Just saw Spotify is going to pay 70 million dollars a year to have their name on the F.C. Barcelona t-shirt. How can this be profitable? Surely not that many people start using Spotify just because they saw it on their teams shirt right?
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It’s the marketing paradox.
How much money do you spend on marketing? What kind of marketing? When are the returns not worth it? All these questions are hard questions to know the answer to, that often don’t have perfect answers, and you just gotta figure out with trial and error.
But the general trend is that for most companies, if they aren’t advertising, and their competitors are, then their competitors are gaining an advantage in brand recognition.
Hypothetically Coca Cola and Pepsi could both stop advertising right now and just keep selling products to the people that current know and buy their products. But if either company did that, they risk the other company swooping in and still advertising and starting to steal those new or on the fence customers. So neither company can let up.
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