alt Hacker NewsI didn't imply that all of their gross was going into ads.
I'm highlighting that the gross on commodity consumer goods is huge - and that it just pays for mounds of white collar bureaucracy, including advertising, and yes 25 points is about right.
Consider that companies pay more for advertising than COGS.
That should tell us something about 'productivity'
FB/Goog revenues could be cut by 60% and the good may very well flow just the same, aka they are not just capturing surplus but facilitate aggressive inefficient competition.
A western nation will post the $5.00 to the GDP when much of it is inefficient make-work.
This is why 'Pricing Parity' has to be used even to begin to compare relative wealth etc.
Toothpaste is a particularly high-margin product so it might not be the best example generally. COGS is generally the largest line item for CPG (or non-CPG products), and distribution isn't free either.
Toothpaste manufacturers can probably get away without advertising on FB/Goog, but I'm not sure that would work for other products or brands. It's not make-work to tell people about your product or service, although in markets with limited players you could see how a marketing arms race would drive prices up.