martinibuster - 7:45 pm on Dec 1, 2010 (gmt 0) [edited by: martinibuster at 7:51 pm (utc) on Dec 1, 2010]
...or they end up with razor-thin profits.
That's one way of looking at it. It's not unreasonable to expect a rise in earnings in exchange for an investment in advertising. That's the Return on Investment (ROI) everyone talks about.
But that's not the only return on investment that can be achieved. The ROI can also be viewed as the cost of expanding the customer base. I've spent thousands of dollars in advertising to grow one of my sites. It wasn't arbitrage, I didn't make X amount for every dollar I spent. But the site did grow and became a bigger fish in the pond- which was my goal.
This is one area where people miss their chance to grow. They spend a significant amount of money on building the website, the menu, creating an ambiance. Then they cheap-out on promoting it.
[edited by: martinibuster at 7:51 pm (utc) on Dec 1, 2010]