The economics of amateurism

So the Super Bowl is going to force us all to watch user-generated-advertisements. The Wall Street Journal reports that Doritos, Chevrolet and the NFL itself will broadcast amateur advertisements during the big game.

What are the economics of this ill-advised venture? Jarod Cicon, one of the five finalists in the Dorito competition, estimates that his 30-second ad costs $150 to produce. In contrast, the average professionally produced 30-second spot costs $381,000 (according to the American Association of Advertising Agencies). Given that Doritos are awarding $10,000 to the five finalists in the competition, that still leaves $331,000 on the table.

That's $331,000 which Doritos isn't spending on the videography and creative. Instead, they've seduced amateurs like wedding photographer Jarod Cicon to work for the glittering promise of long-term fame and fortune. Mr Cicon would be better advised to invest his time in getting a paid job with an advertising and marketing company. That way he would be able to share the $381,000 he could have charged Doritos for a professionally made 30 second spot.

The economics of amateurism are disastrous. As Columbia University professor Jagwish Bhagwati argues, technology is undermining the wages of the American middle class. Web 2.0 style technologies which enable amateurs to replicate the work of professionals are particularly repsonsible for what Bhagwati calls the "tsumani" of downward pressure on wages created by new technology.

So when you see those advertisements during Super Bowl 2007, remember the $331,000 that Doritos saved by getting amateurs to do their creative work for peanuts.

Pass the chips.