As far as I understand how things like facebook or reddit work they:
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offer an unpaid service to mass consumer
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harvest data of the people who use the service
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offer paid advertisement space to companies
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companies buy advertising because the vast data promise precise targeting
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precisely targeted ads convert into sales for companies
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the ROI (profit gained to cost of ads) when buying social media ads is greater than ROI on tv or whatever other ads
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social media expand on the profits gained from ad space sold to companies
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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.
I really don’t understand the massive ad spend from most companies. I’m a bit of a minimalist. I have like the Ron Swanson “people who buy things are suckers” mentality. I buy wood, material, tools and occasionally computer parts. Outside of shoes most of my clothes are 5+ years old and most of my shoes are too.
All that to say, I guess I’m an outlier. I haven’t clocked on and bought anything from an ad that I can ever remember and I’ve been living a life very lacking in consumer disposable goods that they push for going on a decade ago this point.
I don’t understand anyone who doesn’t do extensive research and buy the best product in their price range on any purchase these days. If I do need to buy something I probably average an hour of research on any product I spent over $100 on and far more on anything over $1,000. Astroturfing YouTube reviews and forums would be more effective than ads on my purchase decisions. Which they do too, but they’re normally pretty easy to spot.
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Easiest answer is you aren’t their target market, but the return on ad spend in targeted advertising is huge so the target market is out there.
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.