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> they increase prices of goods which are advertised I think that's completely false. The price of things goes down with volume, and if no one knows about some

• Brakenshire 8y ago
  > I think that's completely false. The price of things goes down with volume, and if no one knows about something its going to be far more expensive than something everyone uses. That applies between companies (where you have real competition), but does it apply over a marketplace? And even if over an industry you were able to persuade more people to buy more product, is that necessarily delivering value for the customer? Wouldn't it just be better if they found things by going out and looking for them if or when they need them, and soliciting expert advice? The obvious example is pharmaceuticals, if patients seeing adverts leads to more prescriptions for a particular drug, is that a good thing? If the pharmaceutical industry manages to get people to take more drugs, is that a good thing? The unit price might go down, but that doesn't mean utility for the consumer goes up.
• oldcynic 8y ago
  Completely false. As volumes sold ramp up the company makes more profit per unit, it's almost unheard of to cut prices. Competition on the other hand can lower prices. If anything these days they tend to increase price as market share increases.
  • ekianjo 8y ago
    But increased ads grow the category around the same product so competitors benefit from it too and overall in more competitive markets prices go down on average.
• danmaz74 8y ago
  > Advertisings entire purpose is to increase the volume sold, which lowers the price. Problem is, if everybody does advertising to compete for market share, the prices go up globally, because the entire ads industry consumes resources. But for now we haven't figured out any better model. We might in the future, or we might not.
  • isostatic 8y ago
    Netflix seem to be doing very well without adverts How much does a website typically earn from my visit (with adblock etc)? I haven't had a site with adverts since 2000 so no idea Sky in the UK gets something like 80% of revenue from subscription, but still have adverts on top of that, trying to extract every last penny. Thats why I won't subscribe -- plenty of other choices for entertainment. If your time is worth say £15 an hour, having 2 of you watching a 40 minute program and 20 minutes of adverts costs you £10. Given the income ratio is 8:1 revenue, your £24 subscription brings in £3 of advertising money to sky per month, if you watch 1 hour a day, that's 10 hours a month, or your time being worth 30p an hour. No thanks.
    • SilasX 8y ago
      Netflix can also restrict access to paying users. Can every site out there do the same (while maintaining a viable business)?
      • isostatic 8y ago
        How much does a site earn from an average visit?
    • danmaz74 8y ago
      But Netflix advertises itself a lot. They still factor the "ads industry" costs in (which practically everybody does in competitive markets).
    • tachion 8y ago
      Don't know about very well, but I do know about the ads and if you're in any UK major city, you should've seen a ton of Netflix ads, recently on the 'Lost in space' a series of wooden block attractiveness that I've personally attempted to watch only because I've seen it on the ads.
• bunderbunder 8y ago
  It's somewhere in the middle, depending on how elastic demand for the thing being peddled is. If you're talking about something like Coca-Cola, where each ad exposure might prompt someone who already has a fridge full of Coke to go grab a can right now, then yeah, that is very much true. If you're talking about something like prescription pharmaceuticals, where demand is tightly constrained by how many people actually have the condition your drug treats and what doctors are prescribing, then I would bet the GP is correct. Then I'd expect advertising for competing drugs to behave more like a prisoner's dilemma.
  • ekianjo 8y ago
    prescription drugs are only advertised in the US so in the grand scheme of things its a minor market for ads.
    • bunderbunder 8y ago
      They are. And the US also has famously high prescription drug prices. I'm not certain that the two are related, but it certainly seems plausible.
      • adventured 8y ago
        It makes a lot more sense that that would directly tie to the US healthcare system approach and how it prices products & services rather than more to the ad market impact. Everything in the US healthcare market is similarly far more expensive. From radiologist salaries, to a bag of saline, to hospital stays. You could cut pharma prices in the US in half through increased negotiating power, imported drugs and government price restrictions for Medicare/Medicaid and still have a very large industry full of advertising.
• eeZah7Ux 8y ago
  This is nonsense. Ads are payed with sales. Money is not created or destroyed in the process, therefore...
  • Tomte 8y ago
    Ads are paid with VC money, mostly.
    • adventured 8y ago
      Ads are primarily paid for by Procter & Gamble, Berkshire Hathaway, GM, Comcast, AT&T, Pfizer, etc. Procter & Gamble all by itself spends $7 billion per year on advertising. The top 100 advertising companies in the US by spend - not one of which is a VC firm, a tech start-up, or powered by VC money - spend more annually on advertising than the entire combined value of all venture capital in the US. You can easily see this in action: when venture capital plunges dramatically every five or seven years, the total US ad spend doesn't similarly plunge with it.
      • Tomte 8y ago
        Directly paid for, yes, but the whole adtech industry is mostly financed by VC money. What P&G et al pay doesn't nearly support the "industry".