Every morning, we run The Narrative Machine on the past 24 hours worth of financial media to find the most on-narrative (i.e. interconnected and central) stories in financial media. It’s not a list of best articles or articles we think are most interesting … often far from it.
But for whatever reason these are articles that are representative of some sort of chord that has been struck in Narrative-world.
Amazon.com’s Ad Prices Could Soar Next Year [Fox Business]
There’s even an opportunity for Amazon to develop its own ad optimization tools like Facebook or Google.
As advertisers see improved return on investment from their optimization efforts, they’ll be willing to spend more per impression or click.
This is a story that I’ve heard Howard Lindzon (@howardlindzon) tell a dozen times …
Back in the olden days, and by that I mean 2012 or thereabouts, Facebook didn’t charge nearly enough for its ad inventory. With a pretty modest budget, a start-up company with a mass-appeal product or service (LifeLock, for example) could get a stellar reach into a crazy number of households.
Those days are long gone. Today you can still get a good reach into whatever number of households you want by advertising on Facebook, but there are no more bargains to be had. Want a crazy number of households? Then it’s going to cost you a crazy amount of money.
From a narrative perspective, what I find interesting is how Facebook’s price increases were implemented under the narrative of “optimization”, as if Facebook were doing you a favor by raising their prices so much.
Sure, the ads today are more targeted and (maybe) more effective, but the price increases and supply decreases are FAR GREATER than the (maybe) improved efficacy. That’s what it means to have pricing power, and that’s what it means – in the modern sense of the word – to have narrative power.
To date, Facebook has been really good at understanding narrative power from the perspective of intellectual property.
But also to date, Facebook has been really terrible at understanding narrative power from the perspective of government and the regulatory State.
Now Amazon is following in Facebook’s footsteps, both in its utilization of the narrative power of “optimization” and in its utilization of the raw pricing power of a monopoly.
Both Facebook and Amazon are smiley-face monopolists, claiming a narrative of efficiency and competition when nothing could be further from the truth. The only difference is that I suspect Amazon will be really good at the regulatory-compliant narrative, too.