In defiance of advertising

Top Line: Try to think of a SINGLE circumstance in which advertising serves customers. At all. Now read on…

Last March, I rode my motorcycle from Amsterdam to Marseilles and back (around 3,200 km) without seeing very much advertising on the way. I didn’t miss it. I also didn’t run out of gas, get hungry or lose my way — so you can’t argue that I needed ads for “essential” information.

In fact, there’s little to recommend road-side advertising except some rent to a land owner and additional sales of a product that we probably don’t even want, let alone need. I preferred the French highways to the American ones — even those with “adopt a highway” advertisements sold by road agencies starved of cash by low fuel taxes. It was more relaxing to look at the countryside as it flowed by…

But forget highways. Why do we need advertising? Here are the arguments:

1. Advertisements give consumers information they need about a product. Hahaha. Advertisements range from optimistic to outright lies. Banksy says it better.

2. Advertisements help consumers choose among products. No, they produce confusion (flattering apples vs disgusting oranges ) or waste (the political lobbying arms race will cost $billions this year in the US).
3. Advertisements represent freedom of (corporate) speech. This is neither constitutionally sound (corporations are NOT people where the First Amendment is concerned; Citizens United was a disastrous decision) nor relevant when it comes to selling goods (rather than expressing one’s views on public policy).
4. Advertisements allow publishers to lower their subscription prices. This one assumes that readers are unwilling to pay a higher price for a “clean” version of the newspaper or magazine when they do pay a higher price for books; and that readers will be “served” by advertisements that display information. Yes, it’s true that advertisements that lower cover prices will lead to higher sales volumes (making advertising more attractive), but I am much happier to read my National Geographic Magazine without advertisements for SUVs or blood-thinning medicines. I also doubt the value of $55,000 watches and Louis Vuitton as Angelina Jolie’s handbag of choice on The Economist‘s back cover. (OTOH, remember this truth in the age of the internet: If the product is free — e.g., google or facebook — then the product is YOU. That observation leads me to the obvious conclusion: Advertisers should pay you!)

But what would happen if we banned advertising? Organizations evaluating consumer products (e.g., Consumer Reports or Underwriters Labs) would get more attention, word of mouth would drive sales, and many “impulse purchases” would not happen.

In fact, I bet that overall consumption would fall, as people made fewer “wrong” purchases (due to deception), fewer “over” purchases (due to advertisements promising a better life for buying product X), and fewer “matching” purchases (to keep up with all the crap your neighbor has, from the McMansion to the third car).

Would that be worse for us? for society? Probably not.

Would it be worse for capitalism? Not for those who offered value for money.

Would it be worse for liars, shysters, late-night sellers, and other sellers of dreams-in-bottles? Yes, definitely. The consumption component of GDP might fall by 20 percent. Would that be bad? Probably not in terms of jobs (people would work elsewhere), happiness (for both consumers with less crap and workers selling products they DID actually believe in), or the environment (lower consumption is better).

What would we see instead? New products would gain market share gradually as people recommended good products to friends. Bad products would get no market share unless they listened to customers and adapted. Local brands could sell value instead of submitting to the onslaught of flash. The best defense for products — new and old — is to offer a real improvement, not an advertised improvement (New! Bolder Packaging!).

Politicians lacking attack ads and flattering hagiographies would have to confront each other in public debates or other personal appearances. People would read news stories and talk to each other to understand more about candidates. Print and TV media would hate this, of course, but now they can earn money from cable or satellite subscriptions. They would also have to serve viewers instead of politicians with big budgets (some governments indirectly control the media via advertisements — or worse).

Could the government ban advertising? Yes, since they already regulate what is said on packaging, advertisements aimed at children, advertisements on roads, etc. In fact, governments would be doing us all a favor by banning advertisements, since a ban would remove the need for producers, politicians and providers of services to compete in the race to put their best lie forward. They could instead concentrate on winning loyalty the old fashioned way: by providing value to us.

Bottom Line: Advertising produces little of value for society. We should experiment with banning it in some places, and then consider banning it in all places.

2012-10-16 15:09:54

Source: http://www.aguanomics.com/2012/10/in-defiance-of-advertising.html