Tuesday, November 15, 2005

Social Benefits and Costs of Advertising

This is an extension of our discussion in class on advertising.

What do you think of advertising? In what ways is it good for society as a whole or bad for society as a whole? In what ways is it efficient or inefficient? You should come up with specific examples.

From the individual perspective, advertising is pretty avoidable in a lot of cases if you find it personally annoying (XM radio, HBO, Tivo or other DVRs, popup blockers on web browsers). See this post from economist Bryan Caplan.

Feel free to throw in your own favorite commercial in addition to your comment. One of my favorites was one I saw on a big screen in the middle of the Ginza district in Tokyo: it featured a a big formation of people singing and dancing with a huge smiling, laughing teapot at the front of the formation. I may have found it funny because it was really strange, because it reminded me of the Kool-Aid guy, or because I don't think the commercial was advertising anything to do with tea or teapots, but then again it was mostly in Japanese.


Anonymous said...

While most people tend to find ads annoying, they must be effective because companies would not waste money on them if they did not help their businesses. In addition to the competitive edges that ads create for many companies, I think ads can be both good and bad for society as a whole. Ads can be good because they can give people new ideas and solutions to problems. For example, my iPod kept breaking and I had to get it replaced twice, but then I saw a commercial for the iPod nano. The nano doesn’t have a hard drive in it, which is what kept breaking in my iPod, so I got a nano and I love it. Without seeing the commercial for the nano, I would have had to probably replace my iPod again before I actually saw people with an alternative (substitute). I also think that ads can be bad for society because people can get ideas and do things to avoid the ads. Ads for prescription medications, I think, are bad for society because the end of the commercials always say “ask you doctor about _______.” If you are going to a good doctor, they will prescribe you the medicine that is best for you and you are just wasting your time and your doctor’s time by asking about a drug that they clearly don’t think is right for you because they didn’t prescribe it to you. Also, avoiding ads like commercials on the radio can be dangerous because you are paying more attention to the radio than to the road.

My favorite recent commercial is Kate Winslet’s American Express commercial. I just think that it is really creative and well though out. The commercial has her saying what has happened to her in her movies over the last decade. For example, two of the lines are “I almost drowned at 20,” which is referring to her role in Titanic and “By 29, I was in Neverland,” which refers to her role in Finding Neverland. At the end of the commercial, she says something like, “my real life already has enough drama, that’s why my card is American Express.” I really didn’t do a very good job describing it so here is the link to watch it. http://www.mylifemycard.com/commercials/spot8/index.html

- Jessica Monk

Anonymous said...

I meant to say "thought out." Sorry that the link got cut off.


Anonymous said...

I think advertising is good for society as a whole because it informs people of the different poducts that can satisfy their wants. This brings more competition into the market because the firms have to keep up with each other. Also, Adverstising is inefficient because of its avoidability. People do not have to pay attention to advertisments through the use of XM radio and Tivo, etc. Because of this, advertising falls short of its purpose. Therefore, it is inefficient.
My favorite commercial is the one for advantix (I don't know how to spell it) where the puppy sings the song about how the medicine helped get rid of his fleas and tics.
-Emily Freebairn

Gregory Bylos said...

I agree with Emily that advertising does create more competition for different markets; however, I disagree that advertising is inefficient. Unfortunately, not everyone goes to Walker, and a lot of people can't afford the $31 a month to avoid ads, which doesn't even inlude the actual cost of the equipment:

DVR: $50 for box + $5/month + $20/month for the actual Dish Network TV program (or you'll have nothing to watch)

TiVo: $50 for box (AFTER a $150 rebate) + $155.40/year + a TV service like Comcast or you'll have nothing to record

HBO: $13.99/month + you have to pay for either satellite or cable

XM Radio: You need a reciever which can cost anywhere from $50 - $170 + $12.95 a month

All in all, although you could theoretically get rid of ads in your life, it's going to be a lot more expensive than a $1 a day.

I also really like Jessica's point about the ads that tell you to ask you doctor about a prescription.