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Predicting OpenAI's ad strategy

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Re: Predicting OpenAI's ad strategy

#341

Post by mschuster91 »

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 idea is to use that as a marketing ploy on all sides.

On one side, paying high wages is marketing on the employment market - enticing people to work at Ford's rather than somewhere else.

Then, you got the government side. A factory providing a town with a lot of high quality employment leads to a lot of purchasing power from the employees and thus to a growing city. Wolfsburg in Germany, the best example, literally was founded by/for Volkswagen. Being respected by local politics for that growth, in turn, leads politicians and city management to... be lenient in enforcing regulations impeding the business. The best example here is Tesla in Brandenburg near Berlin. With any other company in any other place in Germany, they would get hammered with fines. Tesla in turn set up shop in a destitute area, so politicians bent over backwards and looked aside despite numerous violations and transgressions.

And finally, you got the customer side. The story of a quality product, made by well-paid domestic workers, was as powerful a story as it still is today, at least in affluent circles.

Re: Predicting OpenAI's ad strategy

#342

Post by werdnapk »

imhoguy wrote: post #267
lkbm wrote: post #65

Earlier quoted context omitted.

> 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.

Firefox and ublock origin... no ads. I avoid youtube on my mobile device as it's a lot more difficult to control the ads there.

Re: Predicting OpenAI's ad strategy

#343

Post by mschuster91 »

Aurornis wrote: post #207
hansvm wrote: post #199

Earlier quoted context omitted.

That misses the point though. Google and Meta have designed systems which capture nearly the entire surplus. In a non-monopolistic environment you'd expect somebody to be willing to step in at a bit less than Google's rates and offer the same outcomes.

The parent comment did a sneaky thing and gave the advertising budget then pivoted into rants about Google and Meta. They never actually said “All of this money goes to Google and Meta”. It was just expected that on HN everyone would assume as much because that’s what everyone is familiar with. In the pharmaceutical industry, I can guarantee their advertising funnel is much wider than two social media platforms. Thin…

> In the pharmaceutical industry, I can guarantee their advertising funnel is much wider than two social media platforms. Think about all the places you see pharmaceutical ads: TV, billboards, even ads on buses, that sketchy doctor’s office full of company swag. That $40 million is not going all to Google and Meta even if the GP comment tried to imply it was.

Having worked adjacent to ads... yes, there is more than social media ads. But the amount of everything not social media has massively shrunk!

Local newspapers are effectively dead except for local businesses (and even these are reducing their spend - especially the food delivery services fully rely on Uber, Just Eat etc) and so is radio, and even TV has been hit hard. You got newspapers and broadcast stations getting hit left and right, sliding into bankruptcy and/or being bought up by larger companies for pennies on the dollar. The fact that all across the Western world government/citizen funded public broadcasts are under attack makes it even worse, the diversity of media and, most importantly, the amount of people holding government accountable is collapsing as we speak [1].

Globally, Google, Amazon and Meta suck up over half of the global ad spend and it's not going to look better [2].

[1] https://lizfarmer.substack.com/p/how-the-decline-of-local-ne...

[2] https://www.marketingdive.com/news/global-ad-spend-rise-fast...

Re: Predicting OpenAI's ad strategy

#344

Post by littlecranky67 »

HDThoreaun wrote: post #336
littlecranky67 wrote: post #319

Ads will be no longer a buisness model in 3-5 years when simple, locally run models that do nothing besides blocking ads become available. Twitter, Facebook etc. already get past most modern adblockers, but the AI extension will be able to filter them. In-text advertising must be marked as advertisment in most countries, and even if it isn't, local AI will filter this probably out. So a free ChatGPT service with in-t…

Adblockers already remove the vast majority of ads. Adtech works because most people dont use them.

See my sibling response. More people will use adblock if all they have to do is prompt a single line into their computer. Hell people will not even visit websites. They will ask AI to present it in whatever form they prefer. I can have a big-breasted anime character reading my personalized news for me, or have it printed in a 1890 style newspaper. Ads will not make it into either format, because I prompt that out.

Re: Predicting OpenAI's ad strategy

#345

Post by HDThoreaun »

littlecranky67 wrote: post #344
HDThoreaun wrote: post #336

Earlier quoted context omitted.

Adblockers already remove the vast majority of ads. Adtech works because most people dont use them.

See my sibling response. More people will use adblock if all they have to do is prompt a single line into their computer. Hell people will not even visit websites. They will ask AI to present it in whatever form they prefer. I can have a big-breasted anime character reading my personalized news for me, or have it printed in a 1890 style newspaper. Ads will not make it into either format, because I prompt that out.

Using adblock right now is even easier than that though. Most people will not use a command line, but going to https://chromewebstore.google.com/, searching adblock and clicking install is something literally anybody could do.

Re: Predicting OpenAI's ad strategy

#346

Post by __MatrixMan__ »

warkdarrior wrote: post #231
__MatrixMan__ wrote: post #215

Earlier quoted context omitted.

This would predominantly affect businesses where that audience is not trying to find that business. Which sort of businesses are those?

> This would predominantly affect businesses where that audience is not trying to find that business. > > Which sort of businesses are those? Monopolies

I don't think there's a connection there. If I'm not trying to buy a GPU at the moment, the situation re: GPU vendors being unable to reach me is unchanged whether they are one or many.

I suspect it's gonna be clickbaity stuff, gambling apps, distractions and addictions... stuff we can afford to let suffer. If you're actually solving a problem that your audience has, they'll be trying to find you, you don't have to find them. There's a minimum amount of marketing necessary to be findable, but beyond that it's at best a waste of time and at worst a catalyst for other problems that we'd rather avoid.

Re: Predicting OpenAI's ad strategy

#347

Post by dang »

stingraycharles wrote: post #320
dang wrote: post #307

Earlier quoted context omitted.

This is standard HN moderation. The title was linkbait, so we changed it. From https://news.ycombinator.com/newsguidelines.html : " Please use the original title, unless it is misleading or linkbait ". Note the unless. When we do this, we try to find a representative phrase from the article itself that accurately and neutrally represents what the article is about. There is nearly always one of those if you look for i…

What’s the definition of linkbait in this case? I can’t find a good definition online, as the best I can find is “content designed to attract backlinks”, which this does not appear to be / isn’t related to the title?

I'm not a definitions person but surely it means something like grabbing attention with sensationalism (drama / snark / anger / etc.)

Re: Predicting OpenAI's ad strategy

#348

Post by dmurray »

> 2029: $50.00 (Suuuuuuuper bullish case) - Approaching Google’s ~$60 ARPU. By now, the infrastructure is mature, and "Conversational Commerce" is the standard. This is what Softbank is praying will happen.

There's no way Softbank's, or any other investor's, extreme bull case is that four years from now, ChatGPT sells the same amount of advertising as Google and earns $50 a year.

The extreme bull projection is that everyone buys everything through ChatGPT and each user is worth thousands per year. If you don't believe there's at least a slim chance of this you shouldn't be investing in OpenAI, and if you're an OpenAI executive who doesn't think there's a chance of this you shouldn't be writing pitch decks for SoftBank.

Re: Predicting OpenAI's ad strategy

#349

Post by Aurornis »

fweimer wrote: post #313
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…

A lot of people enter the company or product name into the browser's search field and reach their intended target through an ad at the top of the results. If they proceed to purchase something, does this count as a conversion? I think it does. Unlike traditional advertising, this didn't influence the customer's decision to buy at all.

> A lot of people enter the company or product name into the browser's search field

They had to already know the company name or product name to get there.

This doesn’t just happen. Spreading the name of the product and getting it to stick in people’s minds takes a lot of advertising budget, on the whole.

Re: Predicting OpenAI's ad strategy

#350

Post by nfw2 »

bearjaws wrote: post #169
nfw2 wrote: post #140

Earlier quoted context omitted.

In order to sell anything, people need to know about it. Google and Meta provide a way to make this possible. If they didn't exist, you wouldn't somehow have a more affordable way to get people to know about your product. However frustrating the current situation is, it is still more accessible than needing access to the airwaves or print media to try to sell anything new.

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.

So another platform disrupting the duopoly would be good, no?
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