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The Efficient Market Hypothesis gets a little fuzzy when it comes to advertising. More than a hundred years ago Wanamaker remarked that "Half the money I spend

The Efficient Market Hypothesis gets a little fuzzy when it comes to advertising. More than a hundred years ago Wanamaker remarked that "Half the money I spend on advertising is wasted; the trouble is I don’t know which half", and despite all the advances brought about by the internet the situation hasn't changed all that much. It's still completely plausible that Instagram influencers can make money despite being totally useless.

buboard 7y ago
I d really like to see a serious study on the effectiveness of advertising. Businesses have been spending the same % of their profits for advertising for a century. I wonder if that means the effectiveness has essentially not changed.
- vnorilo 7y ago
  I wonder if that holds for national defence budgets as well. Weapons have certainly improved.
  - buboard 7y ago
    Surely, but if the effectiveness of advertising had improved , businesses would increase their reliance and their spend on it over time. While defense has no reason to , once you 've outgunned your enemies.
vinayan3 7y ago
Lots of brands seek exposure so direct sales from an ad may not be likely. You might not be wanting to buy something in the moment but next you are looking for something you'll associate that brand. It's quite hard to track though some progress has been made through tracking you online on longer time scales. Most people dislike this type of tracking across channels cause we really don't get much out of it besides being bombarded with ads from the same company.
- reaperducer 7y ago
  You might not be wanting to buy something in the moment but next you are looking for something you'll associate that brand. Exactly. Coca-Cola and McDonald's didn't become billion dollar companies by not advertising.
  - cwkoss 7y ago
    Remember folks: when a product's advertisement is showing emotion rather than aspects of the product, the product is probably poison/toxic/unhealthy/cheap crap.
  - owlninja 7y ago
    That is a valid point, but also those products are available just about everywhere. Most ads I see on Instagram are some sort of subscription box-a-month club, or some fly by night t-shirt/hat company.
- rhizome 7y ago
  You're talking about brand advertising, as distinct from product advertising. It's not so much about shopping for "something" as it's about instilling an affinity, a nudge, when the choice is between your brand and something else (a competitive brand, a cheaper store brand, etc.). That is, between items that are otherwise equal(ish).
ChainOfFools 7y ago
yeah, that's kind of why I half jokingly call it the Eventually Efficient Market Hypothesis

buboard 7y ago

I d really like to see a serious study on the effectiveness of advertising. Businesses have been spending the same % of their profits for advertising for a century. I wonder if that means the effectiveness has essentially not changed.

vnorilo 7y ago
I wonder if that holds for national defence budgets as well. Weapons have certainly improved.
- buboard 7y ago
  Surely, but if the effectiveness of advertising had improved , businesses would increase their reliance and their spend on it over time. While defense has no reason to , once you 've outgunned your enemies.

vinayan3 7y ago

Lots of brands seek exposure so direct sales from an ad may not be likely. You might not be wanting to buy something in the moment but next you are looking for something you'll associate that brand. It's quite hard to track though some progress has been made through tracking you online on longer time scales. Most people dislike this type of tracking across channels cause we really don't get much out of it besides being bombarded with ads from the same company.

reaperducer 7y ago
You might not be wanting to buy something in the moment but next you are looking for something you'll associate that brand. Exactly. Coca-Cola and McDonald's didn't become billion dollar companies by not advertising.
- cwkoss 7y ago
  Remember folks: when a product's advertisement is showing emotion rather than aspects of the product, the product is probably poison/toxic/unhealthy/cheap crap.
- owlninja 7y ago
  That is a valid point, but also those products are available just about everywhere. Most ads I see on Instagram are some sort of subscription box-a-month club, or some fly by night t-shirt/hat company.
rhizome 7y ago
You're talking about brand advertising, as distinct from product advertising. It's not so much about shopping for "something" as it's about instilling an affinity, a nudge, when the choice is between your brand and something else (a competitive brand, a cheaper store brand, etc.). That is, between items that are otherwise equal(ish).

ChainOfFools 7y ago

yeah, that's kind of why I half jokingly call it the Eventually Efficient Market Hypothesis