Come now, this is only an enhanced form of prisoners dilemma, where the prison guards do a side hustle helping prisoners rat each other out, in exchange for a "very small" commission. Everyone spending money on advertising is a strong Nash equilibrium, but it is not the optimal solution.
If everyone spends money on ads, a single actor choosing to not spend money on ads would (probably) see a loss. And in this case, you have a centralized actor (ad companies) spending a lot of resources telling everyone this fact.
But if everyone decided to not spend money on ads, everyone (except ad companies of course) would see a win.
I think you are digging yourself too deep into antagonistic thinking.
>Come now, this is only an enhanced form of prisoners dilemma, where the prison guards do a side hustle helping prisoners rat each other out, in exchange for a "very small" commission. Everyone spending money on advertising is a strong Nash equilibrium, but it is not the optimal solution.
Imagine you are making your own craft beer in your basement and you are sitting on two crates of beer. You want to sell your beer but you don't tell anyone that you are selling beer because that would be advertising and according to you advertising is not an optimal solution. Even if we assume you are the only company on the planet and have no competitors, your business is still in trouble and about to make losses and close down.
>If everyone spends money on ads, a single actor choosing to not spend money on ads would (probably) see a loss. And in this case, you have a centralized actor (ad companies) spending a lot of resources telling everyone this fact.
Now we assume that you tell someone that you are selling beer which is basically what advertising is. People know that you sell beer now. They can now make a decision to buy your beer. If people like beer that's what they are going to do. If they hate beer they can still decide to not buy your beer.
Yeah, if you did not advertise then you would indeed see losses. Simply because nobody is aware of your products, meaning they are unable to buy your products. But again, no second party is involved, so you don't need a centralized actor to decide to do advertising.
>But if everyone decided to not spend money on ads, everyone (except ad companies of course) would see a win.
Since we are the only company around we are "everyone" and if we decide to not spend money on ads then we would see losses.
So now that I have proven that your hypothesis is not correct we can actually talk about the ad market in general.
Advertising is providing value for companies but the amount of value advertising can provide is not based on how many resources you spend on advertising, rather it is dependent on the size of the market. A big market with lots of consumers can make more money off of more advertising but there is a certain point beyond which you end up spending more on advertising than the market needs. On a planet with 1000 consumers and two companies the best case would be if both companies put out 500 ads. So clearly the optimum amount of advertising is not 0. However, a big company can put out 1000 ads and thereby displace its competitor's ads. It's best to have some ads but not too many.
Advertising per se isn't bad. Worked pretty okay for print press and I even liked to specifically browse the pages with ads on certain magazines. They were focused. If you were a farmer and bought magazines on this topic, the ads there were relevant.
The problem discussed today is the invasive and often clueless nature of online ads. They just spam you and nothing else. Adtech companies gather mountains of data and at the end of the day what do they have to show for it? "Oh, we see you bought a gaming machine. How about you buy these other five ones?". lol.
Seriously. This is sloppy work.
My conclusion is that they don't utilize the private data (that they gather in some very legally questionable ways) and thus they won't lose anything if they're robbed of all the personal data. And the world will be better for it.
"some can be" and "all are" are different things. There are a lot of businesses that don't keep track of their finances, just like there are many people who don't. But assuming that's de-facto situation and every business is losing money on ads is cynical thinking.
