We all pay for brands spending money on marketing, which then pay various platforms allowing these services to be exposed as “free”.
But wouldn’t it be the same if these brands spent less on marketing, and platforms became paid? Is it all a make-believe game? In the end, is it only about brand discoverability?
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If I understand well, your proposal is that:
* facebook is free,
* lipton tea runs a facebook campaign and pays facebook
* by buying lipton tea, you pay for the tea and the ad campaign
Thus, why not paying facebook directly and having cheaper tea.
The answer is complex.
Lipton tea will do ad campaign anyways as did before facebook. Reason is from time to time they want to remind you about their existence and/or offer their new product. If not facebook then street ads, TV ads etc. So tea is not cheaper for you. Especially not because a facebook ad is *efficient*, which means they have to spend less on a facebook ad for the same increase of sale than they would spend on street ads.
Anyways, ad price is usually a tiny fraction of what you pay for a product, most of it is the store profit huge part is transportation.
Also income from ad campaigns that reach you personally is not the only income source of facebook. They made 116 billion USD last year and had about 3 billion active users. That means almost 40 bucks per year everyone needs to pay so facebook has its money.
If we assume that people are rational and they do the math and all, they would choose to pay $40 if they save more than $40 on lipton tea and other products that get cheaper. The problem is that as I mentioned street ads are less efficient so lipton tea would not become cheaper, if anything, it would become more expensive.
However, it’s shown in many research that people are not rational they would not give up a free looking service even if it was proven that they pay invisible prices in linked fees. So paying facebook would not work even if lipton tea would be indeed so much cheaper.
Yet another problem is that the users have different values. Some are poor students or unemployed who would definitely not pay 40 not even 5 per year. These users are still valuable for facebook because they generate content which is kind of a free added value and keeps the rich users using, and also user data that facebook sells. And poor users may become rich users so it’s an investment too. But it would make it really problematic how to price the service.
Of course free services may differ but in general you can replace the word “facebook” to anything else.
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