Certain industries have always had bigger profit margins than others. Turns out that advertising is inherently more scarce than consumer goods; while you can m

Certain industries have always had bigger profit margins than others. Turns out that advertising is inherently more scarce than consumer goods; while you can manufacture as many consumer goods as the market will absorb, you cannot just manufacture more human attention. Instead you must compete for the limited pool of attention that already exists, and established players like Google and Facebook control vast amounts of attention without much effort. This supports a huge differential between the "cost" of serving an ad and its market value, whereas if you're charging $500 for a toaster somebody else will be selling them for $400 by the end of the month. As for the huge sums of money: it's just a cost of doing business. As long as the manufacturers have still have nonzero profit margins, and as long as advertising delivers as much value as it costs, it's a stable equilibrium. Damodaran keeps a table of industries by net margin: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...