5 ms·

Ads allow whomever has the deepest pockets to dominate the public's attention. Incumbents will have more money to spend, chilling the influence of new competito

Ads allow whomever has the deepest pockets to dominate the public's attention. Incumbents will have more money to spend, chilling the influence of new competitors. Most of the "disruptor" success stories that come to mind started with some variation of "we didn't spend anything on advertising, relying on word of mouth."

AnthonyMouse 7y ago
> Ads allow whomever has the deepest pockets to dominate the public's attention. Not necessarily. Advertising has diminishing returns -- we know this because companies don't buy unlimited advertising. If every ad dollar was as good as the first (i.e. it generated more than a dollar in profit) then everybody would buy an unlimited amount of advertising so they could make an unlimited profit. At some point you hit saturation and it costs more than it makes you. Meanwhile the little guy needs it more because they're unknown, i.e. their baseline is further from the point of saturation so they have a higher cost/benefit ratio. If nobody advertises then people keep buying from the incumbent because they don't know of any alternatives. The biggest problem with advertising isn't big vs. little, it's that it's a signaling war. If Coke spends a dollar and Pepsi doesn't, Pepsi loses $2 in sales. But if they both spend a dollar then they've each burned a dollar only to both stay where they started. What would really help is to have some industry of trustworthy third parties whose job it is to tell you what to buy, but nobody has ever really cracked it, because the buyers don't want to pay for it and the sellers only want to pay if it will influence the results.
- TeMPOraL 7y ago
  Advertising indeed seems to give an edge to newcomers over the incumbents, but those same "little guys" would need to advertise less if everyone's attention wasn't already saturated by everyone else's ads. Everyone is still wasting money; new players just waste less.
  - AnthonyMouse 7y ago
    The question is, if you got rid of advertising, how do the customers find out about a new product from a new business?
    - anoncake 7y ago
      Newspapers, magazines etc. Basically however they want.
      - AnthonyMouse 7y ago
        Those are just other forms of advertising, and the entire print industry is dying anyway. Where's the real answer?
        TeMPOraL 7y ago
        Pull advertising isn't really the same kind of advertising as the predominant push kind, and it's the latter that's considered a problem. Let people decide where and when they want to be advertised to on their own. Let them visit exhibitions, trade shows, buy or browse product catalogs and shopper's magazines.
        anoncake 7y ago
        An article or review about a product written by an independent journalist that wasn't bribed is not an advert. Whether it appears in a printed publication or an online equivalent is immaterial.
      - BurningFrog 7y ago
        But we don't want to spend our time researching possible new products. Empirically, we just keep buying the same thing until disturbed by some outside force.
        TeMPOraL 7y ago
        What's the problem then? If our choices weren't at least little bit sticky, marketers would have us running around like headless chickens. Meanwhile, the "disturbing force" often is our own dissatisfaction, our search for novelty, and our changing needs. Things wouldn't stagnate.
tbihl 7y ago
Or, at least, most of the people who thought their advertising strategies were worth mentioning spent almost nothing, relying rather on word of mouth. Those may be quite different things.

AnthonyMouse 7y ago

> Ads allow whomever has the deepest pockets to dominate the public's attention. Not necessarily. Advertising has diminishing returns -- we know this because companies don't buy unlimited advertising. If every ad dollar was as good as the first (i.e. it generated more than a dollar in profit) then everybody would buy an unlimited amount of advertising so they could make an unlimited profit. At some point you hit saturation and it costs more than it makes you. Meanwhile the little guy needs it more because they're unknown, i.e. their baseline is further from the point of saturation so they have a higher cost/benefit ratio. If nobody advertises then people keep buying from the incumbent because they don't know of any alternatives. The biggest problem with advertising isn't big vs. little, it's that it's a signaling war. If Coke spends a dollar and Pepsi doesn't, Pepsi loses $2 in sales. But if they both spend a dollar then they've each burned a dollar only to both stay where they started. What would really help is to have some industry of trustworthy third parties whose job it is to tell you what to buy, but nobody has ever really cracked it, because the buyers don't want to pay for it and the sellers only want to pay if it will influence the results.

TeMPOraL 7y ago
Advertising indeed seems to give an edge to newcomers over the incumbents, but those same "little guys" would need to advertise less if everyone's attention wasn't already saturated by everyone else's ads. Everyone is still wasting money; new players just waste less.
- AnthonyMouse 7y ago
  The question is, if you got rid of advertising, how do the customers find out about a new product from a new business?
  - anoncake 7y ago
    Newspapers, magazines etc. Basically however they want.
    - AnthonyMouse 7y ago
      Those are just other forms of advertising, and the entire print industry is dying anyway. Where's the real answer?
      - TeMPOraL 7y ago
        Pull advertising isn't really the same kind of advertising as the predominant push kind, and it's the latter that's considered a problem. Let people decide where and when they want to be advertised to on their own. Let them visit exhibitions, trade shows, buy or browse product catalogs and shopper's magazines.
      - anoncake 7y ago
        An article or review about a product written by an independent journalist that wasn't bribed is not an advert. Whether it appears in a printed publication or an online equivalent is immaterial.
    - BurningFrog 7y ago
      But we don't want to spend our time researching possible new products. Empirically, we just keep buying the same thing until disturbed by some outside force.
      - TeMPOraL 7y ago
        What's the problem then? If our choices weren't at least little bit sticky, marketers would have us running around like headless chickens. Meanwhile, the "disturbing force" often is our own dissatisfaction, our search for novelty, and our changing needs. Things wouldn't stagnate.

tbihl 7y ago

Or, at least, most of the people who thought their advertising strategies were worth mentioning spent almost nothing, relying rather on word of mouth. Those may be quite different things.