The economics of ads

[Prodigit]

Originally Posted by Quietude

Not if they're paying the right people for the right thing. Small companies that try to use F500 techniques, and larger companies that try to "advertise" on Main Street are certainly wasting their money. (Which is fine with me; waste away, guys.)

Originally Posted by mshultz

I agree. The people who sell advertising are making money, and the people who create advertising are making money. It's the people who are paying for this advertising and thinking it will increase their business who are losing money.

...Which ends up being people like us, because we pay for the goods, that are made by companies that pay for the ads, adding the price hike to their goods...

[Quietude]

Originally Posted by Prodigit

...Which ends up being people like us, because we pay for the goods, that are made by companies that pay for the ads, adding the price hike to their goods...

The shelf price of most consumer goods is largely marketing-driven and -based. Cost of the goods and their manufacture can be as little as 10% of what consumers pay. So a few nickels and shekels to the ad men don't change the equation much.

I forget the rule of thumb and it varies with category, but it's right around a product's 2-year revenues should be 10X total marketing costs to be considered a "successful" launch. In other words, the most successful, whiz-bang, every-channel, drive-ya-crazy product campaign cost 10% or less of revenues. Given the leverage of most conglomerates and multinationals, probably a lot less.