[connoredel]

The idea that advertising is a consumption tax is wrong. You don't use "cost-based pricing" in advertising (i.e., you don't decide how much to charge to make sure you are covering your costs of acquisition). You decide how much to spend on a given ad channel based on the average revenue you expect to get from a customer. There may be other important metrics like payback period -- or sometimes even less tangible things like the number of customers may be important if scale is an end in itself -- but in any case, rational people in charge of acquisition are making sure they are getting some benefit out of the ads at the optimal price that was set independently. If you start marking your price up beyond what people are willing to pay just because you want to make some ad channel effective, you'll see conversion drop and the channel will become _even more inneffective_.

I would argue that two companies with identical products -- one who acquires customers organically and one who acquires customers through advertising -- should set the same price. The first will have higher net margins but the other will enjoy more total profit if they are smart.