6 thoughts on “Advertising: far less ‘powerful’ than you think”

  1. Posted 07/01/2016 at 13:06 | Permalink

    A flip-side of course is that “if advertising works as well as [prohibitionists] think, why do they feel they have to resort to lobbying government to get their pet projects enabled instead of simply advertising it and brainwash the sheeple to stop drinking alcohol/smoking/using toilet paper.”

  2. Posted 07/01/2016 at 13:21 | Permalink

    Two challenges to this article:

    1) Just because increases in advertising in a mature markets does not result in increased sales, it does not mean that reducing or eliminating the advertising would not reduce sales. Ultimately, in a mature market, the marginal product of advertising is very low, which results in the lack of increase in aggregate consumption as a result of increases in aggregate advertising. Your T-model examples makes this point, the marginal product of the advertising was high. Eliminating the advertising of motor cars would not necessarily resulted in declining consumption, and plausibly as well eliminating advertising on alcohol might not have no aggregate effect.
    2) If the theory holds, producers in monopolistic markets would not advertise. But yet we find a lot of advertising in monopolistic markets. Surely if brand market share was the only thing being affected then in monopolies we should not see any advertising?

  3. Posted 07/01/2016 at 13:22 | Permalink

    Two challenges to this article:

    1) Just because increases in advertising in a mature markets does not result in increased sales, it does not mean that reducing or eliminating the advertising would not reduce sales. Ultimately, in a mature market, the marginal product of advertising is very low, which results in the lack of increase in aggregate consumption as a result of increases in aggregate advertising. Your T-model examples makes this point, the marginal product of the advertising was high. Eliminating the advertising of motor cars would not necessarily resulted in declining consumption, and plausibly as well eliminating advertising on alcohol might not have no aggregate effect.
    2) If the theory holds, producers in monopolistic markets would not advertise. But yet we find a lot of advertising in monopolistic markets. Surely if brand market share was the only thing being affected then in monopolies we should not see any advertising?

  4. Posted 08/01/2016 at 15:50 | Permalink

    “If the aim of advertising is to increase the size of the market, it doesn’t seem to be working very well.”
    “It is an empirical fact that advertising generally doesn’t increase the size of the market….”
    Etc etc. Nothing to see here, gentlemen: move right along please.
    Alas, Mr Snowdon’s clumsy attempts to disguise the real and powerful effects of advertising turn out to be even more smoky and mirrorry then the dark arts of adverting itself.
    Try this for an “alternative” opinion:
    Business doesn’t give money away, and they generally have worked out what to do with their resources in order to generate the best return on the funds that they spend.

    From the point of view of the companies who initiate and pay for the exposure of individual ads, the aim of their advertising is clear and unarguable: it’s to make money (or, more rarely, to slow inevitable declines in some market categories).

    Individual ads can do this in all sorts of ways, but the fact that the ads keep on being made proves that they are paying their way.

    Which is why money keeps on being spent on (invested in) advertising.

    It is just silly to think that anyone today can credibly argue that advertising doesn’t change the way the people behave in specific ways and that these changes bring benefits to the people who are paying for these advertisements. D’oh. Please give your readers credit for some intelligence.

    That all this should be shopped to us by a man whose position (Director of Lifestyle Economics, ha!) is sponsored by an industry lobby group called the “Institute of Economic Affairs” is too good to be true.
    Hello George Orwell?

    People today pretty much know how marketing (advertising) works, and the fact many of them are prepared to go along with it doesn’t mean that they don’t resent what they know it is dong to them.

  5. Posted 08/01/2016 at 16:30 | Permalink

    Oh, and another thing:
    This quote from the book Advertising in a Free Society, by Ralph Harris and Arthur Seldon, recently published by the IPA with an introduction by the aforementioned Mr Snowdon.

    Advertising is more likely to reduce, rather than
    increase, costs and prices. Advertising increases the
    extent of the markets in which companies are able
    to operate, therefore leading to greater economies of
    scale. This is confirmed by the empirical evidence.

    Hmmm, empirical evidence in the social sciences is dubious enough. But in the smoke and mirror debate about the economic and social place of advertising, it’s usually nothing more than opinion dressed up with transparently partisan arguments.

  6. Posted 02/02/2016 at 12:24 | Permalink

    And just how does Mr Snowdon presume to assume he knows how powerful I think advertising is anyhow?

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