4 ms·
I don't immediately agree with the premise of this article: that the consumer pays an advertising tax on the good or service being purchased. I tend to believe
by padobson 11y ago
I don't immediately agree with the premise of this article: that the consumer pays an advertising tax on the good or service being purchased.
I tend to believe that advertising actually adds value to the good or service, especially when it's exactly the same as a competing good. When you buy General Mills' Honey Nut Cheerios instead of Offbrand Honey Oats, the advertising on the sale has actually payed for itself and then some, increasing the profit margin above the good itself.
On a macroeconomic scale, the best example I can think of is the Soviet Union. Advertising was thought to be a drain on society under the Marxist thinking of the time, so the Soviet Union didn't allow it. But then they found without advertising, it led to under consumption. I think there were other problems too, but eventually the Soviets started advertising, despite their initial misgivings about it.
A quick google didn't reveal any good citations, so I'm certainly open to other ideas on this, but my main point is that this article over-simplifies the value that advertising generates for an industry.
Edit: Found an interesting article on the Communist world's relationship with advertising: http://www.acrwebsite.org/volumes/5816/volumes/v03/NA-03 http://www.acrwebsite.org/volumes/5816/volumes/v03/NA-03
- bgilroy26 11y agoWhy bother selling Offbrand Honey Oats if you can't offer your customers a discounted version of the leading brand?
- gnoway 11y agoAdds value from the perspective of the seller, sure. If I buy the honey nut cheerios vs. the off brand honey oats, I've received poor value because I've paid more for the same thing. And it's only adding value for the seller if they can sell the product for more than they pay in advertising - if this wasn't the case, people would not advertise because they would lose money. I'd also like to suggest that the Soviet 'underconsumption' you speak of might be better characterized as 'proper consumption'. It's not a mandate that we buy a product just because someone's selling it.
- padobson 11y agoI've received poor value because I've paid more for the same thing. I disagree with this completely. Did you buy it because price wasn't important to you and it was on a more convenient shelf? General Mills paid for that shelf space out of their marketing budget, so the added value was convenience. Did you buy it because your kid likes the cartoon bee and wouldn't eat any other cereal? Then the added value was entertainment. This is the same value you get when you buy a movie ticket. What about when someone buys shoes from Gucci as opposed to loafers from Kmart? The consumer is paying for the marketing, without question. But they're getting something for their money - self esteem, status, etc.
- gnoway 11y agoHonestly, this reads like an argument from an advertiser trying to justify their purpose. Where a box is on the shelf - at least in every supermarket I've visited - has no effect on the convenience of the product. So that's a stretch. I don't have kids but I am aware of the phenomenon of children making choices that an adult would not make. I won't assert that I would never buy my kid the cereal s/he wanted because it was marketed to them, but I will suggest that the value of entertainment gets canceled out by my feeling like a bad parent in that situation. Maybe I'm just bitter because my parents wouldn't buy me the fancy-box cereal. Finally, I think Gucci is in the image business, which I agree is heavily dependent on advertising to sell the image. Without advertising it wouldn't surprise me if Gucci didn't exist. If your self-worth is tied up in what shoes you wear then I agree, advertising has added value here.