> in a cost effective manner

Facebook is currently showing me these ads:

Lady's earrings (see my name), Pixel 10 (I'm theoretically an iPhone developer), cat food (I don't own any pet let alone a cat), special offers from a supermarket I would have been shopping at anyway even if they had not told me about the offers, a sponsored government message because apparently the Bundesministerium für Gesundheit don't have a better method of contacting German residents than by buying ads from a US social network (I have previously seen such from the British government telling me that some breed of dog was now banned even though I don't own a dog and also live in Germany)…

… but none of that's what's importantly wrong.

Cost effective? It's an auction, each ad in isolation may be fair (but there's reason even then to be suspicious), but in aggregate the ad sector is an all-pay auction.

There's a massive over-supply of solutions because all the startups chase the same ideas at about the same times, and the only one of them to get big is the one that pays enough to the gatekeepers of eyeballs to win the all-pay auction bidding for mindshare.

If everyone stopped advertising, the knowledge of solutions would still diffuse, the winner would be so by word of mouth. The difference is that the 1200 "trusted partners" on all the GDPR popups wouldn't collect rent on advising people on the best strategy for selling their user's privacy and battery life and mobile data allowance for money that those users never get to see, and the people buying those eyeballs wouldn't be wasting their VC runway making something other than the product.

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yunyu a day ago | parent [-]

The fact that your Facebook ads are worse is probably because you're in the EU. I'm in the US, and I am getting fairly relevant ads for Broadway shows, data infrastructure products, discounted hotel packages, and climbing gym subscriptions - things that I am actually considering purchasing. And we haven't even brought up intent-based ads (Google search).

Word of mouth benefits incumbents. Advertising at least enables newcomers to temporarily burn money to gain mindshare, while “slow diffusion” will lock society into a “nobody ever got fired for buying IBM” state forever.

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ben_w a day ago | parent [-]

> And we haven't even brought up intent-based ads (Google search).

OK, those also suck, for different reasons.

If I search for a thing, a search engine's entire job is to show me about that thing. That the engine's website puts a different thing that whatever the search algorithm thought was the best thing at the top because an advertiser paid for it to be so, is strictly worse. It's worse when the ad is not correct for obvious reasons, but it's also worse when the ad is also the best thing to show me, because in that condition it was already at the top and shouldn't have needed to pay to get there.

> Word of mouth benefits incumbents.

Ads generally (but not always) benefit whoever is richest, which is usually (but not always) the incumbent. This is why Coca Cola spends so much money on ads, even when those ads say nothing about the product itself e.g. the current GenAI Christmas ad.

> Advertising at least enables newcomers to temporarily burn money to gain mindshare, while “slow diffusion” will lock society into a “nobody ever got fired for buying IBM” state forever.

How long had ChatGPT been out before OpenAI's first ad for it?

The Google search engine itself, I heard about from word of mouth back in the 90s when all of us were using AltaVista, which I also only knew about from word of mouth. Firefox, word of mouth. LiveJournal and then Dreamwidth, word of mouth. Facebook, word of mouth. Skype, Telegram, AeroPress, Huel, these are all things I learned about from word of mouth.

If I understand correctly, "word of mouth" is also known in marketing-speak as "going viral".

	▲	yunyu a day ago \| parent [-]
		You are talking about consumer marketing. I am talking about B2B marketing for prescription medications, enterprise SaaS, etc. These are separate markets and the analogies don't quite hold here - the scam problem etc is practically nonexistent for high-LTV goods with high bid costs, and newcomers are typically well funded enough to periodically outbid incumbents (or implement better targeting). The big-ticket B2B products that one hears of from word-of-mouth are usually the worse ones, since there is rarely any "going viral" to speak of. > That the engine's website puts a different thing that whatever the search algorithm thought was the best thing at the top because an advertiser paid for it to be so, is strictly worse. This is not clearly worse than the result being selected by the whims of some arbitrary Google engineer, or being easily gamed by SEO blogspam bots. At least the advertiser stands to lose something if they bid incorrectly. >How long had ChatGPT been out before OpenAI's first ad for it? Just because some products were able to grow organically doesn't imply that paid marketing never benefits startups. This is a false equivalence. I also find it funny that the vast majority of your example products (everything except Huel or Aeropress?) make a lot of money from advertising. Maybe consider why they still exist.