Aqueous Digital

Is online advertising a zero-sum game?

I was struck recently by a wonderfully succinct article from Seth Godin. For those of you unfamiliar with Seth, his daily email is always thought provoking and well worth subscribing to. What he said was this:

The search tax

Amazon took in more than $30 billion in ad revenue last year, money spent to elevate some products over others in the hierarchy of attention.

It’s probably true that someone shopping on Amazon is going to either buy something or not… the purpose of the “ads” isn’t to amplify consumption, it’s to shift what someone chooses to buy.

It’s a zero sum game–paying for a slot increases market share by stealing sales from the competition.

The thing is: all of that spend is paid for by the consumer.

Search and discovery would work just fine without the ads. Our satisfaction with what we bought would be at least as good if organic search simply highlighted the best match.

This is simply a transfer of money from shoppers like us to one company with a shopping search engine.

Two things struck me about this blog. The first was that I had no ideas that Amazon had made $30bn dollars in advertising revenue last year. Thirty billion dollars is an awful lot of money.

Secondly, the line “this is simply a transfer of money from shoppers like us to one company with a search engine” could equally be applied to Google. Except the money involved is significantly higher. Over $230bn higher to be precise.

Imagine if we, as consumers and businesses, didn’t have to pay that. Sums like that are big enough to move entire economies. In fact over 70% of countries in the world have a GDP figure smaller than Google’s ad revenues for 2023.

Imagine the good that countries could do with money like that.

In 2013, Google’s Senior Vice President of Search, Amit Singhal, said that he thought the destiny of Google was to become like the Star Trek computer, and that this was what they were building.

I wonder, therefore, when we might expect advertising disappearing completely from the Google’s search results?

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