HACKER Q&A
📣 alexb_

If web ad spend decreases a lot, how does the tech ecosystem change?


I've been reading many articles about how web advertising may not be all that is promised. A recent Wired article talked about how much of advertising is being served to bots[0], a looming recession is going to make big companies significantly reduce their advertising budgets[1], and some companies like Uber have pulled out of web advertising at all without seeing much of a decline. This has led me to think about how much of the entire tech industry is based on the assumption that user data and hyperpersonalized advertising is worth a lot of money - should this assumption stop being true, what parts of the tech industry as we know it would survive?

[0]https://www.wired.com/story/bots-online-advertising/ [1]https://www.marketingprofs.com/charts/2010/3485/us-ad-spend-down-123-in-2009

  👤 ironlake Accepted Answer ✓
Online advertising is a reasonably mature space. It's unlikely that it will have any radical changes without some external change. Apple made a big impact last year with their privacy changes, and maybe we'll see some shifts in ad spend or profitability down the line, for now though, it's not as though Facebook and Google have closed up shop.

In the early days of web advertising, there was a lot of noise about how it was all a scam and no actual human ever clicked on a banner ad. Yet you still see banner ads three decades later.

Companies have marketing budgets and the people making those decisions are not universally incompetent. Marketing budgets have existed for centuries.

But assuming your premise is true and the value of hyperpersonalized ads drop significantly, which parts of the tech industry survive? All of them. A specialized business that's very dependent might fail, and big players like Facebook or Google might falter. (Facebook might not be able to fund their metaverse projects for example). The resulting landscape would be consolidated and boring, like radio. And the exciting growth would come from somewhere else.

Also, why are these stories making the rounds again? Did something actually change in the industry?

http://paulgraham.com/submarine.html

👤 toast0
As CPM goes down, the immediate reaction is to add more ad units. Whether that's splitting articles into multiple pages, increasing the amount of the page that's ads, full page interstitials, running more distracting ads, etc.

For sites and services that had a successful business being ad supported, when that becomes unsuccessful, there's likely to be a lot of consolidation: if the consolidated entity is large enough to run their own ad network, they may be able to make the economics work a bit better.

You'll also see some of them try directly charging users or soliciting voluntary payments.

👤 verdverm
Most likely by directly charging users. People and business will have to adjust until a new equilibrium is found. Many are used to the "free" internet