It's sort of like the difference between coupons in the local paper, versus coupons that your ad man hands out next to the front door of your business. Everyone who gets a coupon was coming here anyway.
The dark side of this is how your business can suddenly disappear from view if you stop buying into the Web-Ad-Hive-Mind. That's way worse than the coupon guy hanging outside the front door - that's more like someone in fake construction vests putting up cones around your parking lot.
[1] Giving them something that looks like magic powers to individual businesses, particularly those that aren't particularly computer savvy. "Holy smokes!! 95% of the people who Google reaches went to my pizza place! They must be soooooo good at convincing people my pizza's the best!"
Soooo… ads provide substantial value to businesses?
Yelp likes to do that, for instance. Alternatives to ads include:
Referrals / word of mouth
Organic rankings
In a way, ads are similar to speculators pumping a token they think will eventually justify the hype by recouping the speculative spend. There are diminishing returns the bigger the ad spend gets.
The only difference is that there is no secondary market to keep reselling ads and scalping them higher — or is there? But there is certainly the element of a large supply of greater fools to try out ad spend on various speculative ventures.
Advertising revenue. That’s what Faceboon and Google were supported by.
And it has been a zero sum game in a race to the bottom for years. They just didn’t diversify much, same as Russia or Venezuela with their oil economies.
Most companies built around zero-sum games are eventually going to stop growing as you run out of other people’s money. But that’s OK — they are already HUGE!
The real problem is the public stock market (also a zero-sum game, mostly) creating a bubble and pushing them to extract rents from their ecosystem harder and harder. It’s fine to raise money in order to grow, but investors end up reselling shares for more and more money and represent a class of people who extract rents from a multi sided market.
(By contrast, true utility tokens pegged to the dollar that can be sold to actual customers and are a way to raise money that is more economically sustainable and doesn’t create speculative bubbles.)