On Google and Ads – a just-so story

This is a small thing that I am writing just so that I can reference it later, and to remind myself that I have already made a point similar to this. It is not necessarily factually true, and I have no citation or evidence, only half-remembered from various recorded talks and random people typing words on the Internet. It is, however, a nice story, so I'm writing it.

Just to be clear: this is like 70% fiction and 30% real, in a manner like the Romance of the Three Kingdoms. It is what I would say to someone that wants a rough guide to why things are the way they are, maybe in a bar setting if I went to a bar (which I don't) but it's not really true in the sense that I'd submit it to Wikipedia or similar even if most of the story beats line up.

So don't go taking this as authoritative.

1. Advertising "technology"

Adverts have always been bad, but in recent years they have become worse and worse. Not only have the quality decreased, they seemed to increased in quantity by a corresponding amount, all the while getting more obnoxious and less relevant.

The reason behind this is that at the time it worked. It's mostly Google's fault: they basically overpriced their own ad spaces, especially in the golden child space YouTube. I presume it's something to do with the analogy with television, so they can charge television-like prices (I don't know if they do or did).

Where did that money go? It mostly went to fostering an ecosystem – though a more apposite comparison would be a septic tank – of micro to small scale companies whose primary business objective seems to be siphoning money out of each other. This is the "advertising technology" economic circle. Usually called the "adtech ecosystem", it is opaque to outsiders, full of unknown names and apparently full of deception and fraud from top to bottom.

Let's focus more on that part: a lot of the ad industry is fraudulent in some way or another, in a manner that would make crypto coins look like lending money to your pal. Every step of the way from the people who say "I want to advertise" to the people who say "I want to show adverts" is deeply invested with inauthentic activity, and apparently most of the money is actually /lost/ between all the small companies in a manner fairly similar to American healthcare only worse somehow.

From the top, we have people trying to sell dishonest services and bad products. This is unfortunate, but technically not the fault of the adtech industry, so we can ignore that. What we can't ignore is that from there on, the ad gets sent into ad networks which is majority bot, sold to brokers which is majority bots, then sold to websites which is majority content farms and ad farms, and – this is the real kicker – viewed by some weird click farm somewhere in Asia where there are ten thousand mobile phones and /literal/ robots that scroll and tap on the phones. So it's all bots all the way to the bottom.

Such is the complexity of the system that someone from within the industry created a formidable diagram showing who's who, and it's of filled with names that are mostly unfamiliar. There is a comparison of the ecosystem with three to six years between them and the more recent one is notably more bloated and has many more weird names and despite the larger image size all the text has to be smaller.

The thing here is that the system is fuelled by money from Google which, though inadvertently, sustains this through its massive money input earned by selling ad space at a high price. The high price commanded here means that most low-earning (and so low-status) entities can't afford it, so they resort to smaller networks which have smaller reach and so you don't normally see them.

The money spent here mostly doesn't reach very deep into the end user, nor to the second-to-end user (i.e. the "content creators" that the ads are inevitably placed next to), and apparently just disappears in a money destruction hole. Not literally – it's dispersed amongst the many companies in the system that end up making their executives reasonably well-off but in a way that is hard for anyone to get mad at because you don't know them and they don't frequent the places you do. Certainly no "top 0.1%er", not even "top 1%er" I'd say, but they are definitely well off and from some anecdotes of some guy who knows more than a few others that worked in the ad industry creating the dreck that you see, it's a place where you drink to forget work frequently while the boss hosts some party in a beach every so often.

That is, until

2. The advert apocalypse

Not much to say about this particular thing. Some guy made a video that shows that Google's ads are not really worth the high price they command because of some weird concepts like "brand safety" (don't show our high-status names over low-status and downright evil material) and that caused a panic amongst the high-status brands and that in turn caused a market crash. Now Google ads are priced more appropriately.

Probably something about positive interest rates also go here, what with tech loving zero interest rates, but not sure how to fit that in so I'm just putting this here awkwardly.

In any case, this has several consequences. First, the input to the adtech septic tank has reduced drastically, so the companies start collapsing for the first time. A later issue of the chart of the adtech ecosystem shows many companies now with a red border around them – they've been acquired – or with a black dotted border – they've shuttered entirely. Of course that can just be the usual tech company churn, I wouldn't know, but they're definitely fewer names on the new list so clearly not enough people are filling in the gaps.

But also now that the price has gone down, and with a hole that is left behind putting ads in content that is not "brand safe", lower-status adverts can now sneak in and enter the big leagues. So you end up with some weird two-bit get-rich-quick schemes on YouTube, and all the crypto coins now come in too, but I repeat myself. In any case, to recover the income that that guy with the video has nicely burnt away, Google has been increasing the ads to try and get it, culminating finally in their attempt to get everyone off adblock on YouTube.

In the end though, I don't think their revenue would increase significantly. Personally the ads I get are crap and they don't target me well anyway, and frequently they are annoying and, yes, low-status. Some crappy mobile game whose purpose is to show me even more adverts, some services that I'm too broke to afford, and "please remember our brand" ads.

3. What's next

I don't think that adverts are going away. "Free" is already the consensus price for most internet things and it's going to be an uphill battle to raise prices by ∞%, along with the inconvenience of having to deal with banks as digital transactions always need those with very few cash options available.

More likely some services will have to start shuttering, curtailing themselves or become loss leaders in some way to stay afloat, and that's not a nice thought but maybe it was always meant to be. The Internet as it is has always been a bit of a minor miracle, and probably won't be made in the business and regulatory environment it has made for itself.

There's no real end to this story. We'll have to see what happens next.