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Comment by makeitdouble | Hacker News Reader

What examples of ad based rising companies do you see ?

My first thought was Google, and it's started to plateau in the recent years:

https://www.macrotrends.net/stocks/charts/GOOGL/alphabet/rev....

Meta also took a dive, and while it was from a sharp turn of the business focus, I'd argue it comes from an attempt to avoid staying on a stagnating market.

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YouTube has its own internal micro economy of channels, networks of channels, etc that is thriving from ad revenue. Binging with Babish was “a guy cooking food from tv” a few years ago and is now an entire platform of channels. I think those companies can all be considered separately from the operator of the marketplace.

That's just syndication, though, is it different from having a bunch of blogs that cross-promote content but are ultimately reliant on Google Search and Google Ads to bring in traffic and revenue?

You typically won't see rising ad revenues during a recession. When times are hard, or look like they could get hard, advertising is the first thing cut. Its a well established pattern. Eg, from https://www.createwithnova.com/blog/the-history-of-advertisi... :

> After the last recession in 2008, the US ad market declined by 13%. Newspaper ad spend fell 27%, radio spend 22%, magazine spend 18%, outdoor spend 11%, TV spend 5% and digital 2%.

And yes, it happened this time too. From https://simonowens.substack.com/p/the-advertising-recession-... :

> Digiday published a recent overview of media earnings reports, and while earnings overall were a mixed bag, nearly every single company reported a significant dip in advertising revenue:

> Publishers reported declines in digital ad revenue from about 9% to 30% — worse than the 3% to 27% drop in ad revenue year over year reported for the fourth quarter of 2022. Executives continued to cite macroeconomic conditions and a soft ad market as major challenges to their businesses.

But nominal growth is huge unlike back in 2008/9, most of that is eaten by inflation but it should still result in meaningful revenue growth in many sectors.

TikTok and IG continue to see good ad rev growth

I still dont know how IG hasnt stopped the very obvious bot spam.

[1] This recent post on @bloombergbusiness for instance, it just takes 1 fold of comments to be all scammers, multiple accounts, same or near same message, pointing to the same account.

Sometimes in app its swipe up to go to the next thing, sometimes its swipe left, sometimes i have no clue and trigger an ad event.

And then the "game" ads I get, cant seem to tell IG the ad irrelevant enough times.

1. https://www.instagram.com/p/Cuk_35AMXeE/

It's interesting that those aren't really available on the open web and require the app.

Instagram can be accessed with a web browser.

At the scale of Google/Meta plateauing could just mean market saturation, not that ads aren’t working anymore. I’d be interested to see data showing that RoI has also been decreasing for advertisers or that advertisers have started to pay less because they don’t find ads worthwhile.

I think the two biggest players plateauing is in itself an interesting indicator.

For instance sister comments are mentionning TikTok growing in revenue, but if Google/Meta were already saturating the market, it means that growth is eating from the other less successful players (Twitter/Reddit ?), and at some point Google and Meta will also see dramatic decreases or TikTok's growth will stop.

That also

Google and Meta each have something like half the world as users in any given month? And most of the people who aren't using them are not on the internet?

At some point, you literally have no more people you can get in your service.

Most of them overlap pretty heavily though. Assuming 2B people, minus the 1.3B that China has (rough calculations), there's still room for them to grow user-wise. The issue is revenue though - having 1.5 B Indian users is not the same as having 330 million American users.

Total ad spending is growing slower than the economy [1].

[1] https://www.ibisworld.com/us/bed/total-advertising-expenditu...

Amazon has a growing ad business, but imo it seems more like a “listing fee” that is required to have any sales on their store.

Ah, perhaps this why almost the only time I buy things on Amazon I have usually found the listing through Google…

I don’t use it but TikTok

TikTok makes its money selling data to governments like the CCP. The ads aren't paying for all that bandwidth.

I read that the new cheaper ad based Netflix tier was really successful. So maybe a future of all paid products but a cheaper option for a worst experience with ads?

Unfortunately, ad revenue is a poisoned well. Even if you are paying for the ad-free tier, you will be limited to content that was developed with a mind toward advertisements. Once you serve any ads, everything is under pressure to be optimized for ads.

Even if you don't mind the changes to the content, there's a constant pressure driving up costs and driving down convenience to continue avoiding ads. If you're paying for an ad-free experience then you have money, and you're willing to spend it. You are essentially forced into a bidding war for your own attention.

I'm sure they sell your usage data even if you pay to opt out of ads as well so it isn't like you've even completely escaped by paying to start with.

It was already full of ads via product placement.

some of the decline is attributed to companies pulling back on marketing spend due to declines in consumer spending and also because of iOS changes that has led to decreased efficiency in targeting.

This gets to one big confusion I have, with ad revenue and volume decreasing why are the ad platforms selling more ad spots? When demand for ad spots falls, the supply of spots should fal as fast or slightly faster to avoid a price collapse.

Attempting to shore up revenue by trying to show even more ads is begging for your business to crumble and die a quick, painful death.

In economics there is a concept, profit maximization, where it is determined at which prices the products will, well maximize profits, by taking into account marginal changes in supply and demand. I would be very surprised if the big ad companies didnt have a few economists do the calculations.

https://en.wikipedia.org/wiki/Profit_maximization?wprov=sfla...

I'd be even more suprised if the profit maximization point when prices and the demand for ad spots were both down involved an even higher supply of ad spots for sale.

Finding the right level to decrease supply by would be a tricky calculation to get right, but in no way could the right move be to further flood the market with supply.

You have to remember economics is a model and not exactly how reality works, there are many examples where you will find the supply demand curves arent linear and there are also other things to take into account. Companies can artificially move the demand curves, for example the ad companies can change the quality requirements of what ads they allow, creating more demand. These calculations are best done with real numbers and experiments, kinda like A/B testing and I would guess that the ad companies have such infrastructure

Apple’s ad business is growing.

When you own the platform, your ads are a "Personalized digital user experience" and your competitors' are "ad tracking".

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