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This is exactly right. It was a way to get free advertising from cutting your advertising budget.
by darawk 6y ago
This is exactly right. It was a way to get free advertising from cutting your advertising budget.
- sharkweek 6y agoTwo thoughts: One, I remember a study back when cigarette companies were told they couldn't advertise on television that all major tobacco brands loved this because it meant they didn't have to spend any money on these types of ads. I'm sure there are versions of this all over the place in most marketing strategies. Two, pardon my cynicism, but I'm sure companies model these things out and take action based on those models. No CEO is just like "yes, let's support a social cause." Randomly picking on a brand, but I'm sure Starbucks started flying a Pride Flag because it made sense to do so for the business.
- cortesoft 6y agoIt probably depends on the industry and market. For cigarettes, they weren’t trying to make people aware of cigarettes, because everyone already knows what they are. The companies were simply fighting for market share, and were at a point where they had to advertise just to keep their market share. It was a prisoners dilemma, where the whole industry could be more profitable by cutting advertising, but there was always an incentive to ‘defect’ and advertise your product. The government banning the ads solved this problem for them.
- sukilot 6y agoThe government taxes cigarettes within a nickel of affordability, so it's not really the cigarette companies who profited from this.
- thejynxed 6y agoYou're correct, government in the USA and Australia for instance, is massively profit-taking via the taxes to the point that they are taking in more revenue per pack than the tobacco companies.
- avianlyric 6y agoNot sure the logic on that works outs. On the day ads are banned tobacco companies see a drop in their costs, but no change to revenue. The price of their cigarettes neither goes up or down. Without a price change the government can’t benefit because the tax is proportional to the price. So tobacco companies see a drop in costs, no change in revenue, which results in increased profits. In the future the government could increase the tax rate, and try to force tobacco companies to drop prices to compensate, which could allow governments to extract the extra profits from reduced adverts. But that doesn’t strike me as the kind of behaviour governments participate in, a little too complicated and risky. Also very likely to have unforeseen consequences as it’s unlikely that every tobacco company was spending the same proportion of revenue on ads. Not to say that tax rates didn’t go up. Just seems unlikely to be directly linked to the banning of ads. More likely they went up just because they can keep hiking the taxes until all the tobacco companies go bust.
- scarface74 6y agoAnd it also subsidizes tobacco farmers.
- core-questions 6y agoIt's taxed beyond affordability in Canada already - at $12+ per pack, a pack-a-day smoker is spending $360/mo on smokes, which is not an insignificant chunk of change for many people. The number of people who I personally know for whom the cost was the driving factor in finally quitting is sizeable, and so it definitely works....
- kortilla 6y agoThey do now, but there were decades of massive profit between the ad ban and the huge taxes. In the early 90s a carton was still like $10.
- sukilot 6y agoAnd why is it good for business? Because it reflects the moral values of their customers.
- darawk 6y agoNo, because ad-spend there was zero sum. If their competitors were going to advertise on TV, they had to too, and that made everyone make less money. It was a coordination problem that the government solved for them by banning it.
- sharkweek 6y agoThis is a fair point - I’m not saying it’s a bad thing that businesses follow along with societal change even if for profit, but I do think we give them too much credit for when they do act this way as if it’s entirely benevolent.
- scarface74 6y agoI’m 99% sure that Apple’s CEO really does care about LGBTQ rights...
- mike00632 6y agoIn case anyone didn't get the reasoning. Tim Cook is gay.
- ponker 6y agoJust because a person is gay doesn’t mean that they care about gay rights, especially if they are a billionaire, because nobody really impinges on a billionaire’s rights. As an analogy, say some anti-Semitism was spreading on Twitter and there was a Jewish CEO of Twitter who didn’t delete it. You couldn’t defend him by saying “he’s Jewish I’m 99% sure he cares about anti-Semitism” because if some thugs decide to beat up a random Jewish person on the street it just isn’t going to be the Twitter CEO. (not making a statement about Tim Cook because I don’t know anything about his positions on gay rights)
- mike00632 6y agoRight, Tim Cook is no Peter Thiel. Edit: Tim Cook has made numerous public statements in support of gay rights and being gay. My personal favorite: https://www.cnn.com/2018/10/24/tech/tim-cook-gay-apple/index.html https://www.cnn.com/2018/10/24/tech/tim-cook-gay-apple/index...
- scarface74 6y ago> because nobody really impinges on a billionaire’s rights. https://www.cnn.com/2013/08/09/world/oprah-winfrey-racism-switzerland/index.html https://www.cnn.com/2013/08/09/world/oprah-winfrey-racism-sw...
- ponker 6y agoOK, someone missed out on her fundamental human right to be shown a handbag. Not pleasant, but not a real worry.
- cutemonster 6y agoWhen the execs in a company that cuts its ads spending makes that decision, Do they say to each other: "let's pretend we're doing this for a good cause and that it's not just to save money. Let's say this: ... to the public and our customers" Or do they tend to keep pretending, also when talking with each other in private meetings?
- darawk 6y agoI think they probably say something like "You know, during this pandemic we should probably cut our ad spend. Which area do you think we can cut that will cause the least harm during this time? Facebook? Ok, and as a side benefit, we get to say we're opposing hate speech. Decided, we're cutting our Facebook spend."
- edgefield0 6y agoI think they keep pretending internally but many think in the back of their head that it's all bogus and the real reason for the cut is slashed ad spend. In any case, this situation reminds me of the time when Google exited China and said they were leaving due to censorship concerns. The real reason for leaving was that Baidu had gained an overwhelming share of the search market. I think at the time of Google leaving China, they had less than 5% market share.
- sukilot 6y agoWhy would they leave because of small market share? Costs and revenue scale with usage, and Google has near infinite money to invest in improvements. Being under attack (not just a verbal attack) by the government seems more of a concern. en.wikipedia.org/wiki/Operation_Aurora
- jowday 6y agoFrom what I understand there was a massive, coordinated, and sustained cyberattack on Google's services that pretty clearly originated from the Chinese government that was interpreted as a pretty clear signal to get out of the Chinese market, along with what you outlined.