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If Coke does not buy the large ad campaign, the available advertising resources can be used by the next-highest bidder, and that bidder might potentially be sel
by logfromblammo 7y ago
If Coke does not buy the large ad campaign, the available advertising resources can be used by the next-highest bidder, and that bidder might potentially be selling something with a higher social utility function value. Since the ad infrastructure does not get as much money from that transaction, less is then reinvested into ad infrastructure. If McDonald's stopped advertising on billboards, billboard advertising would be cheaper in the short run, and then there would be fewer billboards in the long run.
- aeternus 7y agoAnd how do you measure social utility? Price is currently the best measure of 'social utility' that we have. People choose to spend their hard-earned dollars on the products that provide the most utility. Companies spend their hard-earned dollars on the vehicles that allow them to sell the most product.
- logfromblammo 7y agoThat's the problem with saying Coke shouldn't buy so many ads. Coke got all their ad spend from people who gave them money in exchange for Coke's products. Coke is rich because society likes drinking Coca-Cola and pals.
- tsimionescu 7y agoBut advertising is explicitly designed to skew that measure - the purpose of essentially all advertising, and certainly all of Coke/Pepsi's advertising, is to convince people that they need something that they don't need; and to make them appeal to their feelings instead of their rationality when doing purchasing decisions (e.g. by inspiring brand loyalty).