
Please Stop Working on Ads - nachopg
http://diegobasch.com/please-stop-working-on-ads
======
cletus
This wasn't quite the diatribe I was expecting.

I basically agree that what Amazon (and Google for that matter; disclaimer: I
work for Google on display ads) is _intent_ and intent is huge. Much as
Facebook would like to become the de facto Internet, I don't see it ever
capturing that intent (let alone Twitter).

That being said, I think people discount what an inordinate amount of _good_
advertising has done and just focus on the negatives (eg the "shit you don't
need"). For example:

1\. While you might be able to afford a few dollars a month to pay for the
cost of GMail, as one example (note: I have no idea what the cost would be
here; I'm just making up numbers), would you? People are highly reluctant to
spend on this. But more to the point, what about people in Africa or Asia for
whom a few dollars a month is a significant sum of money? Those people can
enjoy the same service with an ad-supported model; and

2\. Traditional advertising channels (print, radio, TV) weren't affordable to
smaller businesses. Things like Adwords have allowed many businesses to exist
that otherwise couldn't before the advent of online advertising. How many jobs
do you think this has created and supports?

But I do see the whole "eyeballs-then-advertising" SV model as peaking if it
hasn't already. Facebook may well be the 800 pound gorilla that broke the
camel's back on that one.

And while the author notes that advertising space is growing faster than
purchasing power not all advertising space is created equal. What you simply
has is a diversity of distribution channels for your advertising. That's a
good thing. But not everyone will succeed with an ad-supported model, that's
true.

To the author's problem of working on big problems, I agree. The fact that
SpaceX spent less developing a launch system and reentry vehicle than was
spent buying Instagram [1] with its 13 employees makes me sad that so many
bright minds are working on the apocryphal social network for cats.

[1]: I realize with the 50%+ drop in Facebook's IPO price, that sum is now
significantly less.

~~~
hapless
1\. First item first: Gmail is free because the rich consumers using it are
worth a few dollars a month in ads. Those free users in Africa who don't have
the money can only exist due to cross-subsidy. The ad model helps them only by
accident. Until they have money to spend, they can only detract from the value
of Google's ad inventory.

2\. To address the second question, the cost of traditional media: Adwords
made new businesses more feasible because of the intent harvesting. It allowed
people to pay to advertise to consumers who specifically wanted something, as
opposed to a demographic block.

Instead of advertising to every 25-55 man who might want a corvette, they
could advertise to men who were thinking about a Corvette _right now_.
Previously, it cost serious bucks to reach those men thinking "right now"
because it was dumb luck -- advertise to enough men in the right demographic,
hit a few guys who had the intent.

To a significant extent, the additional data provided by Twitter and Facebook
is no better or more useful than traditional demographic data made available
by TV stations. Knowing you're a soccer mom with an SUV in Baltimore is only
slightly more useful than inferring that from the market, income bracket, sex,
and age group of viewers on a TV block.

Worse, a lot of that broad-demographic advertising is branding. It will always
be easier to make an impression with a 30 second full audio/video TV segment
than with any kind of internet ad.

Twitter/Facebook targeting information might be revolutionary in combination
with TV ad inventory. Pairing that same data with internet ad inventory is
(patently) not nearly as valuable, and it never will be.

~~~
ianstormtaylor
I'm confused. Is #1 supposed to be a rebuttal? Or was your point to reiterate
why ads are beneficial to "free users in Africa".

~~~
JoeAltmaier
I'll chime in. If we want to provide GMail free to people in Africa, then we
just do it. Govt subsidize it or something. Quit shoe-horning philanthropic
efforts into somebody's business model.

~~~
potatolicious
If philanthropy is an emergent property of a business model, I'd count my
blessings and keep it.

~~~
JoeAltmaier
The point of the article was that it Wasn't, in fact it was a drag on the
business model.

------
thesash
The consumer packaged goods industry generates two TRILLION dollars a year in
the US, by selling us things we don't think we need, through branding and
marketing. Bottled water is an entire industry that was built on selling us
plastic bottles filled with an abundantly free resource by convincing us we
needed it through, you guessed it: advertising.

There are many, many industries that rely on brand awareness to sell there
goods. There is an amazing quote which I unfortunately couldn't find that goes
something like this:

    
    
      "In order to reach the small segment of the population 
      that is interested in buying Mercedes, everyone in the
      world must know what our brand stands for."
    

Ads with intent drive clear, immediate ROI, but they can only ever capture the
segment of the market that know what they want. Display ads on the web may not
be the future of advertising, but it isn't going to go away, even if cable TV
died tomorrow. In fact, the very fact that this discussion keeps coming up
makes it pretty clear that there is a huge opportunity to innovate in this
market. Maybe the advice should be: don't build a business that runs on static
display ads, _do_ try to find an innovative ad model that engages users _and_
works for brands. Ads, for example, like the interactive old spice ad on
vimeo. Immediate ROI? No. Massive brand awareness? Absolutely.

<http://vimeo.com/47875656>

~~~
adgar
> Bottled water is an entire industry that was built on selling us plastic
> bottles filled with an abundantly free resource by convincing us we needed
> it through, you guessed it: advertising.

I drank the bottle of water on my nightstand when I woke up this morning in my
hotel. I was a bit hungover and feeling lazy. Advertising had nothing to do
with it. I wanted the bottle of water to make my morning a little easier.

Yes, people buy things they _want_ but don't _need_! It's almost like there's
more to life than the raw inputs the human body requires.

~~~
stan_rogers
>> I wanted the bottle of water to make my morning a little easier.

No, you merely wanted _water_. It could have as easily been a pitcher and
glass and would have satisfied the want.

~~~
adgar
> It could have as easily been a pitcher and glass and would have satisfied
> the want.

Actually, no it wouldn't. If you read closely, my want _was not water_. I'd
say my want was closer to _convenience_. I explicitly did not want to pour a
glass of water, my other (free) option.

I wanted to chug down 16 ounces of clean H2O and roll over. Which I did. And
it was awesome. Well worth the 2 bucks the hotel is going to charge me. In
fact... I'm probably going to make the same decision tomorrow morning. Explain
that!

Edit: waiting on a cab, so I'll be even more explicit. This morning I woke up,
exhausted after a week of travel and a night of whiskey. Ad usual, a bit
confused and not eager at all for my last day of work here in California
before I fly home tomorrow to NYC. definitely going to sleep in another half
hour at least. I know I need water but I don't even want to move. I can walk
to the bathroom but at that point I might as well get up for the day. I look
over: cheapo bottled water. The kind where the plastic is so thin you start to
crush the bottle without trying. That decision takes less than a second: I
grab it, unscrew the smaller-than-a-soda-cap cap and literally squeeze the
entire bottle's worth down my throat in under 5, 10 seconds. Sated, I turned
onto my stomach, buried my face in a pillow, and welcomed the sandman.

No way a pitcher and glass beats that. Even for free.

~~~
stan_rogers
And unscrewing a cap (and breaking the seal in your ever-so-weakened and
pathetic state) is more convenient? You're deluding yourself in order to make
an argument you can't actually substantiate.

~~~
dspeyer
I always have water next to my bed when I sleep. Usually tap water, but in a
bottle with a screw cap. I can open and close it without opening my eyes, and
it won't spill.

------
paulsutter
Making a blanket statement like "advertising is bad" is like saying that
commerce is bad.

We all agree that bad advertising is annoying. We all agree that most
advertising today is bad advertising. But that's no reason to stop working on
advertising.

EDIT: Advertising is a $600B a year industry. It isn't going to disappear.
Improving advertising seems like a good goal to me. Yes there are loftier
goals, but this is a good one.

EDIT: I'm fascinated by the downvotes. Could someone comment on how I've
violated the guidelines here?

~~~
hapless
You discussed none of the points in the article. This is likely to result in
downvotes. (Did you even read it ?)

~~~
paulsutter
Specific points in the article that I'm responding to:

"Please stop working on ads. Pick an unsolved problem instead. Not only it’s
potentially better for the world, but also you’re more likely to raise funding
and cash out. Oh, and if you’re an investor, don’t touch ad-based stuff. If
you do, you’ll be very uncool"

------
petercooper
No thanks. While ads are less than ideal, I'd rather be enriching the lives of
my 75,000 subscribers and run ads than have 500 people paying me $10 a month
for the same publications (75k paying $10 would be even better but wouldn't
have happened ;-)).

Apps powered by ads are a different kettle of fish but advertising is still a
big deal for media and publishing businesses.

~~~
axian
Unless it's a company that cures cancer over the internet, your startup isn't
enriching anyone's life. "Capture eyeballs, monetize later" mantra has failed
in almost all cases, save for few select companies who are just breaking even
on momentum alone.

Media and publishing business are dying. What a strange example to illustrate
a point.

~~~
eschutte2
As one of those 75,000 subscribers, I'm happy to say that's not correct. To
state the obvious, if the product or service weren't enriching people's lives,
why do you think they would choose to subscribe to it?

~~~
khyryk
I think there are various ways to approach this. One could argue that, for
instance, watching TV for 6 hours per day does not enrich a particular
person's life, no matter how convinced they may be that it does.

Your second sentence is a type of an argument I've encountered numerous times,
but I can't seem to recall what it's called. I may get back to this later.

------
potatolicious
Please stop writing articles telling people not to work on ads.

I don't disagree with the point, but we've seen a deluge of these recently and
not a single one has had something fresh to say. Pissing all over people
working on ads, is the new working on ads.

~~~
diego
Have you read it?

~~~
potatolicious
Indeed. The point about user intent vs. value of advertising is neither new
nor obscure - any semi-competent online marketer knows this (and this is also
why Google continues to make the big bucks).

The generic complaints re: "traffic first, fuck revenue!" is true, but like
the above, is neither a new statement nor is it one that really needs
popularizing - it's already being repeated ad nauseum in the community.

There's also a whole side of marketing being discounted - which is that it is
not always necessary for ads to convert directly to a sale. Coca-Cola, for
example, invests a great deal of money in advertising without the expectation
that each impression convert directly to a sale. Brand maintenance is a valid
field, but that's besides the point.

Your post is simply repeating a point that's been hammered home, repeatedly
and enthusiastically, by various people over the last few weeks. It's getting
pretty old. Which isn't to say the topic should be verboten, but can we
refrain from writing another diatribe against the failure of ad-based business
models unless we have something new to bring to the table?

[edit] And another thing, and this isn't necessarily pointed at you - but
these "screw ad-based business models!" posts seem to have come about mainly
_after_ the poor Facebook IPO. There are a lot of people cashing in on the
schadenfreude, writing "I told you so!" posts. It all strikes me as self
congratulatory and needlessly vindictive.

~~~
nachopg
People have complained about the lack of originality from the beginning of
times. Please stop writing about it unless you have something new to say.

------
sriramk
The funny thing is that the people I know who've worked on ads have some of
the most in-demand skill sets around.

It turns out that most successful consumer internet companies in the last
decade have had to turn to some form of advertising (FB, Google, Yahoo,
Twitter, Pandora, etc). And knowing how to build those systems makes you
someone in high demand.

~~~
axian
Just because something is in high demand doesn't prove anything. There is high
demand for homeopathic sugar pills and suburban shamans who charge $100/hr for
consultation.

All those companies you've mentioned have huge problems which points them
directly at the revenue streams they've bet on.

Facebook is taking a beating because they can't monetize the fastest growing
mobile sector. Google is desperately working against the clock to beat the
bubble by branching out in all kinds of industries unrelated to AdSense Yahoo
has been bleeding money for a decade Twitter is in the same position as
Facebook sans the stock market pressure ...and Pandora has been charging
monthly fees for a service because they've seen the writing on the wall.

No company on that list is doing anything exciting or disruptive that's tied
to ads. It's a dead end.

"The people you know". Yeah.

------
Lukeas14
The internet still hasn't figured out a way to profitably produce a high
quality service or content with ads as the primary revenue source. So far, the
only profitable approach is to reach the scale of Facebook/Google which would
enable you to create your own ad network large enough to attract individual ad
buyers. But, this does not mean that it's impossible or that we won't come up
with a solution in the near future. And the people who I would bet on to
create such a solution are those who are currently "working on ads".

It's a problem in desperate need of a solution simply because there are so
many services (yelp, craigslist, pandora, etc.) that are free to users but
expensive to build and maintain. It would be a shame to miss out on the next
generation of ad supported content simply because we gave up on trying to make
it profitable.

------
pearkes
People should totally be working on ads. Ad's are horribly broken in many
cases. Mobile advertising, for example, provides little, if any, value to the
user in it's current form.

That's why I'm proud I work[1] on ads. Let's take a step in the right
direction (RESPECT THE USER!).

[1] <http://kiip.me>.

------
mattmaroon
I think there's a false dichotomy here between solving a problem and building
an ad-supported service. Facebook definitely solves a number of problems. How
to keep in touch with people, communicate, share photos, etc. That's why
people use it. Admittedly it doesn't do anything that couldn't be done (or
wasn't done) another way before it existed, but it reduces the friction and
wraps them up into a great package.

If free social networks were banned, a lot of people would still pay $5 or
$10/mo to use Facebook. But since a law like that seems unlikely in most
countries, people will always gravitate to a free solution or some other
method of monetization more creative than direct payment has to win.

~~~
mark_l_watson
I don't know about $5 to $10/month for Facebook. I would like to see a HN
vote/survey on how much people would pay per month for the most used web
properties if paying was the only way to see them. For me, the maximum monthly
costs would be:

NYT. $15 Gmail $3 LinkedIn $2 Facebook $2

Not sure though about Facebook, HN, Reddit, etc. since they would be so much
less valuable without large user bases.

------
diego
For those who criticize the lack of "anything new" in my post:

What motivated me to write it is that in the past few weeks I've met SEVERAL
entrepreneurs who are starting businesses that would have no choice but to
depend on ads. I'm almost at the point where I want to start a campaign to
convince people that this is a bad idea, given how many other important
problems are not receiving enough attention. I'm not saying that people should
become missionaries. Many of those problems will create huge companies. Data
suggest that starting a traffic-driven business today is like starting a new
Hotmail.

~~~
jaredsohn
>given how many other important problems are not receiving enough attention

This would be a good place to mention some of them.

~~~
prodigal_erik
And some justification as to why they should be expected to be profitable, as
opposed to all the problems society pays lip service to but doesn't care much
about in practice.

------
andrewla
I think what this article is saying is more along the lines of "don't come to
me with business ideas that rely on advertising as their revenue stream", or
generalized to "there are many people who will not put money into business
ideas that rely on advertising as their revenue stream". [1]

While true, it's not useful -- there's lots of evidence that there are people
who feel the other way. Ideas for companies that have no more of a business
model than "attract eyeballs" seem to do just fine, and there are notable
examples that do more than just fine (e.g. Google). The point has been made
many a time that human attention is not easy to get, and there are people
willing to pay money to get some fraction of that attention.

My pet peeve is when sites that do not need to carry advertising carry large
amounts of very annoying advertising -- I'm looking at you, Amazon, with your
"Product Ads From External Websites", which you occasionally trick me into
clicking because it looks like "Customers Who Looked At This Also Looked At".
Or, far worse, is eBay, which is so inundated with ads that I find it almost
unusable.

[1] The exception, I guess, being companies that are in the business of
serving or enhancing ads.

------
unreal37
The author doesn't seem to understand WHY companies want to advertise on
platforms like Twitter and Facebook. (Facebook makes $4B a year on
advertising, so we're not talking about an insignificant amount of money
here.)

That's really the most important part. These are the companies spending their
money. Why do they want to "waste" their money on those sites if as the author
states nobody goes there to buy things.

Two reasons: 1) That's where people are. People spend 8 hours a month[1] on
Facebook out of an average of 32 total hours a month[2] online - 25%. A
company would be stupid not to want to be seen there. I'm sorry, but if your
business is selling things to the average consumer, the average consumer is on
Facebook. They go there to be social with their customers, friend, like,
share, and follow. That leads me to my second point...

2) It's not about selling (right now). The OP makes a huge assumption that ads
lead to clicks lead to sales. Ever seen a TV ad? Do you think TV viewers stop
watching the program to run to the store to buy Tide? No. It's about branding,
having a marketing message and making sure everyone sees it. The 30-second
elevator pitch. Then when they ARE in the mood to buy, when they ARE in the
store, they think about your product. "Hey, I need a new X soon, maybe I
should check out product Y I've been hearing about."

I can certainly see how people can think "there's no intent to buy" on
Facebook and Twitter and maybe that's often true, but that's not even the
point. And ad-supported businesses will always always exist although it might
not be the best model for you.

[1] <http://mashable.com/2011/09/30/wasting-time-on-facebook/> [2]
<http://www.go-gulf.com/blog/online-time>

------
dm8
Somewhat agree with Diego. But unfortunately, people are not used to pay on
the web. I've built an extremely useful service but only 1 in 100 was willing
to pay, which is ridiculous to say.

On a side note, what if you are building a startup to deliver ads? :) (Any
thoughts on building a startup for ad-tech)

~~~
guga31bb
> _I've built an extremely useful service but only 1 in 100 was willing to
> pay, which is ridiculous to say._

To play devil's advocate, if only 1 in 100 people are willing to pay for your
service, how useful can it really be? I'd think those 100 people are more
qualified to judge how useful it is _for them_ than the person who built the
service.

~~~
dm8
Well, we were competing against "free" service offered by big co. Average user
doesn't want to pay. They would say us, "ohh we will go to free service by big
co". And I learnt big lesson that you can't compete against big co's
especially their free products directly.

------
jemka
>Facebook and Twitter are different. Not many people think: “I want to buy a
Veeblefetzer. I’m going to Twitter / Facebook to start my research.”

Likewise, I'm not sitting on the couch watching prime time television and
thinking, "I need a new car, I'm going to start my research by watching car
commercials." Nor is it my intent to "start my research" for any product that
appears in magazines, or road side billboards, or any other similar form of
advertising. Of course, that's not the purpose of those forms of advertising
and OP seems to have a fundamental misunderstanding about the subject.

I don't have a problem taking checks from advertisers as long as they're
willing to write them and neither should anyone else.

~~~
diego
Oh, but I don't. What do you think is the valuation of TV networks these days?
Brand reinforcement advertising is worth much less than intent-based ads that
leads to instant conversion.

"A stat like $3.5 million for 30 seconds of airtime may see a serious hit in
the future as advertisers realize that the internet can yield just as big an
audience as football without having to go through NBC."

[http://www.forbes.com/sites/davidthier/2012/01/30/the-end-
of...](http://www.forbes.com/sites/davidthier/2012/01/30/the-end-of-the-
superbowl-ad/)

~~~
jemka
>"A stat like $3.5 million for 30 seconds of airtime may see a serious hit in
the future"

Ok, and until then the advertisers are still writing checks. You're not making
a point that convinces people to stop using an advertising revenue model right
now.

------
holograham
Part of advertising is brand impressions. You may not buy sometime at that
time but your subconscious has been exposed to the brand enough (often with
other feel-good emotional triggers) that when you do need to buy something you
have a positive attraction to their particular brand.

Online advertising is clearly a viable business model. The article correctly
points out that aggregate purchasing power has grown slowly so their is more
fighting for the same pool of dollars. The problem is not that advertising is
a bad business, it's just a smaller business than some investors and founders
expected. Facebook brings in hundreds of millions of advertising dollars per
year. Not bad.

------
AznHisoka
I think the most compelling reason to not build a business around ads is that
it has a poor ROI. Just do the math, and even with the most optimistic
estimations, you'll still be disappointed.

1 million uniques a month => 10,000,000 PV/month => $5 CPM => $500,000/month
=> $50,000/month => $600K/year.

Sounds great, but then you realize coming up with 1 million uniques by
yourself is highly unlikely, and will probably depend on high costs as well.

Side Rant: Those people saying 10 million users is the next 1 million users...
most of them are investors who invested in Twitter or Instagram. They have NO
clue how hard it is to get even 100K users, let alone 10 million or 1 million.
Give me a break.

------
IsaacL
I can't understand this snobbishness about ads. Advertising has made a lot of
web companies a lot of money.

Yes, it's the uncreative default revenue stream. Unsure how to make money?
Ads! But that's also a good thing - there's a default internet revenue model
that works.

If you can make money via freemium/premium/whatever, bully for you. But don't
knock ads just because you think the smartest minds "should be curing cancer,
not optimising CTRs". Ads have helped support many world-changing web
services. It is not a coincidence that 8 of the top 10 websites are funded
primarily by advertising.

------
brudgers
I've been wondering how much of the total bandwidth and electrical energy
consumed by the internet is the result of advertising infrastructure. I've
also been wondering about how much time is lost waiting for pages to load
because of it.

I got interested when a vBulletin site I frequent added a Facebook "Like"
button. I was amazed at how much crap went back and forth to Facebook every
time I visited a page. I didn't have a Facebook account at the time, but it
prompted me to switch to Firefox fulltime and install NoScript.

------
rdevnull
This is not entirely accurate because: 1) True google ads can be more
effective but are much more expensive vs. Facebook; 2) On facebook you can in
fact target users by age and interests. You cannot target by age on google and
with an higher CPC it doesn't always pay off.

The model of facebook or twitter is not wrong. It is the same used by TV ads,
newspapers etc. you try to target your potential consumers that might be
perfectly good passive buyers. Not only people that search for an Hawaii
vacation would buy one ....

------
mark_l_watson
I recently saw a good comment, something like 'the best minds of today are
working on Internet advertising instead of curing cancer, cleaner sustainable
energy, etc.'

Tough problem though. I don't want Google without ads. For other web
properties like my favorite blogs to read, NYT, etc. I would be happy enough
to make micro payments if doing so was really easy. (Actually, I do pay for
the NYT, so why the ads?)

Maybe the conversation should be about easy to use and secure micro payments.

------
lazyjones
I would like to agree, but have to point out that ads are the honest
counterpart of the widespread guerilla marketing: fake reviews and forum
posts, paid editorials and tv shows. As annoying (and technically backwards,
i.e. still using document.write() and cache-busting headers etc.) it may be,
the thriving online advertising industry prevents dishonest practices to a
large extent - and it enables users to block ads!

------
aretiste
If search engines starting charging I'd teach people to scrape and if
necessary to crawl, for free. Others would too. The web is about sharing
knowledge.

I dare any search engine to start charging. Go for it.

They would end up like Twitter is going to end up (if they continue down the
path they're on).

------
dev1n
This goes back to the old adage by Tom Preston-Werner on making Gravatar (I
think); paraphrasing, but if you don't design for revenue generating parts
into a site, you're gonna have a bad time trying to make money off of
advertisements.

------
badclient
_It’s 2 pm. Alice goes to Facebook. Bob goes to Amazon. Charlie goes to
Twitter._

If you have to bet on which site I'd most likely _actually_ be on on a random
afternoon at 2pm, it wouldn't be Amazon; it would almost certainly be
facebook.

------
salman89
So OP thinks that google should stop working on ads and should start charging
for all its free services?

There's nothing wrong with ads - just make them good and make sure it aligns
with the product (Adsense).

------
seanc722
I would rather have people working on ads and them showing up on my Google
searches then have to pay X amount per search to pay for the cost to
develop/run/maintain.

------
aretiste
Advertising is now an art form. But not the ads you see on the web. Leave ads
to the print, radio and TV folks.

