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So many comments on this thread parrot the notion that people will just pay for the things that they love, but the math there rarely, if ever, ads up. The fact of the matter is that outside a few exceptions advertising makes more money than charging to use a product or relying on donations. And revenue is necessary not only for servers, but for man hours and ability of the creators to concentrate. No one can pretend that Google would make as much money through any other means of monetization. And people don't often work for free. There's also value in lowering the barriers to entry, and allowing all people to use or access a program. Say, for example, Google cost $20/month. Would I pay for it? Absolutely. But a lot of my friends wouldn't. My grandma would use yahoo or bing instead. And some of the value that is gained in Google's ubiquity (which is actually quite a lot) goes away. Google would make less money. We might not have gmail, or google docs/drive. Or a self-driving car. Or Google Fiber. Etc. etc. etc. I'm reminded of the notion of App.net. Sometimes critical mass is inherently valuable, if not part of the core functionality of the product. App.net was originally a pay-to-use Twitter, that a lot of smart people started to use. But it wasn't enough for me to ever find value in it. Twitter was better and free. I'll let them throw ads at me every now and then - it's a great utility and platform. There's no way I would consciously pay enough to use everything that I use online. It's also easy to say that "No one clicks on ads" or "I never click on ads." Even "I'd be happy to pay for the sites I use." But not everyone using those sites feels that way, so your price would likely be astronomical, or the site would collapse under its own weight. A "pay to not see ads" model might work, but a "pay to use the site" likely wouldn't. One look at Revenue numbers of Facebook, Twitter, Google, or the recipes site my little sister built (it makes her $150/day) says differently. I admittedly click on ads at tims, especially retargeted ads. Even if you don't, someone does. And they drive sales, otherwise people wouldn't use them. So consider yourself opted out if you like, but don't pretend like they don't make sense. |
I would add that the majority of ads in the world are brand advertising -- driving awareness and consideration and not targeting a direct response. If you're planning to watch the Super Bowl today, the Olympics later today, or just about any pro/college sport, it's been largely paid for by ads. Not to mention just about any TV show, news program, newspaper, or magazine. No one immediately runs out to Target when they see a detergent ad, but next time they're in Target or shopping at Amazon (and after receiving many more impressions), the familiarity grants it extra consideration.
Most people are familiar with keyword ads, but not as much with brand ads. There's no need to click -- advertisers pay for impressions, and sites get paid for impressions. A little less than half of Internet ads is from brand/display advertising -- about $22bn in the US alone. But globally there are hundreds of billions more from TV, radio, print, and outdoor that could potentially shift online.
http://www.itamarnovick.com/why-facebook-would-be-worth-200b...