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I'm not a marketer so correct me if I'm wrong, but I'm not sure I agree that it's even possible for advertising to bubble in the traditional sense. The biggest
by chjohasbrouck 11y ago
I'm not a marketer so correct me if I'm wrong, but I'm not sure I agree that it's even possible for advertising to bubble in the traditional sense.
The biggest budgets are all pretty tightly regulated. They have surprisingly good information on exactly what impact their ad buys are having, and that information informs their allocation.
The smaller budgets don't necessarily have that, but I assume they consistently churn as businesses open and close. Is this article suggesting the churn of new businesses is going to suddenly drop to zero?
How could advertising bubble with that level of transparency?
- jldugger 11y agoWell, for one, the riskless rate of return could raise above zero, and you might have to factor in the amount of risk your ad buy represents. If you advertise in order to grow your user base, but that userbase is neutral or net negative, when funding costs go up, your gamble that you can shift customers from neutral to profitable is less viable. But imagine a secondary structure of ad buys: you buy mobile ads promoting your app, which monetizes itself through ads. If the ad market falls, you've effectively bought ads high and sold them low.
- melted 11y agoLooks like you didn't read the article. Its whole point is that much of that gravy train is financed by investors right now, and when investors bolt (as they do when things go sour), the whole rickety pyramid will collapse.
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