Big advertising budgets that are funded from the value alienated from exploited workers and consumers. Information asymmetry in the marketplace means that even if you make a superior product at a lower price, you could still be outcompeted by an expensive inferior product if more people know about that worse product and don’t know about your product.
That’s for most basic products anyway. Luxury products like bags and clothes are almost all marketing since the cost to create them is so low compared to their sales price. People buy them because of perceptions created by marketing and not any inherent value in the product itself.
As far as I know internet advertising is an economy destroying sunk cost fallacy. No one makes money off of it, but if they stop basically everything collapses catastrophically, so they just keep pouring more money in to it in hopes that someone will find a way to make it profitable before the bill comes due.
Ehhh, not really. If showing 10,000 people an ad costs you $10 and even one person made a purchase off that, you’ve paid for the ad buy. Internet ad conversions are considered unbelievably excellent if 1% of viewers click on the ad and 1% of those people make a purchase.
Also, if you don’t advertise, then your competition that do advertise are going to eat your lunch.
Is it really unclear? If you had never heard of a product, you would much less likely purchase it. If Coke stopped advertising today, they’d start a very slow but real loss of market to it’s competiton, be it Pepsi or whatever. Note that a LOT of advertising is not for you. It’s for the corporate buyer at name your favorite restaurant so that they think that they’ll get more consumers in the door because they have Coke products, as opposed to some other brand.
I suppose it’s not that unclear if you compare the revenue of all other industries combined to the revenue of the advertising industry. The ratio is pretty large and every type of industry buys ads, so it trickles down from everywhere.
I really cannot understand why advertising is such a huge business. Where does all the money spent on advertising really come from?
Big advertising budgets that are funded from the value alienated from exploited workers and consumers. Information asymmetry in the marketplace means that even if you make a superior product at a lower price, you could still be outcompeted by an expensive inferior product if more people know about that worse product and don’t know about your product.
That’s for most basic products anyway. Luxury products like bags and clothes are almost all marketing since the cost to create them is so low compared to their sales price. People buy them because of perceptions created by marketing and not any inherent value in the product itself.
As far as I know internet advertising is an economy destroying sunk cost fallacy. No one makes money off of it, but if they stop basically everything collapses catastrophically, so they just keep pouring more money in to it in hopes that someone will find a way to make it profitable before the bill comes due.
Ehhh, not really. If showing 10,000 people an ad costs you $10 and even one person made a purchase off that, you’ve paid for the ad buy. Internet ad conversions are considered unbelievably excellent if 1% of viewers click on the ad and 1% of those people make a purchase.
Also, if you don’t advertise, then your competition that do advertise are going to eat your lunch.
Good too know. I guess i need to do more reading.
Is it really unclear? If you had never heard of a product, you would much less likely purchase it. If Coke stopped advertising today, they’d start a very slow but real loss of market to it’s competiton, be it Pepsi or whatever. Note that a LOT of advertising is not for you. It’s for the corporate buyer at name your favorite restaurant so that they think that they’ll get more consumers in the door because they have Coke products, as opposed to some other brand.
I suppose it’s not that unclear if you compare the revenue of all other industries combined to the revenue of the advertising industry. The ratio is pretty large and every type of industry buys ads, so it trickles down from everywhere.