Presumably Google (you know, the people who run Ad Sense) find the sheer amount of viewing data valuable on its own, given the marginal cost of "bad product" as you put it. How many advertisers would pay to have that sort of marketing data pipeline?
It’s no coincidence that this is happening against a background of budget cuts. I suspect Google is seeing less demand for ads right now while simultaneously dealing with expectations that their profits not go down correspondingly.
One thing I’m sure the mess over at Twitter has done is getting companies to reconsider the value of their ads in general, too. That’s always hard to measure which means it looks like an east spot to cut, and I believe there’ve been multiple companies claiming that cutting to zero didn’t affect sales so I’d be surprised if Google wasn’t looking at a soft market where cost cutting looks like a more reliable path to improve their profitability.
>I suspect Google is seeing less demand for ads right now while simultaneously dealing with expectations that their profits not go down correspondingly.
This seems like the root of the problem right here. Why shouldn't corporate profits go down when the economy falters? This should be expected. If you just keep running the company the same way and not pissing off the users/customers, things will improve when the economic situation improves. Rocking the boat just increases risk.
We do have that, to an extent: capital-gains taxes are higher for securities held for less than 1 year. Maybe this needs to be extended or improved somehow.
