The Misunderstood Utility of Search Ads

I have been increasingly noticing an overwhelming negative perception on search ads. Ben Thompson often mentions how search ads can feel like skimming the advertisers as Google collects rent on economic activity that would likely happen anyway. Notice this piece from 2022:

“…oftentimes search ads feel like a rake on organic results that would have given you what you were looking for anyways. Facebook-style display advertising, on the other hand, is the foundation upon which an entirely new host of Internet-only businesses are built.”

Ben Thompson has always been a strong defender of Meta’s advertising, but it appears there is a growing consensus of “pro-social” nature of Meta’s advertising model. While announcing the launch of ads on ChatGPT, even Sam Altman explicitly mentioned Instagram ads as the “yardstick” for useful ads:

An example of ads I like are on Instagram, where I’ve found stuff I like that I otherwise never would have. We will try to make ads ever more useful to users

If you read OpenAI’s press release on their launch of ads, you can almost sense they’re a bit cagey about ads. In an “ideal” world, it does seem they would prefer not to have any ads on ChatGPT. From their press release:

People trust ChatGPT for many important and personal tasks, so as we introduce ads, it’s crucial we preserve what makes ChatGPT valuable in the first place. That means you need to trust that ChatGPT’s responses are driven by what’s objectively useful, never by advertising.

We’ll always offer a way to not see ads in ChatGPT, including a paid tier that’s ad-free.

I was recording a podcast with my friend Liberty a couple of days ago and he also echoed similar opinions of search ads being less useful compared to Meta’s ads. So, the prevailing assumption seems to be that if we could magically strip away ads from a search engine, the user experience would be unambiguously better. I actually grew curious to see if there was any research paper which explored such a question in a more objective manner. I did come across one such paper with full of counter-intuitive findings. I will discuss the paper behind the paywall.

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