Advertising is a terrible waste of resources. To the extent that advertising is serving a net positive goal (spreading information about the existence and quality of products) anyone could think up ways that are an order of magnitude cheaper and do an order of magnitude better job serving the goal.
As someone who worked with online marketing services like google AdWords, facebook ads and search engine optimization, I can absolutely assue you that your statement is not generally true. Advertising is definitely not a terrible waste of resources, but you are right insofar that it CAN be. However, if the basic conditions are right (product and price makes sense, website looks attractive and is easily navigable etc.) ads can be amazing and increase your sales by several 1000%. I’ve had customers that made a return of roughly 100€ for every 3€ invested (yes, including both the cost-per-click for the ad platform as well as our online marketing service priced at 75€/h. And no, people directly navigating to the URL rather than being led to a specific product or landingpage are not counted either).
In fact, next to the stock market advertising may be one of the few examples of actual civilizational adequacy; I’m especially speaking of the ad platform providers themselves (like google or facebook) who have the resources to optimize the absolute crap out of their ad system. If a company who is doing the online advertising (or providing the platform) is the same that is directly profiting from it, then you have an alignment of incentives and the ability to experiment and continuously improve ads in ways that you can almost perfectly quantify and track—this can be incredibly powerful.
Yes, there are companies who can afford to not advertise their product and specific constellations where it in fact may even save a lot money to not advertise, but consider that those are usually products that are completely unique, have high signaling value and are already known and/or are plainly ten times better than anything else the competition has on the market (e.g. Tesla). But if you basically sell the same thing other people are selling, then I’m afraid there is no other similarly reliable way for you to gain visibility and sales than to simply invest in ads. (And if you think otherwise, then please elaborate).
I can’t comment on “old world” things like the efficiency of billboards or TV ads, but barring the odd dolt you can be damn sure that the people making decisions about purchasing that adspace or airtime usually know their way around evaluating numbers and I’d honestly be extremely surprised to learn that they are actually all fools burning their money.
I don’t think there doubt that companies can make profits by advertising. The issue is about whether advertising is a zero-sum game where some providers win over other providers by doing better advertisement.
Advertising is a terrible waste of resources. To the extent that advertising is serving a net positive goal (spreading information about the existence and quality of products) anyone could think up ways that are an order of magnitude cheaper and do an order of magnitude better job serving the goal.
As someone who worked with online marketing services like google AdWords, facebook ads and search engine optimization, I can absolutely assue you that your statement is not generally true. Advertising is definitely not a terrible waste of resources, but you are right insofar that it CAN be. However, if the basic conditions are right (product and price makes sense, website looks attractive and is easily navigable etc.) ads can be amazing and increase your sales by several 1000%. I’ve had customers that made a return of roughly 100€ for every 3€ invested (yes, including both the cost-per-click for the ad platform as well as our online marketing service priced at 75€/h. And no, people directly navigating to the URL rather than being led to a specific product or landingpage are not counted either).
In fact, next to the stock market advertising may be one of the few examples of actual civilizational adequacy; I’m especially speaking of the ad platform providers themselves (like google or facebook) who have the resources to optimize the absolute crap out of their ad system. If a company who is doing the online advertising (or providing the platform) is the same that is directly profiting from it, then you have an alignment of incentives and the ability to experiment and continuously improve ads in ways that you can almost perfectly quantify and track—this can be incredibly powerful.
Yes, there are companies who can afford to not advertise their product and specific constellations where it in fact may even save a lot money to not advertise, but consider that those are usually products that are completely unique, have high signaling value and are already known and/or are plainly ten times better than anything else the competition has on the market (e.g. Tesla). But if you basically sell the same thing other people are selling, then I’m afraid there is no other similarly reliable way for you to gain visibility and sales than to simply invest in ads. (And if you think otherwise, then please elaborate).
I can’t comment on “old world” things like the efficiency of billboards or TV ads, but barring the odd dolt you can be damn sure that the people making decisions about purchasing that adspace or airtime usually know their way around evaluating numbers and I’d honestly be extremely surprised to learn that they are actually all fools burning their money.
I don’t think there doubt that companies can make profits by advertising. The issue is about whether advertising is a zero-sum game where some providers win over other providers by doing better advertisement.