this is a very interesting read, thank you for posting
you may consider a simple example for yourself:
Portfolio $100,000.00
$60k into US Tbills, (3, 5, 10y)
$40k into SP500 cash
$40k into Sp500 on margin
$140k exposure
For the portfolio to be wiped out, you would need to have a 50% drawdown in the sp500 which hasn't happened in 90 years, and that assumes in a crash your tbill face value wont soar due to rate cuts
I don't see a problem with that, but for the record, the title on the site is lower-case for me (both browser tab title, and the header when in reader mode).
I’d suggest that the title should be, “Competition for Google AdWords is so strong that unsophisticated advertisers can no longer get a good return. Where do I promote my business now?”
As someone who leads large parts of ad tech for TikTok and worked at Google for 10 years, it’s the K shaped economy that is pressing SMBs out. Pure and simple
Everyone can make up some complex theories but I see it in the numbers every day. Spend distribution is now k shaped and SMBs simply can’t compete at top end performance levels.
This seems one of the more important comments here - a K shaped economy (Rich get richer up the rising arm of the K and the rest of us are on the down arm)
dominates everything (ie asset price inflation means if you had assets in 2020 you probably still do else good luck) and this just is one of many ways the playing field has tilted towards the richest.
And it is always a choice - we choose platforms and regulations and spending priorities. If “we” choose a different set of tech regulations the K shaped economy can be put back in its box.
For me the problem was most clearly outlined by Cory Doctorow “developers did not unionise or rebel in time because they thought of themselves as temporarily embarrassed entrepreneurs”.
There is probably an element of truth in that however when I looked at the people who outbid me on keywords half were selling high value products where they had enough margin to make it viable. The other half seemed to be spaffing their money up the wall.
SMBs broadly spend 200-400 dollars a month on ads and see marginal to negative returns against 10 million in spend for large clients. Even 1000-5000 see marginal returns at best unless the target small demo high return (local premium services). They lack the budgets for learning and optimization let alone optimal price per placement.
This combined with SMBs targeting everyday joes with increasing less demand availability for anything it leaves them crushed on both sides.
Wow so 10,000-100,000x spend difference. That is a wide K.
Do you think there’s any hope for SMB? Eg I’ve seen some companies tout AI advertising optimization for SMB but when I looked into one for investment the numbers weren’t very compelling.
What is the proportion of spend of SMBs vs large clients? Would you say that large clients are responsible for most of the advertising revenue? I always assumed that would be something like a 50/50 split, but these numbers made me question that assumption.
It affects everyone. It's always been the case, also in traditional advertising. As soon as a company gets rich it defaults to massive marketing (at a loss) to stay on top and drown the underdogs. That's why I think marketing spend should be capped by revenue by law. The current system stiffles competition
That would make it easy to implement: a simple payment receipt to a journalist who visited a "demo" would be enough to start fining them. Imagine the honesty of the press when it can't get bribed by the oligarchs anymore. Or imagine charities needing to court local producers instead of poison-cola for endorsements. It would be a different world!
Not all companies that have massive budgets only sell to affluent consumers. For example, walmart, amazon, most streaming services, coca-cola, pepsi, mcdonalds, etc.
> Also, In my own experience for my business ( also entertainment) I have found reddit ads to be useful.
Reddit is very hit or miss depending on your target audience.
Depending on your Reddit target audience, a lot of people could have adblock installed. They might be loyal to communities that have approved vendor lists where everyone parrots the same vendor recommendations back and forth in every thread, so not being part of that game means you're left out. In some niches, the subreddit moderators have a financial relationship with vendors and they'll put their weight into swaying every conversation away from competitors.
For other niches, none of this applies and Reddit can be a good ad destination. It really depends
100%. My business is in the smart home space. I peruse various smart home subreddit communities, and they all have a few brands that are aggressively celebrated on Reddit. Market research, financial disclosures, and other public data largely indicates that these brands are not all that popular, especially in the biggest-spend markets.
Thank you. This is a perfect example of clickbait. I trusted the HN crowd, clicked the link, and immediately realized the trap. I'm upset at how effective it is. And also commend the author for publishing an article specifically engineered to waste the viewers time.
In truth, I have never seen a company doing such an insane 180 against it's traditional suppliers as Google is doing against the websites populating its search pages which now Google milks as mere training data. Google Search is dead, from the perspective of the websites, and there is less and less incentive to spend effort and money to appear on the first pages.
Google better have a good strategy because this is bound to have 2nd order effects down the road, like, why would I pay money for advertising on a dead internet search engine? If AI is killing organic results, then AI better make money itself, because dead websites don't buy ads.
It's been some years since I've had to put ads on the web, but I found Reddit ads insanely effective. Really, Google ads have been dead for a long time. I found them hardly effective at all since maybe 2011.
A surgeon in our family got basically all his (private) clients from Google. Spend was multiple k per month. If you consider that one surgery brings in 7k in revenue, then those numbers actually make sense. He's retired now but did this up to 2y ago.
> Really, Google ads have been dead for a long time.
For you perhaps. I work with a huge amount of businesses whose profits are still driven almost entirely by them, who have seen not even a blip and make money hand over fist.
I wish I knew the difference. I’ve ran or been close to tens of businesses over the last 20 years and we’ve always paid the Google tax, but I’m not sure it’s ever had a positive ROI.
I think he's aimed in the right direction with the observation about short videos.
I tried to load his website. It took a full minute to come up. Maybe that's the HN hug of death or something, but this is surely issue #1 to resolve.
Beyond that I would ask whether targeting the "young'uns" directly is the correct strategy. His business is party entertainment, kids' birthday parties could be the biggest slice of that, but the kid isn't the purchasing decisionmaker, and there are all these other opportunities (like corporate events) too.
And then I would consider whether paying for ads in shorts is the right or only way to approach the world of video. The thing about video is it's huge, lucrative, and eating up more of people's time every year. People are moving from the text Internet, to watching videos. I would think given the nature of the business this guy has raw footage which can be turned into entertaining videos, or can produce it pretty quickly. I'm increasingly surprised by how much some people can earn on Youtube, by creating videos that also function as marketing collateral for their business. He will ultimately need to geotarget to get customers, so yeah that's probably paid ads, but a good YouTube channel would build authority, making sales easier to close, and might also make him more money than you'd expect via ad revenue.
My entertainment website typically gets 10-100 visitors per day, yesterday it was more like 1000 per hour. The only reason it's still online is because of CloudFlare CDN!
My content is best live and in person but you are right, will be concentrating more on video content for yt and others going forward
Reddits been building up its user base in India the past few years.[1]
I’m permabanned on Reddit so I only consume via the default not logged in feed and I run into some comments in what I assume is Hindi(might be marathi or one of the multiple other languages on the continent) or posts from subreddits explicitly about some aspect of india
I had a few alt accounts, they were all banned and I wasn’t able to make a new account with existing emails.
I assume, with no evidence, that they just used the same data tracking for ads, to enforce the ban. I think Meta turned on the real banning tech during a panic in Covid iirc
I noticed I was shadow banned on youtube (for comments). I have no idea what was the reason because I rarely comment and am very civil when I do. It doesn’t bother me much though, I was just curious how it happened.
I got a few strikes. They were in one of two main categories
1: my true beliefs
2: directly quoting the president
I laugh at any current supporters of this admin who complain about censorship while this is happening and we’re doing shit like having multiple media companies being sued by the king left and right.
Yes, I agree with you. It’s become quite ridiculous. I expect things will turn for the worse and comments would be used against people in various ways if it’s not already happening, eg. being scanned on social media upon entering the US. Dark times…
It does not follow that people making more searches means people are having more successful searches. If google found the exact thing you were looking for and put it top centre in the results, would the number of human searchers stay the same but the number of human searches drop?
Again, then why are people using Google more than ever?
I don't really see how "dead internet theory" explains that. If it were as bad as you claim, surely usage would be plummeting? But it's just the opposite.
Dead internet theory means real users are declining while bot users are skyrocketing.
For example google search is such a terrible experience these days that I’ll often ask an LLM instead.
That LLM may do multiple google and other searches on my behalf, combine, collate and present me with just the information I am looking for, bypassing the search experience entirely.
This is a fundamentally different use case from human traffic.
> Are you sure it’s _people_ driving this increase?
Most likely - yes. If Google has been dead for years people wouldn't pour hundreds of billions of dollars into ads there. The Search revenue keeps increasing, even since ChatGPT showed up. It might stagnate soon or even decrease a bit - but "death" ? The numbers don't back this up. One blog saying he stops paying for Google ads conflicts with the reality of around 200 billion yearly revenue from Search.
Exactly this. Businesses decide whether to pay for ads based on clickthru rates and conversions. Bots don't click through. They don't convert. If these rates fall, advertisers will pay proportionally less as their max bid, and Search ads revenue will fall substantially.
That hasn't happened. Google continues to grow with real users.
The policy described in my link is literally about making each user search more to get the results they want in order to drive more ad revenue. That would create more searches and a less good user experience.
AI is not and cannot be search. Search is dead and has been for a few years now. Search has seemingly been subsumed into the LLM monster, considering how "fuzzy" queries have become (probably because they're not hitting the search algorithm without being massaged by "something else"). Significant portions of the web have been purged from Google's index, which means that neither Gemini nor Search can present those pages to users.
When people say "search is dead", I feel like you and I live on different planets.
If I have an idea of what I want, Google search works great. On the rare occasion I don't know the specific thing I'm looking for, Gemini points the way.
It had never ever been easier for me to find what I'm looking for on the internet, since 1993-1994.
I do wonder how much browser, location, and language plays into this.
I believed these sorts of statements a few years ago, but not anymore. Results were hit-and-miss enough to give the benefit-of-the-doubt. They're now so bad that I assume bad faith, either on the part of the speaker or Google.
Instead sites adds Gemini integrations, which are targeted based on prompts. When you pay enough, Gemini recommends your shop and AI buys the stuff for the target audience.
Google considers the consumer's side, not just the publishers. Users often don't want to visit someone's website (and then dodge ads and cookie/newsletter/notification popups). If the query can be answered without veer visiting a website, so much the better.
Hm good point but if one were to try to reach visibility via let's say contacting the creators themselves or making reddit showcases themselves?
I am not sure what might work better, sponsorships or Ads. Of course some are definitely icky sponsorships but if one were to align with small youtubers who develop their own things and you enjoy their content and there might be an overlap etc.
I personally have an ad blocker so I don't really know what might work for. I guess organic marketing? But how does one achieve it?
Any good books / ideas on more sustainable forms of marketing aside from paying the large corporations a sort of land tax basically?
Google search ain't dead at all: it became so good something silly like 99% of all the queries have to be answered by the Google AI before the very first "result". And for those who want more, there's the "continue this discussion with Gemini".
Now this may not be great for Google Ads (dunno about that) but Google search now works better than it ever did.
The AI summary is good enough often enough that it's tempting to rely on it. But, at least as of a week or two ago when I finally decided to block it, it still gets things badly wrong. (Sometimes seemingly inexplicably, but often because the results don't obviously contain an answer and yet the LLM is desperate to provide one.)
Remember when people wrote things online because they had something useful to say and share and that was enough?
Now it’s slop factory of people having a writing quota to get enough ads because they don’t want to work. Particularly true for tech writers who praise things like leetcode then can’t get a real job.
Now it’s supercharged by ai and they’re upset how accessible their slop job is. I just find that funny I suppose.
Funnily enough, linear algebra is a good example of how doing doesn't lead to understanding. Just calculating eigenvalues and eigenvectors don't give you the geometric view of what is happening. Also talk to some engineering students who learned how to do matrix multiplication, but can't tell you what a vector is (it is not just something with magnitude and direction).
"Pub date: February 21, 2023"
reply