Zero-Sum Games in Traditional Marketing

Abstract

The most basic game theory concept, the zero-sum game, describes conditions in which each gain by one player produces an equal and corresponding loss for the other. Zero-sum games have limited applicability to marketing, because marketing does produce dividends for both players when the right message reaches the right audience at the right time. But marketers have relied on zero-sum in direct marketing, especially when pricing promotions are involved. The Web has disrupted marketing zerosum strategies because of the degree of transparency it provides and the corresponding insight that consumers gain into marketing tactics. The shifting of the zero-sum equation – the minimax point – in the consumer’s favor can be seen in the rapid decline of click-through rates in banner advertising.