By John Eberhard
I recently wrote an article called “Marketing with Monopolies,” that talked about how when you use a marketing platform that is a monopoly, it is not good for advertisers. Because the monopoly can basically charge you whatever they want, deliver bad service, and even take actions that directly hurt advertisers. And you can’t do anything because there’s nowhere else to go.
My example in the article was Google, who has taken actions that have boosted their prices, delivered poor or no service, and taken actions that have hurt advertisers.
A colleague sent me a link to an article entitled “The Enshitification of TikTok, or how exactly, platforms die.” https://www.wired.com/story/tiktok-platforms-cory-doctorow/
I found this article very interesting, because it further explains what I have been observing with numerous advertising platforms today.
The author, Cory Doctorow, coined the term “enshitification,” which now even has an entry on Wikipedia, which defines it as:
“Enshittification, also known as crapification and platform decay, is a pattern in which online products and services, decline in quality. Initially, vendors create high-quality offerings to attract users, then they degrade those offerings to better serve business customers, and finally degrade their services to users and business customers to maximize profits for shareholders.”
In the above article for Doctorow, he says:
“Here is how platforms die: first, they are good to their users; then they abuse their users to make things better for their business customers; finally, they abuse those business customers to claw back all the value for themselves. Then, they die. I call this enshittification, and it is a seemingly inevitable consequence arising from the combination of the ease of changing how a platform allocates value, combined with the nature of a “two-sided market”, where a platform sits between buyers and sellers, hold each hostage to the other, raking off an ever-larger share of the value that passes between them.”
In the article he describes how this cycle has played out at Amazon, Facebook and TikTok. I have observed how this cycle has extensively played out at Google.
I was extremely interested in this because it tends to explain why marketing has gotten harder using some of these platforms. Basically they use tactics to build their user base. Once that is built up, they use tactics to lure in sellers, i.e. advertisers. Once that is built up, they withdraw those carrots, and funnel all the money to shareholders, leaving the users and advertisers with a raw deal.
This cycle is more complicated because of the factor I mentioned in my earlier article, how the Internet operates to tend to make these companies into monopolies. So if you as an advertiser get established with and depend on a marketing platform such as Google, Facebook, or Amazon, and they change the terms of the deal or they set certain market forces in play that make the platform less effective and/or more expensive for the advertiser, there’s nothing you can do.
If there was a real competitor for Google, Facebook, or Amazon, advertisers could switch over to the competitor(s) and the competition factor would prevent or limit the “enshitification” cycle.
Of course the cycle is brought about by a short term mindset, making short term profits a priority over long term survival. Because what marketing platform company can survive in the long term if they are giving lousy service to users and advertisers? Advertisers in particular will not stay with a marketing platform forever if they are not getting profitable results from it.
Nonetheless, I have seen this cycle playing out at Google, Facebook, Twitter, Yelp, and more. None of these companies are thinking with long term survival. The bigger they are, the longer it will take for the fall. But the fall will come.
Advertising results can still be gotten from Google, Facebook, and others. But this is a prediction of how it will get harder as time goes by. And hopefully, competition will find a way into this scenario to make it better.
