Tito's Blog

Volume Premiums in Advertising

From a good Facebook advertising platform analysis on Forbes, it seems like there is a premium on reach, rather than on precise targeting.

Generally, the promise of online advertising is targeting pitches at the precise group for your particular product. But all that precision doesn’t make Facebook much more profitable. In fact, typi

The approximately 2,300 U.S.-based Facebook users with a Harvard degree in economics fetch a meager 3 to 13 cents per click. But if you aim to advertise to all 29,000 U.S.-based Harvard graduates, Facebook will suggest a bid of 54 to 71 cents.

That’s precisely why TV advertising is still kicking. Advertisers need to reach vast audiences and niche targeting is not necessarily what they are aiming for. I am pretty sure that even Google struggles to monetize searches with lower volumes.

Instead of volume discounts, advertising commands volume premiums.

Social Unrest And The BB-NN Model

Everyday we have new signs of growing social unrest due to the worsening scenario in the global economy. That reminded me of the BB-NN model (pdf) that we covered during my MBA class on macroeconomics with prof. Forbes, which models also a “social peace” line depending on the equilibrium among balance of payments, real vs potential GDP, exchange rates and real productivity.