As far as I understand how things like facebook or reddit work they:

  1. offer an unpaid service to mass consumer

  2. harvest data of the people who use the service

  3. offer paid advertisement space to companies

  4. companies buy advertising because the vast data promise precise targeting

  5. precisely targeted ads convert into sales for companies

  6. the ROI (profit gained to cost of ads) when buying social media ads is greater than ROI on tv or whatever other ads

  7. social media expand on the profits gained from ad space sold to companies

  8. 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.

  • Lvxferre@lemmy.ml
    1·
    1 year ago

    I believe that steps #3 and #4 are specially fragile, due to tragedy of the commons.

    Every platform tries to squeeze an additional penny out of ads, so it offers yet another ad space; more offer leads to lower prices, so the price of every ad space goes down, encouraging platforms to use more ad spaces, etc. in a vicious cycle. In turn, the increased amount of advertisement on the internet as a whole pisses the users off, and encourages them to skip ads completely through ad blockers, making online ads even less interesting, thus lowering the price of ad spaces even further.

    Steps #2 and #5 are also somewhat fragile, but less so than #3 and #4. People don’t like this sort of data vulturing, for a few reasons: it’s invasive to your privacy, it’s used for something that you dislike (it’ll later on become advertisement = spam [YES] to annoy you), and the whole idea that someone is making a profit out of your data rubs plenty people the wrong way.