Or, alternatively, they will spend more (input) to produce the same amount of leads (output)? Practically, their margins shrink while the websites maintain revenue.
To be clear, I'm not saying the above effect will definitely happen, only pointing out that other outcomes are possible. In practice it will be some combination of the two.
The amount of money one can sell an advert for to the advertiser is of course related to expected return value for the advertiser of that ad.
The value something provides is relative to other things you might buy instead. If I have an ad budget of $1m, and I can't spend it on targeted ads then I'm going to spend it on the next best thing - if that's non-targeted ads then websites will still get my $1m.
You strangely assume that the advertisement budget will remain constant in a world where advertisement is less effective.
The very reason that adverts are then worth less, is because advertisement budgets will go down, given that advertisements provide less return for their money.
You strangely assume that the advertisement budget will remain constant in a world where advertisement is less effective.
It's not an assumption. I've worked in web stuff, including a lot of ad-driven businesses and businesses that buy ads, for a little over two decades. If one technology is removed businesses will spend the money on a different one. They will never step back and say "Oh well, I guess we'll have to spend less on advertising now."
It's even reasonable to believe a reduction in the effectiveness of ads would get companies to spend more on adverts in order to maintain the same level of growth.
> They will never step back and say "Oh well, I guess we'll have to spend less on advertising now."
Of course they do, what weird assumption is this?
If we lived in a world where advertisement was twice as effective at generating new revenue, far more money would be spent on it; if we lived in a world where it did nothing, no money would be spent on it and companies would search for other means to get new customers than advertisement.
It is certainly not as though the advertisement budged that companies have simply be a number they cling to on religious principle, rather than a number they have decided upon based on their perceived value of advertisement.
There’s a close enough to fixed amount of money people have to spend. Advertising doesn’t make them spend more (or less) of their budget, it just trys to convince people to buy your widgets instead of mine. When I need a phone, or a pair of sneakers, or a bottle of vodka - I’m going to buy one. Your flashy ad may convince me to buy your brand, but it’s not like I’d choose to not buy anything just because nobody advertised it to me. That even works of discretionary spending and impulse buys - I have a limited “uncommitted budget”, so maybe your ads could convince me to buy a new set of golf clubs instead of taking a trip to Vegas, but it’s all the same money that gets spent.
Even if you fully believe that privacy invasive targeted advertising is “the most effective” advertising, if it goes away the second best form of advertising will then become “the most effective” and will eat the lions share of the advertising spend. Or perhaps the market will dictate that instead of “targeted ads”, the most effective strategy will be to split the old google/Facebook ad spend across a combination of older (or newer) ad forms.
Toyota still want to sell Corollas. TAG still want to sell watches. So long as there’s a form of advertising that’s better than not advertising at all, the aggregate of all competitive sales teams will work out how to soak up all my budget somehow. Something will still me the most effective advertising. They’ll still spend their money to get more of that.
(If it turns out to be billboards or movie product placements or something, that’ll suck for web people who’s only possible way to sell advertising is banner ads, but that’s a different argue,ent...)
You strangely assume that advertising overall budget is related to the effectiveness of advertising.
The reason non-privacy invasive advertising is worth less is that tracking is more effective, so it changes the balance. If tracking becomes less effective, advertising money is more likely to go elsewhere than disappear.
If advertisement be less capable of generating new customers, then it is less valuable.
The amount of money one can sell an advert for to the advertiser is of course related to expected return value for the advertiser of that ad.
If it be lower, due to less efficient targeting, then he will not be willing to pay as much for the same advertisement.