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Predicting OpenAI's ad strategy

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Re: Predicting OpenAI's ad strategy

#241

Post by gruez »

csense wrote: post #209
bearjaws wrote: post #62

There is something to be said about the state of advertising. Increasingly it seems you must go to the almighty Google or Meta in order to launch any business. We're looking to expand into a new business line and have out grown our pharmacy capacity. The new business line will cost about $2M in software dev, and $3M for the new facility. The advertising budget? $40,000,000 (annual). We can build 10 robotic pharmacies…

Advertising spend being too high is a symptom of a supply glut. Too many products in the marketplace, not enough consumers to buy them. In a different world where there are higher wages, more people would have more spending power. Then companies wouldn't have to spend as many dollars on advertising, which they could split between higher wages, higher margins and lower prices. Alas, the short-term single-firm directio…

>Maybe Henry Ford was on to something when he shocked the world by paying his employees enough to afford the product they were making (more than doubling many workers' wages)...

That's a nice story to tell, but the economics never works out if you do the math. Whatever extra wages you pay, you only get a fraction of that back in increased sales. How much percent of a worker's income do you think is spent on a car? As a rough measure we can use the BLS's CPI weights for "new and used vehicles", which comes in at 7.4%, with an extra 1.4% if you include maintenance and parts. By that alone "paying his employees enough to afford the product they were making" is going to be a losing proposition, because Ford can only hope to get 8.8% of whatever they paid in wages back as revenue. And all of this is ignoring the fact that you can't pay extra wages out of revenue, only profit, so you can only hope to recoup a fraction of that 8.8%.

Re: Predicting OpenAI's ad strategy

#242

Post by PlatoIsADisease »

jamesgill wrote: post #164

I'm surprised how few seem to understand this; AI is the ultimate 'net' to capture and exploit consumers. AI was never about improving civilization; it was always about money. This is the only thing 'inevitable' about AI.

>AI was never about improving civilization; it was always about money.

Why not both? It has diagnosed patients who were unsolved by humans. And it was cheaper than doctors.

Re: Predicting OpenAI's ad strategy

#243

Post by mjevans »

dwaltrip wrote: post #230
Aurornis wrote: post #211

Earlier quoted context omitted.

> I doubt the ROI would be so high if organic results stood any chance. This is just the same fallacy. In what world are people going to organically share ads for this company on their Facebook feeds? Who is going to Google the company name before they know about it? Every business needs to proactively acquire customers. Distribution and CAC are top of mind values for any growth business. It has been this way long be…

Information can travel without people paying for it do so. Ban most ads and everything will still work fine.

I would prefer a world that returned to the older '30 second blip (for the only) sponsor of the program' ad, which also seemed to be of the limited form: Here's Product X, it does Y, which makes your life better because Z. Informative, dry, stated by an announcer in a calm and not demanding way.

Re: Predicting OpenAI's ad strategy

#244

Post by gruez »

achierius wrote: post #233
csense wrote: post #209

Earlier quoted context omitted.

Advertising spend being too high is a symptom of a supply glut. Too many products in the marketplace, not enough consumers to buy them. In a different world where there are higher wages, more people would have more spending power. Then companies wouldn't have to spend as many dollars on advertising, which they could split between higher wages, higher margins and lower prices. Alas, the short-term single-firm directio…

> The class conflict shouldn't be between workers and employers. Then why don't employers, the ones with essentially all the power here, tend to choose actions that go against the interests of the working class? Simple: regardless of what you think "should" happen, a study of history tells us what actually tends to happen in reality, and that tendency is towards class war between the ruling and exploited classes. Any…

>... so either they're all renting or none are.

The article in the parent comment specifically spells out why renting out land is different than say, "renting" out a car factory (or any other productive asset).

Re: Predicting OpenAI's ad strategy

#245

Post by gruez »

Herring wrote: post #235
csense wrote: post #209

Earlier quoted context omitted.

Advertising spend being too high is a symptom of a supply glut. Too many products in the marketplace, not enough consumers to buy them. In a different world where there are higher wages, more people would have more spending power. Then companies wouldn't have to spend as many dollars on advertising, which they could split between higher wages, higher margins and lower prices. Alas, the short-term single-firm directio…

> In a different world where there are higher wages, more people would have more spending power. Then companies wouldn't have to spend as many dollars on advertising, which they could split between higher wages, higher margins and lower prices. Interesting hypothesis. I looked it up in Wilkinson and Pickett, The Spirit Level. The authors provide cross-sectional data across 23 rich nations, showing a strong positive c…

>The authors provide cross-sectional data across 23 rich nations, showing a strong positive correlation (r~=0.70) between income inequality (Gini coefficient) and advertising expenditure as a percentage of GDP.

Why only rich nations? Many of the most unequal countries are also poor (or at least, not rich), so why do they get a pass?

https://en.wikipedia.org/wiki/File:Gini_Coefficient_of_Wealt...

https://en.wikipedia.org/wiki/File:World_Bank_Inequality_202...

Re: Predicting OpenAI's ad strategy

#246

Post by parineum »

anal_reactor wrote: post #195
bearjaws wrote: post #169

Earlier quoted context omitted.

That's generally my thought as well, I am not implying you don't need to advertise. I just believe the industry has more or less reverted to an even worse version of what we had before (TV & Radio ads). At least before, there was ~100 networks you could sell to, now there's basically 10 if you include major networks. Of course you don't actually launch new products with TV ads, so it is more or less 2 platforms.

The problem is that most businesses used to be local. This naturally limited competition and gave your business a chance, even if it sucked. Nowadays the competition is global.

People don't really care to address that most of the mom and pop businesses that went out of business because Walmart/Amazon weren't offering better products or services. They got their products through the same retail suppliers, just at higher costs and the variety of choices was much lower. They also had much less generous return policies.

There's a personal touch that people opine for but I think that's rose colored glasses. I remember some local retailers where I liked the owners but more often they weren't anything special and sometimes they were downright unpleasant.

The thing I like about Amazon is that I can get my shopping done quickly at home then I can go socialize with people I choose to.

This is just an example if retail but I think it applies to most industries that people think have been decimated by big companies displacing local companies. The whole attitude reminds me a lot of the whole "Make America Great Again" idea. Opininig for a past that never really existed.

Re: Predicting OpenAI's ad strategy

#247

Post by jamesgill »

PlatoIsADisease wrote: post #242
jamesgill wrote: post #164

I'm surprised how few seem to understand this; AI is the ultimate 'net' to capture and exploit consumers. AI was never about improving civilization; it was always about money. This is the only thing 'inevitable' about AI.

>AI was never about improving civilization; it was always about money. Why not both? It has diagnosed patients who were unsolved by humans. And it was cheaper than doctors.

Why not mow a lawn with a sledgehammer? It removed grass that was overgrown. And it was cheaper than a lawnmower.

Re: Predicting OpenAI's ad strategy

#248

Post by sdenton4 »

gruez wrote: post #241
csense wrote: post #209

Earlier quoted context omitted.

Advertising spend being too high is a symptom of a supply glut. Too many products in the marketplace, not enough consumers to buy them. In a different world where there are higher wages, more people would have more spending power. Then companies wouldn't have to spend as many dollars on advertising, which they could split between higher wages, higher margins and lower prices. Alas, the short-term single-firm directio…

>Maybe Henry Ford was on to something when he shocked the world by paying his employees enough to afford the product they were making (more than doubling many workers' wages)... That's a nice story to tell, but the economics never works out if you do the math. Whatever extra wages you pay, you only get a fraction of that back in increased sales. How much percent of a worker's income do you think is spent on a car? As…

It's a collective action problem. If everyone pays higher wages, there's a greater supply of money for buying stuff / solving problems (assuming the higher wages aren't eaten by rents). No individual form recoups all of the higher wages they pay their workers, obviously, but there's a larger market for the goods of everyone has more money.

Re: Predicting OpenAI's ad strategy

#249

Post by cruffle_duffle »

Workaccount2 wrote: post #198
prmoustache wrote: post #174

Earlier quoted context omitted.

> Companies absolutely will offer ad-free experiences. Google has youtube premium, which even compensates creators with half your sub as well. Evenly distributed too. Youtube premium is not ad-free, you still gets whatever ads are embedded in the actual content.

YT premium comes with their own version of sponsor block, but you manually have to hit the skip button. But I don't hold youtube accountable for what creators decide to put in their videos. I would grind my axe with the creator instead, it's their video and their choice. Youtube gets no cut from those segments.

As a paid YouTube subscriber, I’ve always wondered if that skip was only for us. It would be kind of bullshit if it was also for ad-based free viewers too as it would imply that google is free to show you ads they make hard to skip but they make it easy to skip embedded promotions and stuff.

Re: Predicting OpenAI's ad strategy

#250

Post by gruez »

dwaltrip wrote: post #230
Aurornis wrote: post #211

Earlier quoted context omitted.

> I doubt the ROI would be so high if organic results stood any chance. This is just the same fallacy. In what world are people going to organically share ads for this company on their Facebook feeds? Who is going to Google the company name before they know about it? Every business needs to proactively acquire customers. Distribution and CAC are top of mind values for any growth business. It has been this way long be…

Information can travel without people paying for it do so. Ban most ads and everything will still work fine.

Sounds like ads will just get replaced with covert word of mouth enticements. Want to get people to know about your product? Send free samples to influencers. Maybe even fly them out to CES and put them in nice hotels so they can experience your product announcements/demos. All of this is "unpaid", of course.
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