the average American is exposed to 10,000 ads every single day all as a part of an industry that is worth nearly a trillion dollars run by some of the biggest companies in the world but you probably don't even remember the ad that played before this video so how many more ads can companies cram in or are we already past the point of no return hey guy you're the first serious gamer I've seen all morning check this out peeri advertising we all know it when we see it whether it's in or on television not great as
a user experience though I'm getting Googled now on Amazon where if I want to actually find what like the best product is I have to sponsored sponsor okay all the way all the way down here at the end of the page you know item number 13 with social media it's not so clear and neither are the rules consumers can easily be [Music] fooled you can only learn so much in a day and according to research conducted by the National Institute of Health you will forget half of everything you learn within an hour there is no
possible way that even if you tried to listen to every single ad that you were exposed to on a daily basis that you would remember everything they were trying to sell you most people are not trying to pay as much attention to advertising as humanly possible they are doing the opposite most people try to avoid it by skipping the ads getting up from their TV during commercial breaks and becoming wise to carefully disguise product placements people also get annoyed by the constant interruptions nexn an advertising technology platform and Magnum media conducted survey on participants that
were exposed to a different frequency of the same advertisement one four or six times in a 1-hour viewing session participants who only viewed the advertisement once reported a higher intent to purchase an advertised product but participants who saw the ad six times said that they were actually 16% less likely to purchase it because they found the product disruptive to their overall experience so if we can't possibly remember all of the ads shoved in our face and they become less effective the more they are served to us that means we must have hit Peak advertising right
wrong if advertising didn't work companies wouldn't spend nearly a trillion dollars on it every year which is an insane amount of money that is predicted to grow data and analytical reports from KPMG Magna and Satia suggest that companies around the world will be spending $1.2 trillion a year on advertising in 2027 there are three reasons why unfortunately we are nowhere near the limit of advertising the first reason is that companies are widening the way that they can advertise to us in other words they are having their customer their their clients their merchandise sellers they're charging
them to advertise in their store the largest category of advertising is probably what you think when you think of advertising 45C commercials that give the audience some basic information about the five PS of advertising the product the price the people it's for the promotion running on it and the place where they can buy it all advertising will have some or all of these details in the ad traditional advertising is still very popular because it builds awareness of Brands and products that might not convert into sales for days or years after the advertisement was aired if
you think of a soft drink you think of Coke or Pepsi a place to do your shopping Walmart and if you need new trainers you would probably start with Nike that's because these companies all spend billions of dollars every year on awareness advertising some advertising done by lifestyle Brands like Nike won't even mention four out of the five PS in their materials they won't even mention a price a promotion a place where you can buy it or even the product they will just focus on the people that use their shoes so that in a year's
time when you decide to get back into shape you think of athletes and Nike awareness advertising Works particularly well for fast-moving consumer goods the shelves of Walmart and Kroger are filled with products but those products have packaging and that packaging is like a mini billboard designed to stand out and get your attention competition for shelf space at the big box retailers is fierce amongst Brands and it's getting more heated as big box retailers release their own white label products like Sam's choice and great value companies want as much shelf space as they can get but
retailers want to maximize their floor space to the fastest moving products so the best way for a company to get shelf space is to show retailers how much they are spending on traditional awareness advertising this kind of advertising has been around since the days of Mad Men pitching Lucky Stripes but it's about to be overtaken by a new type of advertising that combines the awareness and shelf space into one search advertising is the fastest growing category of advertising because it reaches people as they are actually looking to buy something paying Google to be the first
company to pop up when someone searches for mountain bike gives a company a pretty good chance of selling some mountain bikes because it's so effective it's also expensive and it's why it makes up a majority of Google's income Google is not a tech company it's an advertising company that runs a search engine on the side online advertising has grown in parallel with e-commerce search advertising also benefits from Big Data because an advert on TV is going to be seen by everybody watching it if there are a potential customer or not but advertising on a search
result can use collected data and advanced algorithms to make suggestions with the highest likelihood of sales conversion there is also another category of advertising that has been growing rapidly and that is influencer advertising so it's time to learn how money works as I prove my own Point by telling you about the very cool sponsor of today's video that actually let me do this this week's lesson is sponsored by a long trusted Advertiser who understands awareness advertising and the Right audience to advertise to brilliant brilliant knows that the largest brands are regularly spending on making their
brands known to you and that's why they've become a longtime partner with me they know that while you're learning something here you'll be hungry to learn something there like have you ever wanted to understand the math used to model the chaos of the financial markets if so then brilliant made a smart choice placing an ad here because they offer that course on their website there's many more courses that they offer that may interest you I'm so blown away by chat GPT grock and Bard that I need to understand how large language models work and fortunately
brilliant has an llm course just for that best of all you can learn anywhere you are on your desktop phone or tablet brilliant makes learning fun and enjoyable and if you like my channel I think you'll enjoy learning with brilliant to get brilliant for free for 30 days go to brilliant.org howon works or click the link in the description and the first 200 of you will get 20% off brilliant's annual premium subscription it makes sense that new companies entering the market need to advertise so that potential customers know that they exist the rate of new
businesses being started in America has never been higher in the past 5 years businesses have also found it easier to get early stage investments from Venture Capital funds VC investors want to see growth in the companies they invest in and that means acquiring customers literally at any cost customer acquisition costs track how much a business needs to spend in marketing and advertising to get one customer to buy their product or use their service if you run a business and the cost to acquire a customer is greater than the cost of the product you are selling
to that customer you have a sh business you would think this is obvious but this simple business basic has been tested by new companies that needed to build out a user base because their users were their customers and product all rolled into one if Uber didn't have drivers it wouldn't be able to get paying Riders and if Uber didn't have paying Riders it wouldn't be able to get drivers so to make the business operational Uber had to pump billions of dollars of investor money into advertising their service to both drivers and Riders even much smaller
businesses need to do this to get their first few customers as more people try to be their own boss businesses of all sizes are going to need to spend more on Advertising to get their first customers but these are all still not the companies that are spending the most on Advertising according to a 2019 report by Insider Intelligence on total ad spend it was the largest and most established companies that already had the most brand recognition that we're spending the most money on advertising and that's because of the second reason why we are unfortunately nowhere
near Peak advertising yet there's a sucker born every minute if they stopped advertising completely right now would you forget about a certain Brown sugary fizzy water the fast food shop that serves your favorite chicken sandwich or the name of the tech company that sells smartphones probably not but advertising does more than just inform you about new products it can suck you into accelerating a purchase decision you can admit it I can admit it you have watched a fast food commercial and become hungry for some deep fried goodness but even for big brands that are not
selling products that are impulse purchases advertising is still an effective tool to secure customers long before they even know their customers JP morg and Chase became a laughing stock on Wall Street last year for spending $175 million on an app called Frank that helped college students find grants in scholarships the app was filled with fake users and the founder of the company that sold it to the bank is now facing criminal fraud charges but even if this app did have the user base it reported at $175 million it still seems like a bad investment because
college kids looking for scholarships are not exactly lucrative banking clients the reason the bank made the purchase was because they saw it as a great opportunity to get young soon to be professionals used to banking with them before they even had earned their first paycheck once people become accustomed to banking with a certain Bank shopping with a certain retailer or using a certain cell phone they rarely switch so brands are willing to spend a lot of money on winning over the hearts and minds of young impressionable people before they even make their first purchase sometimes
this is done by purchasing a fraudulent app that promis to provide direct engagement with Millions but more often it's just done with good old advertising brands are increasingly in an arm race to secure lifetime customers because the numbers are obvious according to the consulting firm enture Americans spend on average 57% more with companies that they are loyal to so this should tell you two things if you are running a company getting people early is worth a lot and if you are a customer this is your sign to not pay for loyalty check your insurance utilities
and subscriptions and shop around for a better deal at least once a year it could be the most profitable 2 hours you spend the third reason that we are unfortunately nowhere near Peak advertising yet is that companies are finding new ways to reach you everywhere the technology company anzu has raised a total of $65 million and partnered directly with some of the largest companies in the world because of a new technology they are developing their program will let video game companies dynamically integrate advertising into your games as you play them this will allow video game
companies to tap into a new Revenue stream on top of microtransactions and you know actually selling video games even if it's not sneaking into video games the advertising industry has come a long way from television radio and newspapers customers are also becoming more siloed into different platforms you are watching this video on YouTube right now but you may not have watched cable TV or read a newspaper for as long as you can remember there are some companies that like this highly targeted advertising like watch this I predict in 4 seconds some dude is going to
pop on your screen to pitch you some kind of way to make money online if you use ad block or YouTube premium you might be confused right now but people consuming Finance content on YouTube are prime targets for people selling courses on making money but Ultra targeting doesn't work for big companies with a broad customer base if companies just focus on one medium for their advertising they will be missing out on capturing all the groups of customers that don't use that platform the result companies need to do more advertising to cover all these platforms or
their competitors will steal market share from them the fourth and most concerning reason is that companies are selling us worse stuff than ever before just like there are so many new ways to reach customers there are also new things to sell to them and some of these new products are going to do a lifetime of harm to the people that buy them the years of crypto advertising may be coming to an end but in their place is an even more efficient way for people to lose all of their money gambling on May 14th 2018 the
Supreme Court overturned a law that made gambling on Sports illegal Nationwide overnight it became possible to gamble on Sports from your phone at almost any time of day and gambling companies capitalize on this big time Sports books are now spending more than $2 billion every year on advertising and this has created a marketing Gold Rush the companies know that what they are doing is praying on vulnerable people and that they know laws will eventually catch up but for now they have the opportunity to capture as many people as possible in one of the most lucrative
markets that exists companies like Nike and Budweiser now have to compete with sports books for air time between plays and even these billion dooll companies can't keep up with the spending of sports books so they are advertising more elsewhere which means you end up with more advertising overall now there is hope still for a long time the amount of advertising we are faced with every day has only gone up but go and watch my new video over on how history works on the full history of advertising to find out how we got here in the
first place and how it could all end one place I don't need to be Advertiser friendly is my totally free newsletter compounded daily some of the best Finance creators and I write articles there about topics that don't need an entire video or just wouldn't do well with the YouTube algorithm so if you like these videos you should sign up to that at link below as always don't forget to like And subscribe to keep on learning how money works
