4 ms·

Lower costs do not straightforwardly translate into lower consumer prices, unless we're dealing with commodities in a perfectly competitive market. Moreover, i

Lower costs do not straightforwardly translate into lower consumer prices, unless we're dealing with commodities in a perfectly competitive market. Moreover, in this scenario where the entire market is now able to spend their advertising budget "more effectively", there are many possible outcomes besides more products being sold for the same ad cost. The market-wide increase in "ad effectiveness" may effectively cancel itself out. Ad spend may remain the same, but with more budget allocated to speculative ad strategies. Or the savings may be funneled back into product to further differentiate it from competitors.

Animats 9y ago
The market-wide increase in "ad effectiveness" may effectively cancel itself out. This. At least in the US, consumers are pretty much spent out. In that situation, advertising does not increase economic activity. It just moves it around. This is an argument for not allowing advertising and marketing as a deductible business expense, an idea that's been floated in Congress a few times. Historically, advertising was a small part of product cost. Today, in many industries from movies to drugs, it dominates. This runs up prices for everyone. There's an economic argument for limiting advertising spend.
- fauigerzigerk 9y ago
  >Historically, advertising was a small part of product cost. Today, in many industries from movies to drugs, it dominates. This runs up prices for everyone. There's an economic argument for limiting advertising spend. Advertising spend as a share of GDP hasn't changed much at all on average over the last century: https://www.bloomberg.com/news/articles/2014-03-03/advertisings-century-of-flat-line-growth https://www.bloomberg.com/news/articles/2014-03-03/advertisi... And some say it has even declined in recent years: https://www.mediapost.com/publications/article/273094/us-advertising-as-percentage-of-gdp-slows.html https://www.mediapost.com/publications/article/273094/us-adv... The strange thing is that it doesn't feel like that at all. Advertising has become obnoxious to such a degree that it renders many sites entirely unresponsive on some devices (like my aging iPad). I have stopped visiting some sites or reduced the number of visits dramatically. The advertising industry and indeed the publishing sector itself is clearly on a suicide mission. Someone needs to save them from themselves.

Animats 9y ago

The market-wide increase in "ad effectiveness" may effectively cancel itself out. This. At least in the US, consumers are pretty much spent out. In that situation, advertising does not increase economic activity. It just moves it around. This is an argument for not allowing advertising and marketing as a deductible business expense, an idea that's been floated in Congress a few times. Historically, advertising was a small part of product cost. Today, in many industries from movies to drugs, it dominates. This runs up prices for everyone. There's an economic argument for limiting advertising spend.

fauigerzigerk 9y ago
>Historically, advertising was a small part of product cost. Today, in many industries from movies to drugs, it dominates. This runs up prices for everyone. There's an economic argument for limiting advertising spend. Advertising spend as a share of GDP hasn't changed much at all on average over the last century: https://www.bloomberg.com/news/articles/2014-03-03/advertisings-century-of-flat-line-growth https://www.bloomberg.com/news/articles/2014-03-03/advertisi... And some say it has even declined in recent years: https://www.mediapost.com/publications/article/273094/us-advertising-as-percentage-of-gdp-slows.html https://www.mediapost.com/publications/article/273094/us-adv... The strange thing is that it doesn't feel like that at all. Advertising has become obnoxious to such a degree that it renders many sites entirely unresponsive on some devices (like my aging iPad). I have stopped visiting some sites or reduced the number of visits dramatically. The advertising industry and indeed the publishing sector itself is clearly on a suicide mission. Someone needs to save them from themselves.