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by XorNot
3743 days ago
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This is one-sided. A lot of modern consumer advertising and especially web advertising works this way, but there is also the goal of simply letting someone know a service or product exists (and might fill a need they presently have). The problem is this is a lot like search on the internet - if Google were "perfect", advertising wouldn't work, because it would always find exactly what you were looking for exactly when you needed it. |
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Advertising will always work so long as there is producer surplus[1] in the economy. If firm A and firm B both earn $10 of economic surplus on the purchase of some product, then either supplier will be willing to spend up to $10 to convince a customer to switch from their competitor to their product. If a customer considers the two firms' products to be substitute goods[2], then both products may be "perfect" search results, because the customer doesn't have a preference between them and considers them both to be equivalently useful, which is why Google can extract money from advertisers to show their product first without significantly harming their user experience.
[1]: https://en.wikipedia.org/wiki/Economic_surplus [2]: https://en.wikipedia.org/wiki/Substitute_good