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> most people don't realize that they are paying for digital content and free social services anyway, albeit indirectly, since the ad spendings are included in

> most people don't realize that they are paying for digital content and free social services anyway, albeit indirectly, since the ad spendings are included in the prices of consumer products That's a zero-sum argument that's a bit disingenuous. If you make widgets, and it costs you $5 to make a widget, you can sell 10 of them at $20/pop to the consumer for a total profit of 10 * (20-5) = $150. If you spend $100 on advertising, but that advertising helps you sell to 100 consumers, then you can sell them instead for $10/pop and make 100 * (10-5) - 100 = $400 profit, so you make more profit AND cut the price in half, so everyone wins. The problem is that advertising is so unfocused that it has both littered the public space and been unable to prove, in many or most cases, that it actually succeeds in its goal of improving both profits and reducing prices.

mojuba 6y ago
I agree, the inefficiency of advertisement might be the main reason for the surplus we are paying (also let's not forget the platform - the middleman). However: > been unable to prove, in many or most cases, that it actually succeeds in its goal of improving both profits and reducing prices Neither has it been able to prove the opposite. The long-term effects of brand awareness are difficult to measure. Anecdotally, I've seen cases when a very expensive billboard didn't move the download figures even by an iota but local people began talking about the company casually and even recognizing some of the employees on the streets, telling them how they like the product.
bluesign 6y ago
Actually I don’t agree with zero-sum argument, but your example seems to be equally wrong. Every widget you sell with advertisement is one widget sold less for competitor (or something totally else) Advertisement is not increasing the money consumer can spend totally. So basically you are trying to steal someoneelses share
- solatic 6y ago
  > Every widget you sell with advertisement is one widget sold less for competitor (or something totally else) Not exactly. It's true that consumers sometimes make choices between competitors, like deciding to go to one fast food chain or another. But oftentimes consumers make a choice about how much money to spend vs save. If a consumer has $500 in discretionary funds, the consumer can decide to buy a simple, no-frills, commoditized "meets-my-needs" product and save the $400 for later. Or the consumer can decide to spring for the ultra-deluxe $500 product and save nothing. Discretionary income is far higher than most people realize. Nobody needs to buy soft drinks, new cars (i.e. instead of a used car), new clothes (instead of sewing up old ones), yet another new video game (instead of a library of millions of older titles that are still as entertaining as they were when they were first released), or a million other things that you see if you look at people's financial decisions. People do so largely because of desire that has been aroused in them by marketers.
  - bluesign 6y ago
    "Discretionary income is far higher than most people realize." You just said that. Basically most of the people not saving money. Imagine if noone was saving money (or if it ignorable), this spending you get has to come from somewhere, so you need to cut something to spend on my widget. When I said competitior, I didn't mean another widget maker, it can be anything else you are spending your money on. Even you can maybe skip eating lunch, so widget maker stealing from the restaurant. There is no win-win in this actually.
    - solatic 6y ago
      > Basically most of the people not saving money. Imagine if noone was saving money (or if it ignorable), this spending you get has to come from somewhere, so you need to cut something to spend on my widget. Actually, savings are at an all-time high right now. People aren't spending because they're waiting for the pandemic to be over. It's true that the poor are living paycheck-to-paycheck, but that's generally true in normal times as well. In the pandemic, more people have become poor, but by no means has literally everyone become poor. Most people are still working, and the ones who are working, are saving. Even in normal years, when the economy is good, there are always people saving.

mojuba 6y ago

I agree, the inefficiency of advertisement might be the main reason for the surplus we are paying (also let's not forget the platform - the middleman). However: > been unable to prove, in many or most cases, that it actually succeeds in its goal of improving both profits and reducing prices Neither has it been able to prove the opposite. The long-term effects of brand awareness are difficult to measure. Anecdotally, I've seen cases when a very expensive billboard didn't move the download figures even by an iota but local people began talking about the company casually and even recognizing some of the employees on the streets, telling them how they like the product.

bluesign 6y ago

Actually I don’t agree with zero-sum argument, but your example seems to be equally wrong. Every widget you sell with advertisement is one widget sold less for competitor (or something totally else) Advertisement is not increasing the money consumer can spend totally. So basically you are trying to steal someoneelses share

solatic 6y ago
> Every widget you sell with advertisement is one widget sold less for competitor (or something totally else) Not exactly. It's true that consumers sometimes make choices between competitors, like deciding to go to one fast food chain or another. But oftentimes consumers make a choice about how much money to spend vs save. If a consumer has $500 in discretionary funds, the consumer can decide to buy a simple, no-frills, commoditized "meets-my-needs" product and save the $400 for later. Or the consumer can decide to spring for the ultra-deluxe $500 product and save nothing. Discretionary income is far higher than most people realize. Nobody needs to buy soft drinks, new cars (i.e. instead of a used car), new clothes (instead of sewing up old ones), yet another new video game (instead of a library of millions of older titles that are still as entertaining as they were when they were first released), or a million other things that you see if you look at people's financial decisions. People do so largely because of desire that has been aroused in them by marketers.
- bluesign 6y ago
  "Discretionary income is far higher than most people realize." You just said that. Basically most of the people not saving money. Imagine if noone was saving money (or if it ignorable), this spending you get has to come from somewhere, so you need to cut something to spend on my widget. When I said competitior, I didn't mean another widget maker, it can be anything else you are spending your money on. Even you can maybe skip eating lunch, so widget maker stealing from the restaurant. There is no win-win in this actually.
  - solatic 6y ago
    > Basically most of the people not saving money. Imagine if noone was saving money (or if it ignorable), this spending you get has to come from somewhere, so you need to cut something to spend on my widget. Actually, savings are at an all-time high right now. People aren't spending because they're waiting for the pandemic to be over. It's true that the poor are living paycheck-to-paycheck, but that's generally true in normal times as well. In the pandemic, more people have become poor, but by no means has literally everyone become poor. Most people are still working, and the ones who are working, are saving. Even in normal years, when the economy is good, there are always people saving.