Wasted money, or a message?

Some things you can judge in the shop, like a shirt's colour. Others only once you've tried them, like a meal's taste. In 1970 the economist Phillip Nelson called them search goods and experience goods; in 1973 Michael Darby and Edi Karni added a third kind you can't judge even afterwards, like whether a repair was really needed. Nelson noticed that the ones you have to try get advertised hardest, and for those anyone can claim best quality, so the claim tells you nothing.

The test: two brands, same price, same giant ad, and the same people try both. The good one gets its buyers back, month after month; the bad one gets them once. Only the brand people come back to earns the ad back, so the spending itself can be the message: only a good brand can afford to shout. Paul Milgrom and John Roberts later made it a model; such an ad's clearest message, they wrote, is "We spent an astronomical amount of money on this ad."

It's a tendency, not a law: it needs both brands to earn similar margins, and across 196 product categories ad budgets and quality were mostly uncorrelated. The two brands and their buyers are our illustration.

So, which did you pick?

Sources: Phillip Nelson, "Information and Consumer Behavior", Journal of Political Economy, 1970, and "Advertising as Information", Journal of Political Economy, 1974; Michael Darby and Edi Karni, "Free Competition and the Optimal Amount of Fraud", Journal of Law and Economics, 1973; Paul Milgrom and John Roberts, "Price and Advertising Signals of Product Quality", Cowles Foundation Discussion Paper 709, 1984; Kyle Bagwell, "The Economic Analysis of Advertising", 2003.
Sounds: our own, made in code (earshot, CC0).