5 ms·

No, it will probably make it worse since it gives them cover to waste money like this then raise prices under the pretense of inflation.

by 4oo4 4y ago

gruez 4y ago
This ignores macroeconomics 101. If money is less plentiful/cheap (as of rising interest rates brought on by inflation), then there's less incentive to waste money on investments with questionable return prospects. This includes "investments" in PR. The point about being able to "raise prices under the pretense of inflation" is a red herring. You know what's better than raising prices and then blowing the surplus on ads? Raising prices and pocketing it. You only spend it on frivolous projects if there's nothing better to do with it (eg. because the fed flooded the economy with dollars).
- 4oo4 4y ago
  Actually macroeconomics 101 fails to fully describe the situation we're in. Market concentration (whether it's a single company having a monopoly or oligopoly, a holding company owning different "competing" firms within the same industry, or incestuous relationships created by someone being a board member for multiple companies) throw the usual you're talking about incentives out the window. The near zero interest rates we had until recently weren't so much a balancing act as much as a charity program. And speaking of the Fed, they in effect cause the "free" market to be more like a planned economy, one where those with capital can maintain access to almost limitless free money, and where they use soft power to suppress wages. Yes, there are other pizza chains, but Domino's has almost twice the market share of its closest competitors, meaning it can waste money in an irrational way with few consequences, contrary to the rational actor and healthy competition that most models assume: https://medium.com/edison-discovers/dominos-takes-50-of-pizza-delivery-market-leading-pizza-hut-29-and-papa-johns-21-6f8c11ef03a3 https://medium.com/edison-discovers/dominos-takes-50-of-pizz... This is a good deep dive into these sorts of dynamics: https://www.amazon.com/Peoples-Republic-Walmart-Corporations-Foundation/dp/178663516X https://www.amazon.com/Peoples-Republic-Walmart-Corporations... For years, lots of companies gorged themselves by burning money by doing stock buybacks just for the sake of pumping share prices for fleeting short term gains for executives and shareholders, while everything that makes the company actually operate is slowly hollowed out. Many of these same companies will then ask for bailouts after wasting all this money and making bad business decisions, like airlines. This example with Domino's is actually pretty mild in comparison to money wasted with things like stock buybacks and executive bonuses. Macroeconomic models also don't take bailouts into account, which are usually needed because companies make bad, irrational decisions that favor extreme short term thinking. > "Raising prices and pocketing it" Precisely, that's what many of these companies are doing. Whine about inflation and raise prices for consumers while simultaneously bragging about record earnings on shareholder calls, the only place in practice where they are obligated to tell the truth. If inflation was really the primary cause of price increases, you'd likely see them slashing earnings projections in line with that, but that's not happening. It's certainly a contributor, but to know if a company is telling the truth you have to look at their earnings when they're saying that.
doitLP 4y ago
Waste? Any press is good press and a lot of people are talking about this. Besides, the company already allocated budget for this last year as part of their broader video budget. This commercial run just happens to be about the donation. These things are usually done by some Chief of Bullshit and Diversity Officer and the ad agency chose to highlight it to tick the “social responsibility” slot in this year’s slate of commercials. Would you rather they spent the money on more ads of dripping cheese? Would it be ok to spend $50mm promoting it if the donation was also $50mm? What a nothingpizza.
- jen20 4y ago
  > Any press is good press Tell that to Peloton.

No, it will probably make it worse since it gives them cover to waste money like this then raise prices under the pretense of inflation.

by 4oo4 4y ago

No, it will probably make it worse since it gives them cover to waste money like this then raise prices under the pretense of inflation.

gruez 4y ago

This ignores macroeconomics 101. If money is less plentiful/cheap (as of rising interest rates brought on by inflation), then there's less incentive to waste money on investments with questionable return prospects. This includes "investments" in PR. The point about being able to "raise prices under the pretense of inflation" is a red herring. You know what's better than raising prices and then blowing the surplus on ads? Raising prices and pocketing it. You only spend it on frivolous projects if there's nothing better to do with it (eg. because the fed flooded the economy with dollars).

4oo4 4y ago
Actually macroeconomics 101 fails to fully describe the situation we're in. Market concentration (whether it's a single company having a monopoly or oligopoly, a holding company owning different "competing" firms within the same industry, or incestuous relationships created by someone being a board member for multiple companies) throw the usual you're talking about incentives out the window. The near zero interest rates we had until recently weren't so much a balancing act as much as a charity program. And speaking of the Fed, they in effect cause the "free" market to be more like a planned economy, one where those with capital can maintain access to almost limitless free money, and where they use soft power to suppress wages. Yes, there are other pizza chains, but Domino's has almost twice the market share of its closest competitors, meaning it can waste money in an irrational way with few consequences, contrary to the rational actor and healthy competition that most models assume: https://medium.com/edison-discovers/dominos-takes-50-of-pizza-delivery-market-leading-pizza-hut-29-and-papa-johns-21-6f8c11ef03a3 https://medium.com/edison-discovers/dominos-takes-50-of-pizz... This is a good deep dive into these sorts of dynamics: https://www.amazon.com/Peoples-Republic-Walmart-Corporations-Foundation/dp/178663516X https://www.amazon.com/Peoples-Republic-Walmart-Corporations... For years, lots of companies gorged themselves by burning money by doing stock buybacks just for the sake of pumping share prices for fleeting short term gains for executives and shareholders, while everything that makes the company actually operate is slowly hollowed out. Many of these same companies will then ask for bailouts after wasting all this money and making bad business decisions, like airlines. This example with Domino's is actually pretty mild in comparison to money wasted with things like stock buybacks and executive bonuses. Macroeconomic models also don't take bailouts into account, which are usually needed because companies make bad, irrational decisions that favor extreme short term thinking. > "Raising prices and pocketing it" Precisely, that's what many of these companies are doing. Whine about inflation and raise prices for consumers while simultaneously bragging about record earnings on shareholder calls, the only place in practice where they are obligated to tell the truth. If inflation was really the primary cause of price increases, you'd likely see them slashing earnings projections in line with that, but that's not happening. It's certainly a contributor, but to know if a company is telling the truth you have to look at their earnings when they're saying that.

doitLP 4y ago

Waste? Any press is good press and a lot of people are talking about this. Besides, the company already allocated budget for this last year as part of their broader video budget. This commercial run just happens to be about the donation. These things are usually done by some Chief of Bullshit and Diversity Officer and the ad agency chose to highlight it to tick the “social responsibility” slot in this year’s slate of commercials. Would you rather they spent the money on more ads of dripping cheese? Would it be ok to spend $50mm promoting it if the donation was also $50mm? What a nothingpizza.

jen20 4y ago
> Any press is good press Tell that to Peloton.