Marketing with a focus on digital

Is burning cash for its own sake a good thing?

I read an article in HBR yesterday that said buying a Superbowl ad is like taking $5 million in cash and burning it. That is, if your purpose is to accomplish even the squishiest of business goals like brand or product awareness, or propensity to purchase. And if you've been reading any of the same things I have recently, you're probably sick of all the hot takes saying the same thing.  

What made this one different, though, was the author's thesis. He said that for companies in certain competitive situations, publicly burning cash can be a smart strategic move. And not in a "camel through the eye of a needle" biblical sort of way. Rather, that people watching the ad have a gut understanding that there is "a link between a desirable yet hidden attribute and the cost of doing something." In this case the cost of doing something is $166,000 per second of ad time. The desirable yet hidden attribute is twofold: a high quality product or service, and a commitment to that product or service by the company.

I still don't know if I buy this theory, but it's not coming from left field. The author and other economists are working from a Nobel Prize winning thesis related to hiring practices by managers, and the article illustrates the thesis with real examples of companies essentially burning boatloads of cash unnecessarily in their advertising. 

Again, not enough to convince me outright. But let me offer this personal anecdote. For months now I've been debating whether to get a smart home device like Alexa or Google Home. While Alexa leads in Skills and price point (hello, Dot!), the thing that was really making me really favor Amazon over Home was Google's history of suddenly abandoning products and services. Call me paranoid, but I guess I'll never get over Reader's deprecation. Then yesterday (before I read this article, for those about to yell "cognitive bias!") I read that Google will air an ad for Home during the Superbowl. It instantly eased that concern, and now Home is back in the running. 

And who knows, maybe tomorrow's ad will even make up my mind.  If I'm not on my phone during the commercial break.


Aaron GroteSuperbowl, Branding