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When a ban is a benefit

3 Oct 10 | Re: Advertising

Remember when they were banning tobacco advertising? And all the tobacco companies complained and said no, let us advertise, we’re not trying to get more people to smoke, our tobacco ads are just trying to get smokers to choose our brand? Well if they really believed that, they were on the wrong side of the argument. Allow me to explain.

Let’s assume the tobacco companies are correct and tobacco ads don’t increase the number of smokers, but do encourage people to choose whichever brand they see advertised. What does this mean for each individual tobacco company? Clearly, it means they have to advertise: if they don’t, their customers will desert them for brands that do. In fact, each company has to watch the others’ promotion carefully and make sure it does a similar amount to avoid losing market share. This eventually results in a stable marketplace where each company has its market share, and effectively has to pay an annual levy to ad agencies to buy the fresh ideas and advertising space required to maintain it.

But what if tobacco advertising is banned? In that instance, none of the cigarette makers can spend any money on advertising any more even if they want to. That means that for the first time, each one of them can cut out their ad budget entirely without worrying that they will be handing business to their competitors. The result as far as I can see is a great deal less money for ad agencies and far more for cigarette companies, without much impact on sales for any one of them. Out of completeness we can also consider the smokers: they have less information to help them choose between brands, but might find that some of the savings on ad spending are passed on to them in the form of cheaper cigarettes (I don’t know whether the ban actually resulted in a reduction in price; I’m guessing the company directors probably kept most of the saving for themselves, but perhaps that’s doing them a disservice).

So if the initial premise about ads only making people change brands is true, an advertising ban would have greatly benefited the tobacco makers and you would expect them to have argued for it accordingly (though the ad agencies might have come out against it, possibly with some very creative campaigns I would imagine). Since all the cig manufacturers in fact argued that they should be allowed to advertise, I don’t think they can really have believed that it was true. Shocking.

Of course, this observation comes rather too late to be of any use in the tobacco advertising debate. Maybe it could be drawn on in future debates about adverts for other products that are a menace to society.

Posted by M DUPONT at 13:26

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