Commercials are not logical. FTX edition.

Some people asked me to comment on FTX since I teach Crypto. My insights are no better than anyone else; however, I have wanted to do a blog post about the illogic of commercials, so I will do that with FTX as an example. 

ALL conversations in the post are fictional.

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Alice: Bob,  why did you invest $1,000,000 with FTX?

Bob: Because Tom Brady endorsed it. (See here)

Alice: But Tom Brady is a football player, not a finance person. 

Bob: Well... I know that now. 

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The people in commercials  paid to hawk the product. 

a) Are they experts? In the above case about about FTX  NO, they are not. So this should not work. 

b) There are commercials where the people ARE experts. For example, a basketball player endorsing Sneaker brand (not quite an expert, but they DO use the product). But even this should not work since the viewers KNOW that the person is being PAID to tell us it's a good product. 

c) Commercial spokesman (Geico-Gecko, Progressive-Flo, Dos  XX- the worlds most interesting man, see his commercial here and a Ramsey Meme based on it here) are even stranger- they are fictional characters who are urging me to buy something.  So the question are they experts? doesn't even make sense. Someone pretending to be someone they are not is pretending to like a product they do not use. 

d) Some commercials pretend to be  informative but are not. For example, the Insurance Companies seem to brag about something that ALL of the insurance companies do (bundling, not-paying-for-what-you-don't-need). 

e) A truly new product may have an informative commercial, just to tell me that its out there. For example. Stephen Colbert's Americone Dream Ice Cream which is awesome. (My spellchecker thinks Americone is not a word. This time they are probably right.) 

f) SO, if I did a commercial for Stephen Colbert's Americone Dream Ice Cream would you try it? Lets say I wasn't being paid and I truly did it for my love of that ice cream. STILL doesn't make sense- my tastes and yours may differ. However, you can try it and decide, and  it costs far less than $1,000,000.

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So what are we left with? The only commercials that make logical sense would be those where 

a) the person is an expert

b) the person is not being paid

c) the person is telling you something about the product that distinguishes it from its competitors OR p its a new product

d) Its not a matter of taste- there is an absolute standard that is easily understood. 

Do you know of ANY commercials like that? Influencers who are NOT paid by the people whose product they are hawking (are there such influencers?) might begin to qualify. 

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So LOGICALLY commercials should not work. So why do they?

a) They don't. Its possible they just are not that effective. See here for DON"T WORK and here for 8 times when it did work. I think this is a great commercial (watch it to the end) but it does not make me want to out and buy soup. (Stan Freberg wrote some GREAT commercials. They are on You Tube and I recommend them highly for entertainment. He also has several great novelty-song albums.) 

b) Indirectly. They build brand awareness.

c) Because people are stupid. This is not an interesting answer since I still want to know what their reasoning is, whether or not its faulty.

d) Because you are part of a movement. Drink the Uncola (7UP) to be rebellious! Or the 1984-Apple commercial (see here). These are both odd since drinking 7UP or having an Apple Computer seem to me to be the opposite of rebellious. 

e) Buying the product to express your philosophy: 

Ted: Carol, why did you invest in $1,000,000 in FTX? 

Carol: Because I believe in effective altruism.

Ted: Do you still?

Carol: This might need a rethink. But for now I'll  invest by getting a Freedom Unlimited credit card that gets cash back since Kevin Hart says I should (see here).