I guess you're new here. Personally, after 20+ years working in SF, I think that's a perfectly plausible outcome. I mean, the whole internet ad market has been a long slide to being as awful as they can get away with. The median investor cares much, much, much more about ROI than how that return is achieved. And a common outcome for content companies that aren't stars but have nonzero revenue is to end up as zombies that do anything that juices income a bit.
There are still a lot of ads. The company that now owns SF buys up Websites for the sole purpose of making money through ad revenue. I don't think they are interested in anything but milking the cow they bought. No judgment. I just believe those are the facts.
Reality leans the other way. What eill likely happen is that sites that used to make 100k a year from ads see their revenue drop to 70k then 50k then 30k. To stay afloat they plaster more and worse ads in order to survive.
This is exactly what happened during the first dot com crash when we went from $35 CPM banner ads to $1. Suddenly, ads were slathered on every page or websites simply disappeared. What we really need is a deal that works well for all three parties: advertisers, consumers and content providers. Google Adsense was this perfect solution for a while (until it got optimized to max profitability).
Maybe online advertising is like social networks and can only enjoy brief moments of relative balance before the cycle starts anew.
Rather, the problem lies in the need to generate increasing returns without charging anyone for a service. Facebook's recovery model has been to acquire and monetize anything with a growing userbase, Google's has been to sprawl across as many verticals as possible in a wild goose chase for long term sustenance.
It's going to be a sad day for Silicon Valley when advertisers stop getting their money's worth – which seems inevitable at this point. Products reach their saturation point and you can either kill the user experience (and subsequently kill the userbase) or you can start charging (and subsequently kill the userbase).
We do still have a few more years left of pseudo-charitable "Internet-giving initiatives" to get the rest of the world's loyal consumer-to-be population online. That way we can shove ads for the local ebola clinic in front of people in need of real help. That should sustain SF housing prices for another decade or so.
I definitely think you’re right on the conclusion: a lot of content sites are going to need to dramatically scale back their size or simply fold. It feels a lot like when VCs pile money into an area and it takes longer for viable business models to win out, only with a much longer run time since the advertising market is so much larger.
Quite optimistic views there. Most content doesn't have a real monetary value beyond generating views. There won't be an acceptable ads consortium, advertisers will only get more ruthless or die.
Entirely possible. They're predicting that half (1/2) of the businesses in my city will fail by the end of summer. If you're still holding on then you're cutting expenses to the bone... with the 2nd and 3rd order effects being that ad revenue, ether via click, or just in a "Eat At Joe's" ad in a local paper, is gone.
That's a very interesting point that I never fully considered. Of course, there is no doubt that some content providers already are taking money to reflect someone else's agenda, but it's definitely worth considering what happens if advertising fails as a business model for the majority...
This idea is as inevitable as it's horrible. It amazes me just how much of the web is supported by "ads". And the depths to which a company will sink in order to increase their ad revenue. And just when you think we have hit rock bottom, a new company will dig to greater depths.
Seems like the content market is due for a correction, then. If people are sick of toxic ads, and toxic ads pay for content, but nobody else wants to pay for the content, the content can just die and we'll figure something else out I'm sure.
Media companies might have to go back to primarily subscriptions, especially since adblock is ubiquitous and people aren't visiting from social media like they were. They might also have to settle for making less revenue because the "stonks only go up" economy doesn't really exist anymore and I feel like there will be a lot of correction in a lot of companies as a result.
This will probably continue to happen. Google/FB etc. used content that was created by others to monetize them but kept the profits away from the content creators. This resulted in a lot of original content going away (See the death spiral of the local newspapers) and getting replaced by clickbait, algorithmic content, misinformation etc. I don't think there is room for the same amount of growth going forward and this is simply the market adjusting their P/E multiple to account for the lower growth rate (FB is being hit harder because of the Meta overspending debacle).
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