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> competition drives improvement Are you saying ads helping competition? How? > customer choice is central to a functioning market, leading to innovation. Ad

> competition drives improvement Are you saying ads helping competition? How? > customer choice is central to a functioning market, leading to innovation. Ads suppress customer choice, along with innovations. Can you recall any recent innovative carbonated drink? Marketing budgets of pepsi/coca cola make competition and innovation impossible.

neom 2y ago
Advertising is a PURE competitive move in the most fundamental sense in the business playbook, anyone who doesn't understand that doesn't understand business and therefore nor marketing nor sales. Sadly, that is a lot of people out there who profess to understand business.
- Ukv 2y ago
  > Advertising is a PURE competitive move I think "competition" has to be directed towards a useful end, like improving the product, else it's at danger of just causing enormous waste disproportionate* to any value it is creating, like rigs for Bitcoin mining or microsecond trading. Say you're playing a game where every minute you can either create a new cube or steal two from your opponent. The direct optimal strategy is for both players to just repeatedly steal - "competing" in a sense, yet wasting time for no progress. The meta-strategy, if we as a society want to increase the number of cubes, would be to punish stealing so that players instead compete by doing useful work (creating cubes). To me the problem with marketing looks the same. It could make business sense for both Coke and Pepsi to double their marketing budgets to push flyers through every door to take each other's market share back and forth, but doing so wastes disproportionate* resources for little to no gain. Also seems as though it's one factor making it more difficult for potential new competition that has a legitimately better product but doesn't have billions to spend on ads, exclusivity deals, etc. *: There can be some value created, like slightly faster Bitcoin transactions, or people being very slightly more informed about some products. Just that the zero-sum game aspect allows resources wasted to be far in excess of the value gained (if any at all), even without externalities.
  - neom 2y ago
    Well here, I'll show you the paradox if you're curious. I do this stuff for a living right? I mean this is my world for the last 20 years, I literally teach it. But, I'm speaking out of 3 sides of my mouth? How can I say on one hand: advertising is a tool in the GTM playbook and a useful one. Say: advertising most useful as competitive tool, And also say: competition is for losers. Here is how: You have to admit and understand you are competing, you have to have a sense of where your competition is, and then you have to find out how to put yourself around them like chess, so they wake up and realized they lost. Once you have a monopoly, you immediately become susceptible to competition from startups, because realistically monopoly required you to have a product that is generally applicable to very many people. Your horizons and timelines at that scale are 5-10 years into the future, you can't wiggle around easily, you pre-paid $100MM of ads in airport skyways. If you rest on your laurels, you will die, apple is a good example of a business that doesn't compete it just ever-iterated itself with consumer insight, blackberry the other side of that. That is why late stage business is so complex, you're being attacked everywhere, so you need 10 product lines, 250 features, 300 geographies, localization, etc etc. Say Starbucks totally loses Canada to Tim Hortons, what do they do? Spend $500MM to outcompete Tim Hortons in a market that they can't win or just leave and focus on new markets. This is business, outside of a few lux brands who have it as a strategy, nobody is spending money just to piss people off and annoy them, people who don't want to buy have ALWAYS been annoyed by sales, but that isn't necessarily a sales thing, and it is why targeting matters.
    - Ukv 2y ago
      > Here is how: You have to admit and understand you are competing, you have to have a sense of where your competition is, and then you have to find out how to put yourself around them like chess, so they wake up and realized they lost. Once you have a monopoly, [...] I don't claim that advertising is an illogical move from a business's self-interest perspective, but that it involves a zero-sum game that allows the resources wasted on it to greatly exceed any value it produces for society. It's a way to "compete" without doing useful work, and as a society we'd typically want businesses to compete by doing useful work instead of, for instance, building bigger and bigger Bitcoin-mining rigs.
danaris 2y ago
While I dislike advertising a lot... > Ads suppress customer choice, along with innovations. Can you recall any recent innovative carbonated drink? Marketing budgets of pepsi/coca cola make competition and innovation impossible. ...I don't think this is actually reasonable to ascribe to advertising. This is a problem with hyperconsolidation. Competition is driven by having many players in the market who are all within spitting distance of each other's overall size, however you want to measure it. Once consolidation shrinks the number of players down to a handful or less, that's when competition and innovation are stifled. You say it yourself: the problem isn't that there's advertising. It's the marketing budgets of Pepsi and Coke. Which are (probably, didn't look it up) larger than the annual budgets of some countries. That couldn't happen if they weren't utterly unchallengeable juggernauts.
- neom 2y ago
  I still don't understand what the marketing budgets of coke or pepsi or any other business has to do with innovation or consumer choice outside of potentially spurring it? I read lots of stories of founder/entrepreneurs (like the one who wrote this blog post from my research) who can't build a business and then blame it on everything except their own failings to understand the fundamentals of business.
- Const-me 2y ago
  > Once consolidation shrinks the number of players down to a handful or less, that's when competition and innovation are stifled. Yeah, and ads is the main mechanism why. Ban ads of carbonated drinks, and pepsi/coca cola will become no different from any other manufacturer of that stuff. They do have economy of scale for their advantage, but I don’t think it will help them much. The price/weight ratio of their product is rather low, and technically pipes are way more efficient at moving water than semitrailers. Without marketing, it would make economic sense to produce these drinks locally at smaller scale. An example of similar commodity (in terms of the price/weight ratio) unaffected by ads is concrete. Roughly speaking, there’re 100 coca cola bottling facilities in US, versus 2000 concrete plants.
  - neom 2y ago

neom 2y ago

Advertising is a PURE competitive move in the most fundamental sense in the business playbook, anyone who doesn't understand that doesn't understand business and therefore nor marketing nor sales. Sadly, that is a lot of people out there who profess to understand business.

Ukv 2y ago
> Advertising is a PURE competitive move I think "competition" has to be directed towards a useful end, like improving the product, else it's at danger of just causing enormous waste disproportionate* to any value it is creating, like rigs for Bitcoin mining or microsecond trading. Say you're playing a game where every minute you can either create a new cube or steal two from your opponent. The direct optimal strategy is for both players to just repeatedly steal - "competing" in a sense, yet wasting time for no progress. The meta-strategy, if we as a society want to increase the number of cubes, would be to punish stealing so that players instead compete by doing useful work (creating cubes). To me the problem with marketing looks the same. It could make business sense for both Coke and Pepsi to double their marketing budgets to push flyers through every door to take each other's market share back and forth, but doing so wastes disproportionate* resources for little to no gain. Also seems as though it's one factor making it more difficult for potential new competition that has a legitimately better product but doesn't have billions to spend on ads, exclusivity deals, etc. *: There can be some value created, like slightly faster Bitcoin transactions, or people being very slightly more informed about some products. Just that the zero-sum game aspect allows resources wasted to be far in excess of the value gained (if any at all), even without externalities.
- neom 2y ago
  Well here, I'll show you the paradox if you're curious. I do this stuff for a living right? I mean this is my world for the last 20 years, I literally teach it. But, I'm speaking out of 3 sides of my mouth? How can I say on one hand: advertising is a tool in the GTM playbook and a useful one. Say: advertising most useful as competitive tool, And also say: competition is for losers. Here is how: You have to admit and understand you are competing, you have to have a sense of where your competition is, and then you have to find out how to put yourself around them like chess, so they wake up and realized they lost. Once you have a monopoly, you immediately become susceptible to competition from startups, because realistically monopoly required you to have a product that is generally applicable to very many people. Your horizons and timelines at that scale are 5-10 years into the future, you can't wiggle around easily, you pre-paid $100MM of ads in airport skyways. If you rest on your laurels, you will die, apple is a good example of a business that doesn't compete it just ever-iterated itself with consumer insight, blackberry the other side of that. That is why late stage business is so complex, you're being attacked everywhere, so you need 10 product lines, 250 features, 300 geographies, localization, etc etc. Say Starbucks totally loses Canada to Tim Hortons, what do they do? Spend $500MM to outcompete Tim Hortons in a market that they can't win or just leave and focus on new markets. This is business, outside of a few lux brands who have it as a strategy, nobody is spending money just to piss people off and annoy them, people who don't want to buy have ALWAYS been annoyed by sales, but that isn't necessarily a sales thing, and it is why targeting matters.
  - Ukv 2y ago
    > Here is how: You have to admit and understand you are competing, you have to have a sense of where your competition is, and then you have to find out how to put yourself around them like chess, so they wake up and realized they lost. Once you have a monopoly, [...] I don't claim that advertising is an illogical move from a business's self-interest perspective, but that it involves a zero-sum game that allows the resources wasted on it to greatly exceed any value it produces for society. It's a way to "compete" without doing useful work, and as a society we'd typically want businesses to compete by doing useful work instead of, for instance, building bigger and bigger Bitcoin-mining rigs.

danaris 2y ago

While I dislike advertising a lot... > Ads suppress customer choice, along with innovations. Can you recall any recent innovative carbonated drink? Marketing budgets of pepsi/coca cola make competition and innovation impossible. ...I don't think this is actually reasonable to ascribe to advertising. This is a problem with hyperconsolidation. Competition is driven by having many players in the market who are all within spitting distance of each other's overall size, however you want to measure it. Once consolidation shrinks the number of players down to a handful or less, that's when competition and innovation are stifled. You say it yourself: the problem isn't that there's advertising. It's the marketing budgets of Pepsi and Coke. Which are (probably, didn't look it up) larger than the annual budgets of some countries. That couldn't happen if they weren't utterly unchallengeable juggernauts.

neom 2y ago
I still don't understand what the marketing budgets of coke or pepsi or any other business has to do with innovation or consumer choice outside of potentially spurring it? I read lots of stories of founder/entrepreneurs (like the one who wrote this blog post from my research) who can't build a business and then blame it on everything except their own failings to understand the fundamentals of business.
Const-me 2y ago
> Once consolidation shrinks the number of players down to a handful or less, that's when competition and innovation are stifled. Yeah, and ads is the main mechanism why. Ban ads of carbonated drinks, and pepsi/coca cola will become no different from any other manufacturer of that stuff. They do have economy of scale for their advantage, but I don’t think it will help them much. The price/weight ratio of their product is rather low, and technically pipes are way more efficient at moving water than semitrailers. Without marketing, it would make economic sense to produce these drinks locally at smaller scale. An example of similar commodity (in terms of the price/weight ratio) unaffected by ads is concrete. Roughly speaking, there’re 100 coca cola bottling facilities in US, versus 2000 concrete plants.
- neom 2y ago