4 ms·

I personally suspect in many industries there is a sort of informal agreement about what is reasonable spending on sales and marketing. If any single company s

I personally suspect in many industries there is a sort of informal agreement about what is reasonable spending on sales and marketing. If any single company spends more, and succeeds in gaining advantage purely by spending more, all their competitors will generally just be forced to follow. But, no one really wants to follow that to the logical conclusion of spending all possible dollars on marketing.

majormajor 1y ago
> But, no one really wants to follow that to the logical conclusion of spending all possible dollars on marketing. Sure, just like nobody wants to spend all possible dollars on rent. But outside of "we just can't afford it anymore" external economic factors shocking the system, the natural incentives point to a slow and constant ratcheting up. IMO this would be a good reason to have further regulations on advertising - locations, frequency, accuracy - since we're gonna be saturated with it otherwise.
- nitwit005 1y ago
  There are a number of studies showing competing companies in industries tend to make coordinated actions. I'm sure you've noticed everyone raising their prices together, or fast food restaurants all halting 24 hour service at around the same time. People often operate based on perceived industry norms/trends, rather than some sort of rational economic analysis.
Marsymars 1y ago
If you’re the VP of marketing though, your incentives are to ratchet up the marketing spending as much as possible in a way that shows ROI.
- airstrike 1y ago
  Increasing spending doesn't increase ROI, so a better version of that argument is that the VP is prone to "empire building" and wants to run a bigger department, with a bigger budget and headcount.
  - Marsymars 1y ago
    Yes, that’s better put. (Though I didn’t mean increased ROI - just that increased spending has a non-negative ROI.)

majormajor 1y ago

> But, no one really wants to follow that to the logical conclusion of spending all possible dollars on marketing. Sure, just like nobody wants to spend all possible dollars on rent. But outside of "we just can't afford it anymore" external economic factors shocking the system, the natural incentives point to a slow and constant ratcheting up. IMO this would be a good reason to have further regulations on advertising - locations, frequency, accuracy - since we're gonna be saturated with it otherwise.

nitwit005 1y ago
There are a number of studies showing competing companies in industries tend to make coordinated actions. I'm sure you've noticed everyone raising their prices together, or fast food restaurants all halting 24 hour service at around the same time. People often operate based on perceived industry norms/trends, rather than some sort of rational economic analysis.

Marsymars 1y ago

If you’re the VP of marketing though, your incentives are to ratchet up the marketing spending as much as possible in a way that shows ROI.

airstrike 1y ago
Increasing spending doesn't increase ROI, so a better version of that argument is that the VP is prone to "empire building" and wants to run a bigger department, with a bigger budget and headcount.
- Marsymars 1y ago
  Yes, that’s better put. (Though I didn’t mean increased ROI - just that increased spending has a non-negative ROI.)