No matter what you think of the privacy aspects, I worry that we've decided to build the entire modern tech universe around the mother of all bubbles. All manner of bad business decisions seem to be running with the assumption that back-end ad/targeting/etc. revenue will eventually patch the hole in the sides of their business model.
Here's my theory for the bubble factor:
You can sort of divide the ad market into four quadrants.
1) Premium advertiser, premium content. Coke and Toyota paying to be on the front page of the New York Times etc.
2) Premium advertiser, low-grade content. A lot of this is remarketing, where that damned fridge you looked at once six months ago follows you across the web.
3) Low-grade advertiser, premium content. This is likely the rarest quadrant, as it's too expensive for amateurs to play in.
4) Low-grade advertiser and content. Think of the chumboxes at the bottom of news sites.
I feel like Quadrant 1 and 2 are surprisingly at risk.
Premium advertisers have experts running their campaigns and analytics up the wazoo. Eventually they're going to ask "Is it worth paying Google/Meta/etc. NN% of the total spend when we could probably call top-50 publishers directly and arrange a deal? They may also be more brand-sensitive, worried about blowback from inappropriate ad placement in Quadrant 2.
There is a real risk that the "better" sections of the ad market eventually graduate away from brokered networks, and eventually Google and Meta are left as a glorified Taboola. Is there a lot of money in there? Possibly, but I wonder how sustainable the money is. I suspect a lot of revenue from small advertisers is due to very poor inefficiency (bad campaign design, poorly managed spend, dark pattern tooling), and it runs a risk of death-spiraling as the quality of the network tanks.
Facebook is an interesting monetization problem because the product is so intensely based on network effects. A strategy to maximize ad revenue may end up coming at the cost of some user abandonment, which is the ultimate risk for their platform. They need to thread the needle of "how creepy can we be without making people leave."
Here's my theory for the bubble factor:
You can sort of divide the ad market into four quadrants.
1) Premium advertiser, premium content. Coke and Toyota paying to be on the front page of the New York Times etc. 2) Premium advertiser, low-grade content. A lot of this is remarketing, where that damned fridge you looked at once six months ago follows you across the web.
3) Low-grade advertiser, premium content. This is likely the rarest quadrant, as it's too expensive for amateurs to play in. 4) Low-grade advertiser and content. Think of the chumboxes at the bottom of news sites.
I feel like Quadrant 1 and 2 are surprisingly at risk.
Premium advertisers have experts running their campaigns and analytics up the wazoo. Eventually they're going to ask "Is it worth paying Google/Meta/etc. NN% of the total spend when we could probably call top-50 publishers directly and arrange a deal? They may also be more brand-sensitive, worried about blowback from inappropriate ad placement in Quadrant 2.
There is a real risk that the "better" sections of the ad market eventually graduate away from brokered networks, and eventually Google and Meta are left as a glorified Taboola. Is there a lot of money in there? Possibly, but I wonder how sustainable the money is. I suspect a lot of revenue from small advertisers is due to very poor inefficiency (bad campaign design, poorly managed spend, dark pattern tooling), and it runs a risk of death-spiraling as the quality of the network tanks.
Facebook is an interesting monetization problem because the product is so intensely based on network effects. A strategy to maximize ad revenue may end up coming at the cost of some user abandonment, which is the ultimate risk for their platform. They need to thread the needle of "how creepy can we be without making people leave."