this post was submitted on 25 Jan 2024
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I just don't understand how advertising still makes so much money. Who's watching ads and clicking on them these days? Who sees an ad that isn't annoying, pandering, or downright infuriating to them? The ad business is so profitable, it's Google's main revenue source and Netflix is getting rid of a paid tier just to focus on their ad-supported one.
How is the ad business so profitable?
We try to avoid ads, but there is vast majority who just watches ads and get influenced.
My wife works in advertising. Online ads are about building brand recognition. It's affecting it's primary goal by having you see the advertisement. Clicking on the ad is another metric, but it's not necessarily the goal, more of icing on the cake.
The companies/govt agencies have huge budgets to get people to see their message. The big reason the house brand of whatever at the store is 10% cheaper is that brand doesn't advertise. You the consumer are paying for advertising by buying products that are advertised.
That's what someone in advertising would say. Co-branded (store brands) are cheaper because they are not as good as the brand name. The co-brand manufacturing company intentionally makes them with less quality, even if they are literally made in the same factory as brand names. If they didn't, the brand name company would complain and pull their business.
Then there are brands like Nabisco that do everything in house. Oreos are way better than most copies because they have better ingredients and quality control.
No I don't want to hear anyone's spiel about how they think co-branded food is better than brand names. That's your opinion. The facts are that co-manufacturing factories literally adjust their quality based on what the brands pay them.
A mid sized company I work with did some in-house analytics on their advertising spending and concluded that 75% was just money wasted
Several million dollars cut from future ad budgets with no negative revenue impact
I click on product ads when I'm looking for generic product categories and don't have a brand and model in mind.
There's millions of apps with ads, billions of websites with ads, trillions of hours of videos with ads. Advertising is terrible, but if you can't see how they make money, your blind.
My point question was not how the companies serving the ads are making money. My question is why companies spend so much to make and serve ads and how they're getting enough return to continue doing it in such a capacity that it pays for the free Internet services we use.