The rumblings against Google are becoming louder as good CEO’s begin to realize how ineffective shout-based advertising truly is except for brand-building.  Established businesses simply don’t benefit from Adwords and Facebook.

I’ve always been skeptical of the entire advertising-based internet economy.  People hate ads.  They hate being shouted at and forced to sit through a cynical and artificial barrier to them and their desires.

In fact, I don’t know of one person that willingly sits through advertising anymore to consume the content they want.  And, in my case, if you try to force me to sit through it I will simply find another way around the ad.

This is why you can’t kill The Pirate Bay.  It’s why DVR’s were so popular before cord-cutting became the strongest demographic trend of our age.

I once tried Hulu Plus.  I was willing to pay them to cut the insane number of ads they put in popular content.  So, I figured, fine, I’ll pay the $14 or whatever to not be served this nonsense and save twenty minutes per episode.

To my shock, I was served the same number of ads.  Only now I had more content to choose from while still having to sit through ads. So, Hulu wanted $14/month to show me ads and Netflix (at the time) wanted $8 for no ads, but I’d have to wait a few months to watch the show?

Loyal Netflix customer today at twice the price.  Hulu sucks.

Google’s Ad-Blocking Nightmare

Google is in similar trouble. Ad-blocking software is among the most popular in the world.  For a lot of people, the bandwidth burden of advertising is simply too much to bear.

I ran into this with Investing.com last year.  That site is invaluable to me professionally.  It is my data service that I would have to spend thousands for from a professional vendor.  Their data package is incredible.

But, the site is an advertising nightmare. It is slick with ads that are not only bloated bandwidth lampreys, but also loaded with dangerous malware.  They made the site inaccessible with an ad-blocker.

I complained to them immediately and said I would be happy to pay them $4-5/month not to be served ads.

Within three weeks they had an option for that for $39/year.  They sent me a personal email response to inform me.

I signed up within five minutes.  Customer for life.

What Investing.com found is that they can monetize their server costs by serving ads to a small number of their clients.  If Google ads were making them so much money they wouldn’t have been so willing to create an ad-free option for so little money.

Since the company’s real business model is being a forex broker, they were alienating their existing clientele in pursuit of a few sheckels to cover IT costs.  That’s bad business.

The Established Brand Catch-22

Investing.com, when it was a much less well known brand, likely needed the revenue from ads.  But, today, it is far better trafficked than sites with older brands.

Site Alexa Global Rank
Forbes.com 238
BusinessInsider.com 281
Bloomberg.com 433
WSJ.com 558
Investing.com 741
Seekingalpha.com 1633
Fool.com 2246

But the stronger the brand and the more diverse the business model the less the need to serve malware and annoy your customers.

An article from Zerohedge yesterday is what prompted this post.  It further cemented my thesis that the more established the brand the more digital advertising hurt the business.

Restoration Hardware’s CEO tasked his marketing staff to find out how effective their AdWords buys were… by word they were buying.  Here’s the results:

I said, well, how many words do you buy? They said 3,200. 3,200 words. I said, well, what are the top words? How are they ranked, the ranking of the words? Oh, we don’t have that, right. And I was getting the look at like, oh, Gary is kind of one these old brick-and-mortar guys. He just doesn’t get it.

And I said, well, what are the top 10 words? And they didn’t have the information. I said, why don’t we cancel the meeting and come back next week when you have the data? I’m sure that Google sales representatives who are taking you to the expensive lunches and selling you the 3,200 words have that data. So why don’t we get the data and then let, review the data?

And they came back the next week and we sat in a meeting and all of a sudden, I can tell you there’s a little change in the faces. They had to wear it kind of down. Everybody kind of came in. I said, so what did we find out?

And they said, well, we’ve found out that 98% of our business was coming from 22 words. So, wait, we’re buying 3,200 words and 98% of the business is coming from 22 words. What are the 22 words? And they said, well, it’s the word Restoration Hardware and the 21 ways to spell it wrong, okay?

Immediately the next day, we cancelled all the words, including our own name.

This builds on Procter & Gamble cancelling a $100 million internet advertising campaign when they found out that they got exactly zero return on the money.

Google’s Come-to-Jesus Moment

This is why Google is freaking out.  This is why they are demonetizing their political rivals.  Once a brand is big enough to attract an audience worth serving tons of expensive high-eyeball ads to/for, the brand no longer needs the advertising and the sites hosting the advertising no longer need the revenue.

Building an internet business where all you are selling is advertising from Google is not a business model.  It’s a trap.

In my business, producing content that informs is the means.  Selling a subscription and a support system is how I monetize it.  Keeping the barrier between you and the content low is the way to high retention… that and saying something worth reading.

The more I look at Google’s business model, the more I realize that it is a data aggregating service that derives insane revenues based on an unsustainable arbitrage. And, ye gods, I haven’t even brought in the blockchain yet.

Google is also not helping itself by actively attacking the very people that make its advertising platforms so valuable, ideologically-opposite YouTubers.  Internet 2.0 social media companies are owned by SJI (Social Justice Idiots) that are envious of the success of libertarian and individualist ideas on their platforms.

Superior products always thrive in an open market free from barriers to access.  And Google is now the poster-villain for censorship and power-mongering through market share.

The end result will be the end of Google’s dominance once alternative platforms are capable of competing.

That Google’s management stepped in this trap so easily should be shocking [James Damore’s firing].  But, as I pointed out in a recent blog, Smart People Do Stupid Things because of their programming.

And these are people so ingrained with their own sense of rightness (and righteousness) that they can no longer distinguish between honest exploration of issues and honest bigotry.

They’ve been successful to this point using these ‘scripts’ to achieve their goals, so they will continue using them and, worse, defending them to the point of their own destruction.

In the markets, this is occurring with money managers and central bankers.

Once more companies realize like Restoration Hardware did, that people 1) hate ads and 2) refuse to subsidize people who shout at them the quicker we can add Google to that list and build an Internet where the content has value, content creators are paid according to their worth and the middle men who think controlling the ‘wire’ is where the money is can all go hang.