Are ad-supported business models anti-consumer?

Advertising-supported businesses are harder to align with long-term customer satisfaction than subscription businesses, but they make more money if they do.

A common view is that ad-supported websites, in their drive for more ad clicks, cannot resist exploting their customers with scammy content and more and more ads.

The problem is that eventually those websites become unusable and the business fails. Take the simple case of websites that put more and more ads on the page. Sure, ad revenue goes up for a while, but people rapidly become annoyed with all the ads and leave. The business then declines.

That's not maximizing revenue or profitability. That's a business failure by execs that should have known better.

It's very tempting to use short-term metrics like ad clicks and engagement for advertising-supported businesses, which encourages doing things like increasing ad load or clickbait content. But in the long run, that hurts retention, growth, and ad revenue.

In a subscription-supported business, it's easier to get the metrics right because the goal is keeping customers subscribing. In an ad-supported business, it isn't as obvious that keeping customers around and clicking ads for years is the goal. But it's still the goal.

Ad-supported businesses will make more money if they aren't filled with scams or laden with ads. But it's easy for ad-supported businesses to get the incentives and metrics wrong, much more error-prone than for subscription-supported businesses where the metrics are more obvious. While it may be harder for executives to see, ad-supported business do better if they focus on long-term customer satisfaction, retention, and growth.