But we don't know how much online advertising lowers prices. Would be interesting for an economist to study.

For all we know, online ads could have no effect. And what about ads intended to generate demand instead of address current demand? Maybe online ads are tricking us to by more of what we don't want (Yay, another subscription box).

If the difference in effectiveness is enough to make Google, etc unprofitable than maybe there is an argument to be made that it is necessary.

If it means they make 10% less profit, people would probably prefer privacy."

Possibly in aggregate, but they almost certainly have an effect for individual advertisers. No company is going to cut their advertising if their competitors aren't going to make the same cuts.

But it would be very cool.

Imagine if all browsers suddenly shipped perfect ad blockers[1]. Many sites would die off; but I suspect a number of micropayment platforms would quickly spring up in their place. The result might not be as diverse, but it would be interesting.

[1] A perfect ad blocker would have to do the impossible, i.e. identify sponsor segments of YouTube clips, slice out native advertising, and somehow kill off all promotional consideration. I.e. absolutely impossible and probably not desirable.

I still don't see why customers want this. I would rather a company struggle to spend its ad budget effectively, and then conclude that it could better spend its resources investing in making a better product (or its employees, or its infrastructure, ..).

I don't have an econ background, so feel free to clear up what's wrong here.

If the goal on the social level is to get valuable information to potential customers, then it would follow we should get rid of most tracking and most advertising. Most of it is disinformation and deception that buries lower-budget information in the stream of messages from those with the biggest pockets.

Advertising needs to be expensive enough that it is always dominated by quality of product and reputation spread by word-of-mouth, as this puts the power in the hands of consumers. This is critical for the healthy functioning of markets, because advertising distorts the natural expression of demand.

The current hype-fueled cryptocurrency craze is the apotheosis of advertising dominating product.

Ah, but this is not what the discussion is all about, is it? "Telling potential customers about their product" can be done with a static hypertext page, it does not require infesting the entire Internet with tracking parasites to profile every individual. And your "incremental dollar" can be spent on SEO to improve the visibility of your page.

Moreover, in this scenario where the entire market is now able to spend their advertising budget "more effectively", there are many possible outcomes besides more products being sold for the same ad cost. The market-wide increase in "ad effectiveness" may effectively cancel itself out. Ad spend may remain the same, but with more budget allocated to speculative ad strategies. Or the savings may be funneled back into product to further differentiate it from competitors.

This. At least in the US, consumers are pretty much spent out. In that situation, advertising does not increase economic activity. It just moves it around. This is an argument for not allowing advertising and marketing as a deductible business expense, an idea that's been floated in Congress a few times.

Historically, advertising was a small part of product cost. Today, in many industries from movies to drugs, it dominates. This runs up prices for everyone. There's an economic argument for limiting advertising spend.

Advertising spend as a share of GDP hasn't changed much at all on average over the last century: https://www.bloomberg.com/news/articles/2014-03-03/advertisi...

And some say it has even declined in recent years: https://www.mediapost.com/publications/article/273094/us-adv...

The strange thing is that it doesn't feel like that at all. Advertising has become obnoxious to such a degree that it renders many sites entirely unresponsive on some devices (like my aging iPad). I have stopped visiting some sites or reduced the number of visits dramatically.

The advertising industry and indeed the publishing sector itself is clearly on a suicide mission. Someone needs to save them from themselves.

Although there's some portion of apathy, the vast majority of people are ignorant or even misinformed. You can't conclude from the actions of an ignorant person that they don't care about the thing they don't know about / don't understand.

Most people do understand that the loyalty-cards are not necessarily the only way to get discounts or even that they are actually discounted (in the absence of those cards, prices would be set differently overall).

There are certainly stores we may legitimately feel more trusting of than others.

Anyway, lots of people really appreciate a store like Trader Joe's that just has reasonable prices across the board, never does any sort of discount promotions and never tracks anyone — even if the customers never explicitly thought through that aspect of the experience, they still experience it and feel differently than they do with the other tracking-focused stores.

On a side note: I learned recently that sales and such at most grocers are actually driven by the brands themselves. The reason Trader Joe's is free of all that is because they sell relatively little that is of the big-marketing-budget style branded products…

With advertising, it's a lose-lose proposition. In exchange for being tracked everywhere, we get shown pictures of things we don't want. Who would opt into that?

Stuff like this comes about organically. No one held a big meeting and decided the internet would be funded by privacy invading ads. The ad ecosystem just shifted that way over time due to competition.

Before there was internet, companies already spent all their marketing dollars on stupid TV and radio ads.

If viewing lingerie ads meant I could get my alcohol half price, I might start accepting them.

(If we could make advertising less effective, we could have better products ... maybe because spending more on advertising wouldn't work as well as spending more on engineering or QA. But overall spending/cost is a bit orthogonal.)

If the ad companies are making less money; it doesn't suggest that the ad cost is going up