Tuesday, October 13, 2009

Is advertising really free?

Why do companies pay for advertising? Assuming they are rational, it is because they think that they can generate enough profit to at least offset the cost of advertising. Where does this profit come from? Us of course. It comes from us buying more of their product.

This can be a good thing, a win-win situation. There may be a new product that we don't know about, but which we'd love to have. For example, I am glad to know of the existence of an upcoming Star Wars MMO. By advertising it to me, the company is increasing its profits and helping me to, eventually, find an awesome new game*.

On the other hand, it can be a win-lose. Or actually a win-win-lose. The first winner is the seller who gets more business. The second is the credit card company. The loser is the person who is caught up in a whirlwind of advertising, consumerism, and disregard for the idea that credit runs out eventually.

This actually works quite well for me. I get a lot of online content for free because of advertising. For me it is free since I either see something I want or it's some consumerist shit that I ignore. My free content is subsidized by those who are more apt to spend their money, and that of someone else as well. Oh sure, sometimes I don't like seeing ads, but that's what NoScript and ad blockers are for. It's great: I get free stuff without seeing many adds. Other people who I don't know wreck their lives. To top it off, their interest payments are what make it possible for credit card companies to offer things like airline miles or cash back.

So I suppose to answer the question: yes, no, no. For me it is free. For someone else it is not. For society overall, it is not. Or to be more accurate: no, no, no. I don't benefit much when people go on credit binges and support a wasteful economy, which then crashes when the card companies realize they can't milk much more and dump the person.

* This sounds like viral advertising, doesn't it? Oops. TBH, I couldn't think of many good examples. Maybe a surprise 8th Harry Potter? Or a remake of Episodes 1-3 that don't make me want to cry? I'm out of ideas.


G-Rebel said...

I live in the biggest tourist trap in the world, and benefit when people spend (er, lose) all their money, which in turn makes it so that I never have to pay state income tax. It's great. You lose, I win, how much better could it get?

A company wanted to hire me that, get this, made credit cards for gamblers. They provide the credit, you go to a casino to a special ATM and get money, you gamble the money, lose it all, then owe the credit card company for everything you lost plus interest...I refused to even go to the interview, because that's just sick.

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