Comment by crystal_revenge

Comment by crystal_revenge 13 hours ago

6 replies

> ads in the future.

It boggles my mind that people still think advertising can be a major part of the economy.

If AI is propping up the economy right now [0] how is it possible that the rest of the economy can possibly fund AI through profit sharing? That's fundamentally what advertising is: I give you a share of my revenue (hopefully from profits) in order to help increase my market share. The limit of what advertising spend can be is percent of profits minus some epsilon (for a functioning economy at least).

Advertising cannot be the lions share of any economy because it derives it's value from the rest of the economy.

Advertising is also a major bubble because my one assumption there (that it's a share of profits) is generally not the case. Unprofitable companies giving away a share of their revenue to other companies making those companies profitable is not sustainable.

Advertising could save AI if AI was a relatively small part of the US (or world) economy and could benefit by extracting a share of the profits from other companies. But if most your GDP is from AI how can it possibly cannibalize other companies in a sustainable way?

0. https://www.techspot.com/news/109626-ai-bubble-only-thing-ke...

0xDEAFBEAD 4 hours ago

If advertising helps high-quality / innovative products spread faster, it can power growth. Indeed, the rate of adoption of innovations seems a fairly critical input for growth. Advertising can speed such adoption.

StopHammoTime 12 hours ago

You've run a false equivalency in your argument. Growth is not representative of the entire economy. The economy is, in aggregate, much more than tech - they have the biggest public companies which skews how people think. No exclusive sector makes up "most" of the economy, in fact the highest sector, which is finance only makes up 21% of the US economy.

https://www.statista.com/statistics/248004/percentage-added-...

  • crystal_revenge 12 hours ago

    > Growth is not representative of the entire economy

    Our entire economy is based on debt, it cannot function without growth. This is demonstrated by the fact that:

    > in fact the highest sector, which is finance only makes up 21% of the US economy

    Every cent earned by the finance sector boils down from being derived from debt (i.e. growth has to pay it off). You just pointed out the largest sector of our economy relies on rapid growth, and the majority of growth right now is coming from AI. AI, therefore, cannot derive the majority of it's value by cannibalizing the growth of other sectors because no other sector has sufficient growth the fund both AI, itself and the debt that needs to be repaid to make the entire thing make sense.

rahulyc 9 hours ago

I think your argument isn't exactly right.

You can imagine a future world where producing real goods and services is ~free (AI compute infinite etc.)

In this world, the entire economy will be ~advertising only so you can charge people anything at all instead of giving it away for free.

  • suddenlybananas 6 hours ago

    If your revenue model is predicated on Star Trek-style communism, it's maybe not a very realistic model. I really don't think if producing things is essentially free that advertising will be a very big thing since it would be pointless.

lemonlearnings 12 hours ago

US GDP is 30T so that revenue is less than 1% of it. But 1% of GDP us still eye popping amount. But remember in the non Google world that is split up into Yellow Pages and TV ads and etc. and possibly many ventures that were not possible because of lack of targeted ads didnt come to fruition.