Wednesday, May 14, 2008

How Advertising Works, and Why It Won’t For Facebook

My Facebook posts showed me that a lot of people don’t understand the basic theory of advertising and some of its ramifications. I thought I’d explain it a bit here as it might help people understand. What advertising all comes down to, in the end, is return on investment. How much does a company have to spend to make $1 in profit. If Budweiser spends $100 million in ads in a year, but those ads sell enough beer for them to make $200 million in profit, it was money well spent. If it nets them

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