What about ads + paid plans with no ads? I feel like that’s a great middle ground for everyone who would delete the app if it had ads. Am I missing something with that thought process?
(Throwaway because I work in ad tech and don’t want this sentiment linked to my employer)
Eg. My personal experience with buying products (food, software, SaaS, etc) based on ads conditioned me to actively distrust products that are heavily advertised compared to stuff that's just mentioned in reddit threads or used by friends. Would I be a good fit for ads?
Few people making $30,000 a year are going to pay to disable ads. many people making $200,000 or more are going to consider it.
Marketing works. How do you think your friends learned about product that are mentioned in reddit threads? Guarantee it wasn't organic. If the company was launched in the last 10 years, it was built on VC dollars used to spend tens to hundreds millions in marketing.
Of course, not everyone is that way, but ads have different objectives, and they are effective.
The goal is to nonconsensually force their message on people who don't want it.
Fuck these people.
Advertisers don’t want to be spending money to reach people who will never buy their product, either because they hate their ad or because they don’t have money, but unfortunately there is no way to know who these people are in advance. Spending $10/month to not look at text ads is a sure fire way to signal you have money so you aren’t in the later camp, and people who hate ads with a passion and won’t respond to them are rare in the wild (hn nonwithstanding :D)
Too many people think they can monetize by just “sprinkle some ads on it” without thinking about why an advertiser would buy those ads.
> and that’s who they want to advertise to
is just a fancy way of saying "targeting". What I think you're saying is that it's not people who want ad-free experiences that are being targeted. Rather, those people belong to a broader group -- those with money to spend -- who are being targeted.
What part of the post you replied to indicates nonconsensual?
They want sales, or signups or whatever acronym they need to force up. Group A converts at 10%. Group B at 1%. The advertiser may have a theory of why these groups are different. Increasingly, we don't. FB, especially, does a lot of automated targeting.
Marketers tend to have good instincts about these things, because patterns are repetitive and simple. That said, I'm pretty confident that advertising to subscribers would be more effective than advertising to non subscribers.
In my mind, "person who subscribed to a thing online" is just a good qualifier. It probably correlates to a lot of other qualities like "shops online often" or whatnot. Those "theories" don't really matter though. They're just a starting point.
Advertisers don't know or care what people think of the ads nor how they make the 98.3% who didn't buy anything feel. All they know is that they didn't click/buy/whatever.
I think people imagine online advertisers like a geekier version of mad men. It isn't like that. There's not the pretensions of understanding or influencing psychology. It's more like stock trading.
Spotify is a good example. The ad supported version has uses: it's a funnel for paid users, a deterrent to competition, a data farm, etc. Making money is not one of those uses. I suspect that this is because the best advertisers audience subscribes.
Also, opt out ads also harms your upside. EG, fb make more in ad revenue than they could ever make in subs. You don't want to pursue an ad-based strategy that excludes the possibility of a win like that, even if it's a long shot.
I normally don't mind listening to the news and commercial breaks on the good old radio.
For spotify this is tolerable. Network effects exist, but they aren't everything. For telegram, network effects are the whole thing.
"Freemium" doesn't usually work the way people think it does. "Just let me pay to remove ads" is rarely good business advice. If your business model is ads, you stick with ads. If your business model is subs, you might have an ad-supported version for other reasons.
Even in old media, paid channels/papers/etc. still have ads. They don't make an ad free version.
And then you have adverse selection putting downward pressure on the revenue per free user.
As you previously stated, revenue is not distributed evenly. For sake of argument, the actual numbers for 5 users could be: 120, 30, 0, 0, 0 . The ad-free subscriber would not pay the average profit, they would need to pay the average profit of a paid subscriber. If we assume only the whales would pay for an ad-free experience, they would need to pay $10/month and not $2.50.
First, I think facebook's global revenue per user is $30. US should be much higher. My back-of the envelope has it @ $225 per year currently ($43bn revenue from 190m users)... I may be wrong. Don't hurt me.
Second, they make $225 (or $30) per user while also maintaining a very high number of users. You can't expect to put up a paywall and not lose users. So, to reach parity, you need to charge enough for subs to replace those.
For FB, it's flat impossible. That's why I picked it as an example. You cannot have 190 million americans as paying users at any price. You definitely can't have that many @ $20 per month.
Practices I don't like: - Making sponsored searches look like regular searches. - Pay to Play, where your content gets demoted if not a paid subscriber (Thinking of a non-google websites here).
Besides, as I said in another comment, ads will only exist in channels. Channels have already sold ads directly since about forever.
Also: https://t.me/durov/153