Comment by LunaSea

Even if it seems like everyone is saying this, it's just statistically not true / in the aggregate, at least in the context of direct online ads. Otherwise the direct ad industry would be totally dead (ad performance is measured to death by companies).

Conversion (getting someone to purchase) at scale with ads is not so simple as person sees ad, clicks, and buys. There are many steps along the funnel and sometimes ads can be used in concert with other channels (influencer content, sponsored news articles, etc). Within direct ads you typically have multiple steps depending on how cold or warm (e.g. have they seen or interacted with your content previously) the lead is when viewing the ad and you tailor the ad content accordingly to try to keep pushing the person down the funnel.

Generally if you know your customer persona well and have good so-called product-market-fit, then (1) you will be able to build a funnel that works at scale. So then (2) the question is does the cost to convert a customer / CAC fit within the profit margin, which is much more difficult to unpack.

However, it's worth keeping in mind that digital ad costs are essentially invented by the ad platform. There is a market-type of force. If digital ads become less effective and the CAC goes too high across an industry/sector, the platform may be forced to reduce the cost to deliver ads if the channel just doesn't make enough financial sense for enough businesses.

All this is to say, the system does/can work. Tends to work better for large established companies or startups with lots of funding. In general, not a suggested approach as a first channel for a small startup/small business. Building up effective funnels is incredibly expensive and takes a lot of time in my depressing personal experience.

"This is something that I still struggle to wrap my head around: if a company is paying X$ for advertisement, it means that people subjected to this advertisement will give Y$ to this company that they would not have paid otherwise"

You seem to be assuming that, in the absence of advertising, the company will sell as much as it did before -- just with lower overhead costs -- rather than advertising driving more sales and possibly lowering costs because the company has more customers. For some items / things this may be true-ish. I'm going to buy paper towels because I need paper towels, and advertising has little influence on that -- except, maybe, which brand I buy. But I'm going to spill things, and my cats are going to keep barfing on the floor from time to time, so I'm going to need paper towels regardless. And I'm not going to buy a bunch of extra ones just because the ads are so good.

Don't get me started on soda advertising and such because the amount of money those companies spend on ads is mind-boggling and I don't think it moves the needle very much when it comes to Coke vs. Pepsi...

But, would I go see a movie without ads to promote it? Would I buy that t-shirt with a funny design if I didn't see it on a web site? Sign up for a SaaS offering if I don't see an ad for it somewhere?

If a SaaS lands 20% more customers because ads (and other forms of marketing) that's not necessarily going to mean I pay more for the SaaS because ads. It may very well mean that the prices stay lower because many of their costs are fixed and if they have 20% more paying customers, they can charge less to be competitive. If a publication has more subscribers because it advertises, it may not have to raise rates to stay / be profitable.

In some cases you may be correct -- landing customers via ads equals X% of my costs, so my prices reflect that. But it's not necessarily true.

Parent's point about ad being close to propaganda is key: people getting advertised at are often not the ones with the money.

For newspapers for instance, Exxon or Shell could be paying a lot more to have their brand painted in favorable light than the amount the newspaper readership could afford to pay in aggregate.

The same way Coca Cola's budget for advertising greenness is not matched by how many more sales they're expecting to make from these ads in any specific medium, but how much the company's bottling policy has to lose if public opinion changed too much. That's basically lobbying money.

Almost no online newspaper survives from subscriptions.

Non public broadcasters are rarely if ever and free. Meaning that their business model requires this as revenue to survive.

For news, I feel it's another can of worm altogether.

Right now we've already having oligarchs owning news groups and very few independent publications. But getting rid of other revenue sources won't help that situation, we'd get more Washington Post or New York Times than Buffalo's Fire.

It's a lot easier IMHO to have an independent newsroom if the business side can advertise for toilet paper and dating sites than if it needs to convince Jeff Bezos of its value to him.

And investigation journalism costs a lot while not getting valued by many, there's no way we get a set of paid-only-by-viewers papers from all relevant spectrums covering most of the news happening every day.

Which models are there? The only other ones I know is patreon-like, which totally destroy the long tail.

And long-tail ones are the best. There are some great videos on youtube which are 10+ years old and do not have millions of views. I am sure many of their uploaders already forgot about them. I cannot see them existing without being supported by "something", and if that's not advertisement, than what?

Could you explain how you arrived at the $3.50/month figure?

The model I understand you're suggesting is individual pricing based on usage and value as an ad target. A lot more complex and opaque than a straightforward fixed fee for all users.

Also, it's worth noting that YouTube Premium includes YouTube Music, which serves as your Spotify replacement. You might not need this, but the subscription fee covers more than just the lost ad revenue on YouTube.

I would gladly pay for ad-free youtube if they weren’t double dipping by tracking me (which is now more valuable because you have my cc#)

They already have this choice and don't pick it.

> I detest being manipulated

It's even worse when you can't even be detested because you don't realize it is happening.

> Maybe if advertising was banned, we'd each subscribe to one or two online newspapers and discover which ones are decent and which ones are crap.

I keep hoping that decent aggregators will emerge - or I will find the ones that exist.

I am happy to pay for news, but I cannot afford to pay for all the ones I want, and I cannot afford the time to read all I want. I would like to pay good aggregators....

> The remaining YouTube channels would be concentrated around the ones that are of higher quality, rather than easy slop produced to push ads. Nobody would try to clone someone else's channel for money. They would only be produced by people who were passionate about that topic. There would be fewer channels by passionate people, but the percentage would be much higher, so it's not necessarily a worse situation overall.

I have some questions about your vision.

- How many content creators would no longer be able to make passion videos as their full-time job because they're no longer getting revenue-sharing from YouTube?

- Okay, some content creators also have Patreon etc. What's the incentive to post these videos publicly for free, as opposed to hoarding them behind their Patreon paywall?

- What's the incentive for YouTube to continue existing as a free-to-watch service? Or even at all? Take away the ad money, and I can't imagine that the remaining subscription revenue comes anywhere close to paying for the infrastructure.