Trucks, BMW etc.).
In my experience, it's not that they're stupid - but they have neither the required math skills, nor the visibility into the whole pipeline, to be able to correctly evaluate the RoI, so they trust their providers in the ad industry a lot. So the correctness of their calculations depends a lot on the virtue and honesty of people working in the industry specializing in lies and manipulation when placed in front of an easy opportunity to make extra profit by being dishonest.
Here's my take on the two sides here:
1) It makes me uncomfortable that companies can track me online and use info that to target ads (or whatever their business model thinks it needs my info for). There are things about me like my location, identity and politics that are personal and I want to be in control of, not tokens to be sold.
2) Online advertising returns much less than $1 in profit for every $1 spent, so whats the point? Only big tech companies are benefiting from it. The fact that advertisers are pulling back during this economic contraction only proves this - if $1 in ad spending bought you >$1, they'd keep up their spending.
Not everyone will agree with me, but for me, both of those are true.
Are you saying (A) no single advertiser increases their profits by more than the amount spent on advertising, (B) that, in aggregate, the amount spent on advertising is less than the additional profit earned by all advertisers, or (C) something else?
It's unlikely that (A) is true.
It's possible that (B) is true but that any individual advertiser would be net harmed if they were to stop advertising (because they can't stop their competitors from advertising).
"The fact that advertisers are pulling back during this economic contraction only proves this - if $1 in ad spending bought you >$1, they'd keep up their spending."
It doesn't prove that. Perhaps they are pulling their spending because:
- they're not selling any more due to social distancing (theatre tickets? massages? dating services?)
- they're not selling any more due to supply constraints or inability to operate their business's physical locations
- the stuff they're selling is stuff people cut in a downturn
Just because a piece of advertising isn't worthwhile when no one can go out and many people have just lost their jobs, that doesn't mean it wasn't worthwhile before.
Targeted ads for largely online companies: If your customer sees an advertisement on Facebook and YouTube, and sees a few sponsored search results on Bing, then opens an ad in an Amazon mobile app six months later and converts, which ad was effective? Which was priced right? Lets assume you can 100% correlate all of this activity. Can you justify spending $X on platform Y will return >$X?
Brand awareness ads for largely offline companies: Your products are largely sold at retail, and you are a large multinational company like Coca Cola or Nestle. Which of your ad campaigns this quarter drove sales? Can you justify spending $X on platform Y will return >$X?
Even if that is true, that doesn't mean it's impossible to prove that your total advertising budget of $X improves your profit by more than $X.
- Advertising as a first-principle works, because our biology is amenable to familiarity.
sheer repetition ⇒ familiarity ⇒ positive bias ("things I know / like / trust / ...", common pattern)
There might be more to it, but that's enough, and proved enough times in many a scientific study afaik.
- Applying the technique to a real-world problem has varying levels of efficiency; whether it's the wrong solution or badly executed.
Heed this naive comparison: not all bridges are good, and some are scams. But there's no question whether building bridges is useful in the first place. The question is and forever will be, what should be the rules for making good enough bridges, safe enough?
Advertising as a domain and market is not a special snowflake in most regards. It's actually boringly common, dare I say predictable.
____
Where it gets tricky. Where first-principles aren't enough because complexity is at a whole other level: advertising is the primary revenue for a bunch of industries, most notably the press (the media) which is otherwise considered "the fourth pillar of democracy", i.e. that quality of information in a democracy is as necessary as government, congress, and justice, the 3 branches of the republic ideal form.
How do you reconcile that the biggest "influencers" of public opinion, the press, is itself mostly influenced financially by the most interest, biased, self-tauting side of the entire economy? Wherein not rational engineers, not sane financiers, not level-headed CEOs or even just Jane and John your co-workers next door have a voice, not even sales who know that lying and deceiving is not the way to build a sustainable business... but marketing, in other words those whose job is to create a Hollywood-fiction of fabled greatness... it's not lying, it never was, it's been elevated as fiction —see: artistic awards for the best ads, superbowl hype, and the actual real cinematographic value of some of that, hands down. Nevermind that the products are asking for real money, however.
And then we wonder why the media has become such a theatrical ongoing masterpiece of sensationalist storytelling. Well, lines were crossed.
Why infotainment has become such a norm that it is now capable of higher quality than "editorialized" (read: advertiser-leashed) newsrooms. “No, Jane, we can't say that. We'd lose ad money, you don't want us to fire people, do you?”
The sheer complexity of that makes me want to duck in quantum machine learning and call it a day on politics.
I don't have a perfect solution, I can only see red lines in law and a certain sense of ethics, like we value life, we should value information. In short, bug is in human code, thus fix as well.
As an example, lets say your product has a conversion time of 6-12 months. If you strike right now and have the right content to keep people engaged over that time period while theyre in quarantine they'd be ready to "convert" right near the end of some of the most stringent quarantine restrictions.
If you don't spend, then you just burned an entire year's worth of leads in your funnel.
They aren’t so much concerned by “people buying what they don’t need” - hardy a major concern of most hackers - they’re concerned about invasive data tracking being used to target ads. So I think you’ve gotten the first one wrong. And there’s no contradiction with the second in that case.
1) The ad industry is insatiable for customer data, and is willing to violate every last persons privacy to get it
2) The utility of the advertising industry’s targeted models is suspect at best.
The only question is if they are fairly priced. It could be argued that they were overpriced due to over-funded companies overbidding on them trying to growth hack and bot traffic being mixed in.
Then some consultant came to Ebay and proved, without a doubt that the ads don't work. So, they created a test: they removed the 20 million $ worth of ads for that top slot and watched the traffic afterwards, it was pretty much unchanged! It's because All those people that clicked on those ads, were going to come to ebay anyways, despite the ads, not because of the ads.
The future of ad revenue will depend on when the VC bubble will pop. As long as the interest rates stay 0%, it's not over yet.
Advertising spending, for example in the context of tobacco advertisements, is actually a pretty classic example of what the person you are replying to said though. You'll have to clarify what you mean by making decisions atochastically and how exactly this ends up a congestion game. If everyone else is advertising their cigarette brand, your optimal strategy is to advertise as well, which is not a congestion game. You just end up with a dominant strategy of "advertise" for a differentiated product, which means it is better for you to advertise no matter what. It can also go the other way in advertising though. For example if you sell some undifferentiated product like a commodity, no individual wants to advertise since driving demand for the commodity helps everyone in the market while you have to bear the cost.
Very few advertisers are actually in a true "prisoner's dilemma" in the sense that they're fighting tooth and nail in the same market as another company and parsing back advertising will cost them dramatic marketshare. First, a lot of demand is supply constrained - lysol is going to sell their wipes no matter what, so advertisers can easily defect. Secondly, advertisers may be locked in a competition broadly but not in a specific channel. Your youtube channel probably isn't your best ROI or its easy to cut back spend and just invest in your most performant channel - it's often not youtube for these companies.
What ad platform do you use? Google?
Expect to YouTube to try and get a piece of this pie as well when there is a “integrated” ads apocalypse when YouTube changes its terms of service.
It’s expensive to store, process, and deliver all this video.
YouTube has been making money off advertisement to kids for years. Now that is being regulated.
As a YouTuber myself (not big), and with a few friends who have over 1M subs, and plenty in the 100k-500k range, I can tell you that's not true.
My girlfriend is a camgirl, and she tells me that while she has more people in her "room", they are tipping less and she's making less.
yikes
The model used by Twitch seems far more reliable. I thought they were going that way with YouTube Red, but that ended up being a huge disappointment. After about a year I switched to just donating to my subs on external platforms.
Just let me make small, monthly donations to the creators I like. In exchange, spare me the ads. YouTube can even take 50% of the cut or whatever. It's more stable that way for both YouTube and its creators.
If only it was possible to pay for the true hosting and bandwidth cost, with discovery/search mechanisms either open source or on a separate service (decentralized and smaller in scope), and again a separate platform to support individual creators.
Not disagreeing with you, just pointing out that the Twitch model might still suck on some level.
In a viewer-contributed system, only creators that have a good audience worth paying into would receive donations, but those lesser known videos would essentially have to be subsidized by those donations since those videos wouldn't bring donations in themselves. YouTube's cut, 50% as you suggest, would probably be better spent making the platform better for those creators than hosting videos that brings in no donations.
Also only a very very small subset of the audience will donate. Platforms that have been predicated on donating or subscribing to receive content are struggling to lift off (besides Patreon, which is effectively a marketplace for content, merchandise, behind the scenes stuff, etc rather than just a video hosting platform).
There are 2 Youtubes, one for embedded viral clips you discover around the web and one for professional content that viewers subscribe to.
I think Youtube has issues shoe-horning both systems into one monetization scheme. I think this is mostly a problem of inertia but either they need to make things more stable for their professional creators or someone else needs to build a better platform for these pros.
There’s a whole ecosystem of niche review channels that have decent but transient viewership.
For instance some chromebook reviewing channel posts reviews of almost every chromebook coming out to market. There might be some people subscribing to that, but the bulk of the views will be from search results, and only for 3 or 4 videos per viewer (once they make their buying decision they’re done).
That’s an example I could think of on the spot, but there are many many facets of youtube that have a decent traffic with no allegiance from the viewer. They also survive by managing in-content ads themselves, having affiliates or any other system external to youtube, but youtube ads must still represent something to them.
This situation is also true on Twitch. For every big streamer pulling >1k viewers per stream, there's thousands of small streamers with <10.
Youtube has already made a token effort to mimicing this with the 'join' button, but right now that more patron-centric revenue model looks to be a short- and medium-term winning formula. Youtube would likely benefit from pursuing it.
To monetize your video you need to have 1000 subscribers and 4000 hours of watch time in the past 12 months.
I love the direct-support model as a consumer/viewer, but I have significant doubts that it competes with ad dollars nearly as well as people would like it to.
Buying things for daily needs, and advertising for them is still normal.
Unless you're willing to turn Youtube into a 'Developed western countries only thing'(which already exists - it's called Youtube premium), advertising is a better option.
Twitch is primarily an ad platform. That's where they make most of their money, and why they're making changes to increase ad impressions. Subscriptions used to give you site-wide ad-free. Now it's only for that channel.
See Devin Nash streams for insight into the business of Twitch. It's not public info, so it's a lot of reading between the lines and anonymous first-hand accounts, but I imagine it's accurate.
The direct-pay model is vastly preferable because it keeps advertisers from controlling content, and Twitch certainly has shown greater success here than I've seen before. But it's not happening on Twitch. At least not like it should.
Twitch since acquisition has made some changes (e.g. no longer hiding ads for prime members, forcing pre-roll ads on channels) to increase the amount of adverts seen but content creators hate adverts.
Twitch is live and not episodic which means that it relies on people watching and staying to watch. Pre-roll ads cause a noticable bounce rate, where someone clicks on a channel and because an advert starts playing thinks "nevermind" and clicks a different channel. Adverts during streams are suitable for some games with natural pauses but for others just interrupt things and any time creators have a break (which they should have more often for their health), they will lose a significant part of their audience.
Most games don't have a natural cliffhanger or other hook to get people to wait for "after the break", so the audience will just think, "I wonder what x is doing" and click through to their channel instead. In fact they don't need to wonder, it's present on their sidebar as a constant reminder of what other channels are showing.
So there's this weird situation where Twitch is reliant on both content creators and want advertising revenue but adverts actively harm content creators so resent being forced to play adverts.
Maybe they should just let creators monetize their own channels by having, as you said, a subscription service similar to Twitch as the main monetization.
> [...]
> Just let me make small, monthly donations to the creators I like. In exchange, spare me the ads. YouTube can even take 50% of the cut or whatever.
I'm confused. Isn't that exactly what YouTube Red (now called YouTube Premium) is? $12/month, no ads, creators you watch get paid out of the monthly subscription instead. (A payment which was, last I checked, significantly more money per-user than ad revenue is.)
I've used the word "donation" a few times, but I don't really see it as a charity. They're providing me a service and I'm simply allowed to pay whatever I want for it.
To that end, YouTube Premium is a disappointment to me. It's fixed at $12/mo for everything. I can't donate more and I can't pay less in exchange for removing ads on only a few specific channels. On top of that, there is no transparency over how much money is taken by Google and how the remainder is split across the channels I watch.
YouTube Premium is a service for people who can't or wont setup ad blockers, are already paying for Google Play Music, care about the exclusive content, or want to download videos with the YouTube mobile app.
I use a PiHole and have no problem using a VPN to connect to my home network if I want to block ads on my phone. I still buy my music, so I don't care about the Google Play Music subscription. I don't care about the exclusive content and I can just use youtube-dl if I really want to download a video.
The only reason I would get YouTube Premium is to support YouTube itself. But the questionable actions YouTube has taken to stabilize its ad revenue (coupled with the many problems of its parent company, Google) alleviate any guilt I might have otherwise felt. At this point, I only use YouTube because of their content monopoly.
> This is a cardinal sin of EDM
SKIP AD FROM MASTERCLASS.COM
> We live in strange times
SKIP AD FROM MASTERCLASS.COM
> Little Red Riding Hood… Let’s start the story a different way!
SKIP AD FROM MASTERCLASS.COM
These adverts never end. They are relentless. There must be something wrong with the platform.
Haven't actually taken a course myself. I'll admit their ads got me to check out their site given the big names they've managed to attract, so they did their job, but it looks like their programs are yet another "we'll sell you lectures with zero practical exercises or applications for $X/month so you can sound smart at parties" service.
I guess it might be useful for 17 year olds picking a college major or exposing people to brand new topics, or professionals already in the relevant field looking for tips, but that's about it. Watching Penn & Teller's Masterclass isn't going to teach you how to be a professional magician, Aaron Sorkin isn't going to teach you how to be a professional screenwriter, and Chris Hadfield isn't going to teach you how to be an astronaut or engineer. It's like paying $180 to read the back of the book of a profession.
But there are so many topics I know almost nothing about that would be interesting to get an exponent to ELI5.
Negotiation / Photography / Writing / Fashion. I know next to nothing about all these things. The ones I do know a little about, say chess, may not be as enriching but I don't mind watching Kasparov go over the basics...
Really I haven't bought it and I'm not sure why. If I could pick an episode from the chess class it'd help me decide but doesn't seem like that's possible.
Most of the content sits in this weird intersection of being completely useless to beginners and being too basic for intermediate/advanced practitioners. For $180 it's not even useful for parties, it's just a long interview for fans of the person.
Ironically, what I learned was that most of the time, she works more as a creative director - she's at a laptop. Someone else is pressing the trigger, and then in post processing, someone else is doing that too, to her direction.
Here's a link if you want to watch a 2 minute ad (if youtube is to be believed 31 million people have watched it.)
https://www.youtube.com/watch?v=dtj6dDARgfQ
I've skipped a fair number too.. They are long.
I have no idea how they get experts in certain fields to do these classes.
I had to click the little (i), then "stop seeing this ad".
I'm not opposed to ads at the beginning and end, but numerous _jarring_ cuts in a ten minute video to play a couple of ads every two or three minutes? No thanks.
But I distrust Google and don't want to serve them more data than is necessary.
But I can at least refuse to use a Google account, and to serve a tracking cookie. I'd have to live off the grid and in the woods to stop feeding them any data.
And the cake is delicious.
This problem is a solved problem. It’s called YouTube Premium.
And creators get paid too.
You’re simply being cheap. Don’t even pretend there’s anything technically or UX wise superior about the way you’ve chosen to avoid YouTube ads, and on desktop PCs only.
Studying, in general, is a great use of this time.
(And what future video adblockers will be capable of.)
But instead I see ads that seem to be claiming they'll teach me ballet, screenwriting, and all sorts of other things that absolutely don't lend themselves to broadcast online instruction even if the person teaching is extremely talented and well-known.
Hey, if you want to get established one way is to conquer a niche others aren't going after, right?
It's a kind of "look for your keys under the streetlight" theory for market selection....
Have you seen how horrible those Nigerian scam things are?
WHY would they do such a thing!??
ROI maybe? They are bringing in a slice more money from the ads than they are spending?
Not everyone works the same as you. As an HN reader, I bet you dig data like many of us do. And I bet a lot of people working with Google Ads can show you data which show a positive ROI.
It's nice as there are none of the YT ads, no comments, I can download things, and I get to support some Youtubers I actually enjoy watching.
The other thing that is known to be pro-cyclical: luxury products. I am looking at you Apple. Again 2008 was the ramp up of smartphones, I don’t think it informs us much on how high margin smartphones will do in a severe recession.
People spent in aggregate way more to accomplish fewer things before the iPhone (or equivalent high-end Android phone).
My smartphone is my primary camera, my communication device, my transportation lifeline, my business operations lifeline, etc etc.
I can't afford for this one thing to be the point of weakness. $1000 is extremely cheap relative to the value I get out of it - it would be a waste of time and money for me to skimp here. Not to mention, once you're in the ecosystem, breaking your workflow is extremely expensive so there's an element of lock-in.
Apple are in a stronger position than anyone gives them credit for.
The benefits have far outweighed any inconveniences for me in nearly 2 decades as a customer.
Doesn't mean there aren't issues, but in general I am very happy with the ecosystem.
Anyway this gets away from my original point. $1k is not a lot of money for what a smartphone is and the role it plays in our lives (which is only ever increasing).
It's silly to skimp on something so integral that you'll likely have for 3-5 years (or more!). All for what? Saving $500? This is why the high end smart phone market won't be impacted as sharply as you're predicting. People understand this.
If a depression comes, people will soon have to choose between eating and paying their rent and utilities. Phones won’t even enter the picture.
I really think you're living in denial of modern reality. A smartphone gives you access to jobs among other things.
Also if you want true income on YouTube, your best bet is affiliate marketing and sponsorships. Many YouTube personalities have already moved to this model -- they seamlessly integrate paid sponsorships and links into their content by working directly with the sponsors. Not only does this render ad-blockers obsolete, but it cuts the middleman (YouTube) out of the equation. It also vastly improves engagement, click-through rate, purchase rate, etc.
Interesting, thanks for verifying that -- honestly I was mostly just making an educated guess. The rest of your reasoning makes sense, too. At this point, we can only guess as to what the extent of the damage will be.
You mean that crap at the beginning, middle, and end of every video isn't working? Cry me a river. Its about content not your unoriginal gibberish.
Ripples gonna ripple.
Another thing, Google has an exceptionally strong balance sheet and can weather this recession for many years if need be. They're not going bankrupt any time soon. You don't go and just short such companies when there's still plenty of leveraged junk out there.
Everybody expects ad revenue to rebound fairly quickly once this is over. You don't expect COVID-19 to be cutting Google's revenue in half over the next 20 years, do you?
That said, analysts will make guesses based on financial projections and then give multiples to things like revenue or earnings, depending on the company. If a quarter of Google's revenues is impacted, it will have immediate effects. Of course, that's assuming that it's only a single quarter's revenue which in this case would be wrong. You're talking months of high unemployment globally.
Well of course! Nobody knows what the future will be -- it's all best-educated guesses. That doesn't contradict my point.
The stock price winds up being a kind of market-driven wisdom-of-crowds situation of a ton of different people's guesswork, mostly institutions with teams of researchers.
Obviously Google's price has been impacted. But the point is the price hasn't been impacted nearly to the same degree as immediate revenue. Because? People expect Google to be around and doing fine for a couple of decades.
So you're right that these things can't be perfectly predicted... but the stock price still is the result of everyone's predictions, as imperfect as they are. It's not "laughable" -- it's literally how it works, and if you don't believe that, I don't know what to tell you.
I was surprised not to find any, since lifetime customer value creates an upper bound for marketing and ad spending. So when there’s less overall economic activity, the lifetime customer value may very well also be going down - at least for discretionary spending - meaning the upper bound for ad spending is also coming down.
I wouldn’t be surprised in shifts of lifetime customer value in many industries in at least the medium term. And therefore in ad spending for those sectors of the economy.
If you're expecting more, build your own brand and video hosting platform, and develop whatever individual brand value you can from your audience. Otherwise, them the breaks of more content available than one can consume in a lifetime (see: abysmal Spotify artist revenue). IMHO, content creator driven platforms at least give you a chance to extract more value than you could from Youtube (due to creator<->YouTube/Google power dynamics).
But aren't we really talking about Adsense? If we're talking about Adsense, aren't we really talking about the overall capabilities of the system?
Is there any alternatives to Adsense? No, if Adsense isn't working for you, then you're looking for a totally different approach for monetizing your content.
But we still haven't arrived to the fundamental issue, which is that we're in the midst of a global economic meltdown. A lot of Adsense buyers are pulling out and that's driving down the market for ads.
I'm not a marketing guru, but I'm guessing that advertising spend in general is one of the first things to get cut during difficult economic times.
Does Nebula address this? Are they giving away helicopter money? Perhaps the service can open a portal into another dimension where COVID-19 has never happened (or maybe not for a couple of months, so we can get some quick partying in.)
I have a subscription but for some reason it doesn't scratch the same itch as YouTube even though it has a lot of the same content that I watch on YouTube. It may be because there isn't much Nebula only content so I might as well just check one website instead of two. I also don't think it has comments. And all round just isn't as slick of an experience as YouTube.
Also by design not just anyone can upload to it and so I belive it will probably be quite limited in its growth.
You'll probably have to be on YT for exposure and then direct people off the site. Ironically a lot of TikTok-ers are trying to use the same trick to move their followers to YT for better pay.
TikTok pays money for videos? I thought it was pure "instagram but with music and videos" for kids. Not that I've used instagram either but at least they don't seem to pay people. Or do they? :)
However, TikTok is has a pretty substantial adult audience. There are quite a few niche communities that have just organically moved to TikTok: cosplay, makeup, and digital art are some obvious ones.
If you are an animation fan you should give it a shot.
Given how snotty Google is for the big names, I am of the opinion that Google should get absolutely destroyed with damages when a small creator finds their stuff online without their permission.
I'm sure it depends on the business sector. But for any company that can operate in this environment, this is the time to spend MORE on ads, not less.
I don’t think anyone would have an incentive to make the videos anymore and without fresh content believers would lose interest and Eventually evidence of a round earth (plus peer pressure) would build up and outweigh their older ideas of flat earth.
The flat earth debunking channels, on the other hand ...
Business closed means no need to advertise, no ads means no need to turn on servers... But apparently it seems to be ok so far.
Would love to hear opinions.
YT and other socials have essentially been creating a whitelist of who is "trusted" to speak about coronavirus, allowing them to capture audiences by promoting their content and opting to not display and essentially censor that of smaller, independent ("fake") voices.