As far as I understand how things like facebook or reddit work they:

  1. offer an unpaid service to mass consumer

  2. harvest data of the people who use the service

  3. offer paid advertisement space to companies

  4. companies buy advertising because the vast data promise precise targeting

  5. precisely targeted ads convert into sales for companies

  6. the ROI (profit gained to cost of ads) when buying social media ads is greater than ROI on tv or whatever other ads

  7. social media expand on the profits gained from ad space sold to companies

  8. social media corp announces a brand new feature and we return to point 1)

Which step is the closest to breaking? Where are limits of growth and who hits them first? Is there a cap on marketing budgets beyond which companies won’t afford social media ads and tech corps won’t afford expansion and maintenance? A cap on how much data (=how precise ads) can they harvest from us? A lower threshold of general wealth below which ads won’t convert into more profit because people are too poor? A breaking point of enshittification at which user count (=ad visibility) plummets?

The recent apeshit of tech companies after the raised interest rates made me feel that the entire thing is quite fragile and ripe for falling… But I’m not a financial advice so maybe I’m completely clueless.

  • ryathal
    1·
    1 year ago

    Advertising and marketing is about creating a story. Coke will spend a billion on the story that a coke add in your feed, and one during the game, will get you to buy a coke at the gas station on your road trip or something.

    Social media, and the internet in general, also provided better targeting and reports than ever before. They get tons of advertising money because they can make a report that the ad was seen X times and clicked Y times, that makes their advertisers happy.