Monday, April 11, 2016

How will "free" affect the Middle Man

We live in a day and age where we want things now and we want them to cost us as little as possible - and even better if we can get it for free. Anderson talks about the beginning of this trend with his Gillette razor example. Gillette positioned their disposable razor blades within a cross-subsidy model, which we now see becoming more popular with other industries - particularly with technology sales. This trend of "free" is becoming the new normal, however, and I agree with Anderson that this notion of "free" is going to change everything.

The millennial generation has grown up with a free web, which is becoming the backbone of the future of technology. Although services online like Google and social media may be "free," someone has got to cover the costs. This is where advertisers come in. I believe that we are going to see an internet that is embedded with digital ads and digital marketing more intense than it is currently. Anderson's article was written in 2008 - just look at how things are being operated now; in 2016 Google makes $67 billion in ad revenue alone. Big tech hubs like Googe, Facebook, and Apple are recognizing the fact that technology consumers want "free" and, thus, there must be a middle man daddy warbucks to cover those costs. But, from an industry's perspective, are these tech gods like Google and Facebook taking advantage of this fact and charging companies too much for advertising? This video explains how Google charges a company for search ads - starting with bids from $4 per click to $1 per click. Companies must devote a lot of time and effort to perfect their quality of ads in order to be competitive within the digital market. What does this mean for consumers? Are we going to have to cover these costs when buying the physical products just so the company can keep up with the digital advertising demands? 

As an Advertising major, I am interested to see how the digital "free" world evolves and continues to play a role with consumers and advertisements. 


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