Nobody other than content providers, advertisers and others in the ad ecosystem really likes advertising. Consumers virtually universally dislike them.
On the other hand, viewers and consumers generally like low-cost or no-cost access to content, so to the extent that advertising makes that possible, we tolerate it.
So the YouTube move to ad non-skippable ads will not be universally welcomed.
For all the criticisms of advertising-supported apps and computing experiences (intrusive, user experience disruption, privacy), user value also is created.
Advertising functions as a subsidy that lowers the direct price consumers pay for media and content that might otherwise be unaffordable or have limited availability.
Study / Source | Media Category | Estimated Consumer Value / Cost Reduction | Key Implication | Link |
Brynjolfsson, Collis et al. (MIT / Stanford digital economy research) | Search engines, email, social media, online video | Search engines valued at ~$17,530 per year per user; email ~$8,414; online video ~$1,173 | Consumers receive extremely high value relative to the zero or low prices paid | MIT summary of study |
Brynjolfsson, Kim & Oh – “Attention Economy: Measuring the Value of Free Goods on the Internet” | Internet services overall | ~$38 billion annual consumer surplus in the U.S. from free internet services | Traditional GDP misses large welfare gains from free digital services | Study summary |
Brynjolfsson et al. (NBER 2024) | Social media | Median value of Facebook access ~$31.95/month; disutility from ads <10% of that value | Advertising annoyance is small relative to the value users receive from free platforms | NBER working paper |
McKinsey Global Institute | Internet services broadly (social media, video, search) | ~€150 billion annual consumer surplus from web usage in U.S. & Europe | Most value from internet use accrues to consumers rather than providers | McKinsey analysis |
Carnegie Mellon / Stanford digital goods research | Digital goods broadly | $2.5 trillion annual global consumer welfare from digital goods | Free digital services generate welfare comparable to several percent of GDP | CMU summary |
NBER Digital Advertising Program | Online media generally | Advertising enables provision of free digital goods and increases price competition | Digital advertising increases consumer welfare through free services and lower prices | Project description |
IAB Consumer Study (2024) | Digital media broadly | ~80% prefer more ads rather than paying for online services | Consumers explicitly recognize ads as the price of free content | Research summary |
It’s just a value-cost tradeoff. So though some will inevitably oppose the notion of advertising defraying the cost of use of language models, there is a reasonable argument to be made that ad support helps model suppliers continue to support widespread “no extra charge” access.
Service | Ad-supported model | Cost without ads | Estimated annual savings per user |
Google Search | Ad-supported search results | $100-$200/year (estimated cost of alternative search engines) | $100-$200 |
Facebook | Ad-supported social network | $100-$150/year (estimated cost of alternative social networks or premium features) | $100-$150 |
YouTube | Ad-supported video platform | $100-$150/year (estimated cost of alternative video platforms or premium subscriptions) | $100-$150 |
Spotify Free | Ad-supported music streaming | $120/year (estimated cost of music purchases or premium streaming) | $120 |
Microsoft Bing | Ad-supported search engine | $50-$100/year (estimated cost of alternative search engines) | $50-$100 |
News websites (e.g., HuffPost, BuzzFeed) | Ad-supported news content | $50-$100/year (estimated cost of news subscriptions or alternative news sources) | $50-$100 |
Likewise, advertising has enabled many forms of media and entertainment.
Medium | Ad revenue as % of total revenue | Estimated annual ad revenue per user | Impact of ads on user cost |
Traditional TV | 50-70% | $200-$500 (depending on viewing habits) | Keeps cable/satellite TV costs lower |
Radio | 70-90% | $50-$100 (depending on listening habits) | Enables free over-the-air broadcasting |
Streaming services (e.g., Hulu) | 10-30% | $50-$100 (depending on subscription tier and ad exposure) | Offers lower-cost ad-supported plans |
Magazines | 50-80% | $20-$50 (depending on publication and ad exposure) | Keeps magazine prices lower |
Newspapers | 50-70% | $50-$100 (depending on readership and ad exposure) | Helps maintain free or low-cost online content |
Online display ads (e.g., banner ads) | Varies | $5-$20 (depending on website and ad exposure) | Enables free access to online content |
Sure, nobody really “likes” advertising. But what we do like is lower cost or no extra charge access. It’s an exchange like any other commercial transaction: the buyer gets something of value for a price, even if the price is attention or time.
