AI eating the world, the advertising bubble, and IQ tests
Raz Tirboaca 
It’s not a tech bubble, it’s an advertising bubble
Google, Facebook, Twitter, TikTok, etc don’t have a product, they have an audience. And their business is selling ads. Is online advertising working? Probably not.
To illustrate, consider Steve Tadelis’s eBay research. Ebay lost $0.63 cents on every dollar they put into Google search advertising, but that’s actually an imprecise estimate. If the experiment were to be replicated infinitely (and another ad stop, and another ad stop, and another ad stop…), in 95% of all ad stops the true loss would fall in the range of negative $1.24 and negative $0.03. This is what statisticians call the confidence interval. In advertising research, the confidence interval tends to be huge.
But..
Marketeers actually believe that their marketing works, even if it doesn’t.
TOOLS
Everything AI this week:
📝 Unlock your best writing with Lex. Any time you don’t know how to continue your text, type +++ and Lex will fill it for you.
📷 Runway is a content creation suite that helps you change images with text descriptions; remove objects in videos; remove video backgrounds; and expand images with descriptions.
📷 DiffusionBee is the easiest way to generate art on your Mac with Stable Diffusion. Give it a text prompt and it generates a picture based on it.
🎵 Soundraw is a music generator that helps creators get unique music for podcasts and videos. Select the type of music you want – genre, instruments, mood, length – and let the AI generate songs and variants for you.
📚 Talk to Books by Google helps you get quotes from more than 100k books that respond to your question. Use natural language to get better results.
🎨 Khroma is a palette generator that learns which colors you like and creates limitless palettes to discover, search, and save. DOPE!
Ⓜ Fontjoy is a font combinations generator with deep learning. Mix and match different fonts for the perfect pairing.
TEAM
🧐 Is IQ a load of BS? IQ tests are not useless, but they are limited. The main problem is that IQ is widely misunderstood. It is simply a measure of how a person performs on a narrow set of questions compared to other people.
🚀 Ship more. Risk less. Improve performance. Learn how to adopt feature management practices that accelerate release cycles - and how you can deploy every 6 hours instead of every 6 weeks.
MARKET
🦾 Amazon’s new robotic arm Sparrow is capable of handling millions of different products. It is able to grab items of different sizes and textures and place them in boxes. The robot could replace humans at Amazon’s warehouses, but this may require the warehouses to be redesigned.
👻 The reason for Meta’s massive layoffs? Ghosts in the Machine—new projects helped Facebook to accumulate employees rapidly. The company has continued to keep staff on even after projects have been deemed unsuccessful and shut down. Meta would hire new employees with each new project, and when those projects were over, the employees would just work on experiments and research.
📈 YouTube Music and Premium added 30M subscribers in one year, bringing the total to 80M across both platforms. These new numbers indicate that YouTube Music and Premium are growing even faster this year than the last. In last year’s report, YouTube said it added 20M subscribers across both its services in just one year.
🎙️ Listen to Phill Agnew on this episode of Nudge to find out why “You have to spend money to make money” is the biggest lie in business. There are plenty of examples of cost-free marketing based on proven behavioural science tactics that get results. Learn how to boost app downloads without spending on ads.
Thanks for reading! See you again next week 🫶