Thursday, June 08, 2006

Is more advertising the answer?

Marginal Revolution tells us why the answer to bad advertising isn't less advertising but more:

...advertising can encourage people to buy things that may not make them happy. The solution to the advertising problem, however, is not less advertising but more. A society with a lot of advertising is a society in which advertising is not very powerful. In any case, the competitive cacophony of the market place where the very desperateness of the advertisers is itself an advert for their impotence is no real danger.

The real danger is not from Madison Avenue. At the very worst, when Madison Avenue tells us how white our shirts can be, we end up with lighter pockets but whiter shirts.

There is an element of truth to that reasoning, but two important factors have been ignored.

Firstly, the question of false advertising. You can only expect people to end up with whiter shirts if the product advertised actually does what it is claimed to do. The more advertising, the greater the incentives for the advertiser to lie, to make grandious claims that don't measure up, simply to be heard over the crowd. Fruiters in the market never cry out "Get yer average quality oranges, only a little bit bruised", they are always best choice quality. In a world of more and more advertising, there will be less and less consumer loyalty and more incentive for advertisers to lie.

Secondly, externalities. Perhaps you do get cleaner, whiter shirts. But what costs have you ignored when calculating just how lighter your pockets are? Have you included the extra sick days from asthma and auto-immune diseases caused by the extra chemical burden? Is the loss in lifespan and/or quality of life born by you or the advertiser? What about the effects on the environment of manufacturing the products? Those are costs being born by everyone, whether they enjoy the profits (either money or whiter shirts) or not. Or social effects -- perhaps your product is made in Poorerthandirtistan, under terrible social and economic conditions, such that it breeds the sort of rage and anger that leads to terrorist attrocities, war, or other crimes.

It is not clear at all that the answer to the negative effects of advertising is more advertising.

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