Products should compete on their cost vs value for the customer, not on which is better known.
Yes, advertisements make customers aware of a particular category of product but by pushing one specific brand instead of the whole category. I would OK with advertisements which push the whole category, that is positive-sum.
But currently we have an arms race where you have to invest in ads to compete with other products of the same category and that is zero-sum. Inter-category competition should be based on quality/longevity/cost.
>I would OK with advertisements which push the whole category, that is positive-sum.
This doesn't get rid of people buying what is most well known. In fact without the possibility of being exposed to more niche options people will just go with the incumbents. Advertising allows new competitors in a space to be able to acquire customers based off their value for customers instead of being a wellknown thing.
They'd still be exposed to other options, through friends, reviewers, comparisons websites, etc.
Ads mean the brand with more money wins. It is completely orthogonal to value/cost.
You can in theory get investors to fund ads for a new brand but it just increases the upfront cost. Organic growth is no longer possible. And who benefits most are the already rich.
Popular options will have more words of mouth, more reviews, appear on more comparison websites, etc. The incubants have a massive advantage through those paths.
>Ads mean the brand with more money wins. It is completely orthogonal to value/cost.
Why? A better product will be able to achieve a better ROI on ad spend. This means that they can afford to spend more per ad than their competitors meaning they will win all of the ad auctions compared to the brand with the most money.
A product with higher price-input cost spread will be able to achieve a better ROI on ad spend. i.e. they can displace products with higher quality, lower price, or both.
Yes, advertisements make customers aware of a particular category of product but by pushing one specific brand instead of the whole category. I would OK with advertisements which push the whole category, that is positive-sum.
But currently we have an arms race where you have to invest in ads to compete with other products of the same category and that is zero-sum. Inter-category competition should be based on quality/longevity/cost.