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Predicting OpenAI's ad strategy

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Re: Predicting OpenAI's ad strategy

#261

Post by parineum »

malfist wrote: post #212
smikhanov wrote: post #57

Earlier quoted context omitted.

To be honest, in the pre-internet era, paid paper copy of FT had ads too. The delivery mechanisms for ads in the internet era are trillion times nastier and more annoying, of course. By the standards of today’s web, the print ad for Cartier on the second page of paper FT looks almost classy, interesting to read.

But there's a big difference. The paper copy didn't harvest data from you, didn't infect you, didn't spy on you or steal resources from your computer or internet bandwidth. All the advertiser knew about you was you were a subscriber to FT, and maybe what the _average_ demographic of an FT subscriber was. Nothing about you personally.

The paper copy did do that, just not as individualized. People would choose which publications to put their ads in based on data collected about their subscribers.

The job of ad men has always been just as much about were to put the ad as much as what the ad was.

Re: Predicting OpenAI's ad strategy

#262

Post by pphysch »

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…

The microeconomics of that decision are poor for the company, but the macroeconomics are great. But the macro angle has been reduced to "Fed interest rate" in America.

Re: Predicting OpenAI's ad strategy

#264

Post by fenwick67 »

gruez wrote: post #250
dwaltrip wrote: post #230

Earlier quoted context omitted.

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.

this already happens

Re: Predicting OpenAI's ad strategy

#265

Post by array_key_first »

sumedh wrote: post #204
toddmorey wrote: post #121

OpenAI is here because Sam Altman is NOT a product guy. He craves Apple style consumer success, but he's terrible at productizing his technology. Remember the marketplace of custom GPTs? Hell even the name ChatGPT. Anthropic had to show them how to build useful workflows for developers using AI. Meanwhile, OpenAI delivered... Sora. To actually quote Sam Altman: "I think of ads as a last resort for a business model."…

> It's just maddening to me because this technology could be so much more useful for purposes way beyond advertising. AI is a perfect technology for Ads though. Instead of me wasting time reviewing multiple products for my use case, ChatGpt will just give me top 3 recommendations with the pros and cons and then buy it for me.

But this loses value as soon as ads come into play because of incentives. It's hard to trust recommendations when ads are in the mix.

Re: Predicting OpenAI's ad strategy

#266

Post by Herring »

gruez wrote: post #245
Herring wrote: post #235

Earlier quoted context omitted.

> 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.…

Take a few quantitative courses (ie statistics). Roughly speaking, you usually want to compare similar-ish groups. It's like if you want to examine the effects of diet on a human body, you can't just mix old and young haphazardly. Advertising spend in Somalia probably works very different than advertising spend in Norway.

Re: Predicting OpenAI's ad strategy

#267

Post by imhoguy »

lkbm wrote: post #65
MontyCarloHall wrote: post #6

I think ads will inevitably roll out across all tiers, even the expensive paid ones. Ad revenue isn't uniformly distributed across users, but rather heavily skewed towards the wealthiest users, exactly the users most able to purchase an ad-free experience. The users paying $20 or $200/month for premium tiers of ChatGPT are precisely the ones you don't want to exclude from generating ad revenue. Google realized this a…

> Google realized this a long time ago; there is no ad-free paid version of Google Search. Ad-free YouTube costs $14 a month (and the creators get a higher payout from premium user views than they do from the free, ad-viewing users).

YT ads are intrusive like with TV. You can't skip most them easily anymore like you can scroll and skip sponsored Google Search results.

Re: Predicting OpenAI's ad strategy

#268

Post by gruez »

sdenton4 wrote: post #248
gruez wrote: post #241

Earlier quoted context omitted.

>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.

>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.

Does this actually work? Suppose you're on an island where the economy only produces coconuts. How does giving workers more coconuts make the economy grow, such that there's more coconuts to go around overall? Unless the workers were absolutely famished, giving them more coconuts isn't going to increase productivity. You might argue this model isn't representative of the real world, but that's approximately how the economy works. It can produce a certain amount of "stuff" (ie. coconuts), of which some portion can be given to workers, and the remainder can be given to the kings/elites/capitalists/whatever. Unless you improve productivity, there isn't going to be magically more stuff to go around.

Giving each worker a car can plausibly increase their productivity (less time spent commuting?) but the effect is small, and unlikely to be recouped by car companies. The situation looks even worse in the current economy. If everyone's paychecks were 10% bigger, what marginal item do you think it'll be spent on? A bigger car? A new iPhone or big screen TV? How would any of those increase productivity?

Re: Predicting OpenAI's ad strategy

#269

Post by chrisXOXO »

I have never really looked at ad revenues, but honestly those numbers seem reasonable and crazy at the same time (or their calculation at least). My main issue is, that I hate oligopolies. For many industries I think a country can protect itself against oligopolies from outside. But everything digital comes out of little valley on the west coast. This really bothers me.

Re: Predicting OpenAI's ad strategy

#270

Post by stingraycharles »

bastawhiz wrote: post #133

The ads are a problem (or will be, when the temptation to add them to paid plans becomes too great), but the bigger problem in my opinion is going to be the "SEO" that companies will do to make their ads appear in places that they don't belong. "The sieve of Eratosthenes is an ancient algorithm for finding all prime numbers up to any given limit. But if you're looking to have fluffier baked goods, consider this flour…

There are already SEO companies that are trying to ensure a site’s content is being referenced by ChatGPT, so it’s already a thing.
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