[edmundsauto]

My 2 cents - in the past, there were bigger inefficiencies that advertisers could exploit. So they could buy a click for 10 cents, and profit 25 cents from it. Google has gotten better and closed that gap, so now you pay 15 cents (and due to increased competition, you might only profit 20 cents)

The opportunities are still there in local minima, places where it's too small for Google to optimize. But the trend is clear.

[jklinger410]

A perfectly optimized ad algorithm reflects the market, and offers little opportunity that isn't present in the business itself.

Costs go up because winners have been found. Like monopolies in capitalism.

[edmundsauto]

Naive question, but if a winner had been found in a given niche, wouldn't there not be as much bidding competition and thus costs would go down?

Concretely: if I am the only pie baker in the world (I won), who else would bid against me for "place to buy pie"?

My unsubstantiated hypothesis is that google has gotten better at cross-promoting - so they could target people who like cake, increasing the market and competition for bids, making prices go up.

[jklinger410]

Incumbents often maintain large budgets to ward off competition. Competition wins enough to keep bidding, etc. If America is not full of monopolies, the bidding environment stays liquid. There is also the threat of using literal brand name targeting, or conquesting, which encourages your competition to run their own ads to keep you out.

I believe there are some agreements for larger corporations to continue to promote things even if it is not necessary. People with funny money can treat ad markets like billboards.

Another fucked up aspect is that the government often runs ads to promote its own policies.

Much like real markets there is sometimes unnatural activity that keeps it moving.

[geysersam]

I've seen this narrative a lot in this thread. But if Googles ad-algorithm was actually good I'd expect to occasionally see useful ads. But Googles ad-algorithm is far from perfect. That's why people use reddit or other community aggregators to find useful products, the search engines just really suck at that task.

[jklinger410]

If you are like many of the commenters on here who is using adblockers and abstains from social networks, this is precisely why you see shitty ads.

Also if you aren't buying anything by clicking them, advertisers are ignoring you because you aren't a valuable user to them.

You are most likely reaping what you sew. Which shows that the ad networks are actually working.