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Constant share of GDP for a constant value add is bad. It means there have been no productivity gains. (Which is the main point of the productivity puzzle.) Or

Constant share of GDP for a constant value add is bad. It means there have been no productivity gains. (Which is the main point of the productivity puzzle.) Or more likely, the productivity gains have been eaten up by need to increase the amount of ads in a zero-sum market for attention. My hypothesis: the optimal amount of advertising spend on a big-picture basis is far less than the actual amount, maybe by an order of magnitude - but a competitive market economy won't get there without some heavy disincentives applied by the state or the public (no tax deductions; "centralized" neutral marketing by journals, blogs, Amazon reviews and clubs like Consumer Reports or Stiftung Warentest; heavy penalties for astroturfing/perverting such neutral reviews etc.).

dsr_ 10y ago
For the majority of the age of advertising -- basically since newspapers came along -- nobody knew how effective any given advertisement was. Now we have actual feedback, and the results are tremendously disappointing to everyone except two categories: companies who are completely unknown, and companies who are part of a dominant 2-10 vendor market. If you are completely unknown, any advertising improves your situation. If you are a market leader battling for the top few slots in a giant consumer marketplace, huge spending can change consumer perception a little. Getting 2% more sales at the expense of your competitors may be worthwhile. But the bread-and-butter of advertising was everybody in between those two extremes, and the actual effectiveness is now known to be basically zero.