Advertising Economics

I hear a lot about the advertising business boom. Selling advertising on buses. On school buses. About FedEx sponsoring textbooks. Google and Yahoo selling ads. Recently, someone auctioned off the right to tattoo a section of his body. There's this vision of the future as a "Minority Report" scene where people receive personalized ads as they stroll about. There's moaning and worrying about us becoming overwhelmed with ads.

Lately I've been thinking about the economics behind this model. Here's my conclusion: This sort of future is only possible if advertising becomes very, very cheap.

Here's why: For a company, advertising is cost limited by profit per item. That is, advertising comes out of a company's profit. Long term, a business can not function if it cost more to sell the item than to buy it. (Yes, exceptions like the razor/razor blade model where one sells a cheap permanent item and an expensive replaceable item. But even then the net profit needs above zero.)

Now a company can shift where it advertises. Perhaps the internet is a better medium than newspapers. Perhaps advertising on textbooks is a better use of resources than magazines. Perhaps sponsoring college bowl games is better than radio. But companies are strictly limited their advertising budget based on their sales.

Likewise, credit cards not withstanding, there's a strict limit on the number of purchasing decisions a person makes during a year. Just because I see more advertising doesn't mean that my yearly buying power goes up. (Yes, there's suggestions that advertising does increase spending, which may lead to debt, which leads to interest, which in turn leads to less spending...or bankruptcy.)

So perhaps the question is really...what's the value to us of non-advertising filled space? What does an advertiser have to value a space at before we'll fill it with an ad? How good is a "FedEx" tattoo on my arm as an advertisement?

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Zeal and Human Nature

I came across this blog entry today discussing the nature of radical Islam. I don't have a lot more to say about it, other than I've been contemplating whether or not we (I) think of ourselves (myself) as somehow more enlightened and less given to violence.

Chinese Torture, err, Modern Medicine

The difference, apparently, in anesthesia. Ancient Chinese used to remove toenails without to torture. Modern doctors first repeatedly stab you with a needle to numb the toe, then operate. When all is said and done, I strongly prefer modern medicine.

Thoughts from today:
Sometimes the "surely it will get better" thought isn't right, and there is a reason that modern medicine is a huge advancement over ancient times.

Experts often know more than novices. I shouldn't pretend to be an expert where I'm not.

Experts are tempted to abuse their expertise for personal gain.

Some problems take an expert to solve.

Some problems take an expert to know that it takes an expert to solve.

The Only Constant: Change

Lately I've been thinking about how life is always in flux. Not necessarily truly dramatic paradigm-altering change, but a "The more things change, the more they stay the same" type change.

* I've always assumed that Steve Irwin would make video of dangerous creatures until he was fifty or sixty or seventy, and then become one of those guest commentators on TV or some such. Or not.

* Friends wander in and out of our lives...and occasionally wander back in again.

* Our pastor was commenting on how our church feels different this year than it did last year, which is different from five, ten, or fifteen years ago.

I'm also realizing all over again that I don't like change. Or rather, I like change that isn't too personal. Buying a house sounds cool. Rebuilding an entire social network doesn't. New experiences are interesting. Developing new life routines isn't. And so on.

Nothing very new for my personality and temperament, but since I haven't blogged much, I figured I'd share, especially as I'm having writers block on my more interesting thoughts.