The confusing thing about advertising

There are two things about advertising that I find confusing.

First, businesses dependent on advertising revenue often pay platforms like Facebook for user acquisition through cost-per-click or cost-per-thousand-impressions models. The math here is puzzling: you are paying to reach 1,000 people, have let’s say 30 of those convert to users, and then trying to get others to pay you to reach those 30 people… The only explanation that seems to make this work is that you are banking on viral growth where the users you acquire bring additional users organically, thereby expanding the base you can monetize through advertising. But that’s a big bet to make as the foundation of your business model.

Second, major advertising platforms like Google and Facebook promote online advertising as superior for reaching consumers, yet these same companies invest heavily in traditional TV advertising. It’s like a Honda salesman selling you on all the features of the Accord and then you watch him drive out of the lot in a Camry.

These tech companies clearly view online advertising as part of a balanced diet rather than the optimal solution for all consumer reach scenarios. And while that’s probably a reasonable stance, it creates an apparent contradiction with their core business positioning. If online advertising is so effective, why aren’t you using it exclusively to promote your own products? The answer seems to be that they know traditional advertising channels have distinct strengths that online channels don’t fully replicate, which is a philosophically inconsistent position for companies whose entire revenue model depends on convincing others that online is the way to go.