Benefit of Advertisement

I have never doubted the benefits of advertising, its usefulness has been shown to me by many libertarians in their writings; but recently, I realized that in some cases, advertising can also improve the product itself.

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Many socialists criticize advertising as something that increases the price of a product, but not its quality, which is, in their view, a typical failure of capitalism, as it is a wasting that would not exist in socialistic society; I have read countless great texts from various libertarians, which have without any doubt dispelled this myth. But recently, I realized there was another point of view to the usefulness of advertising that I have never read before, which led me to write about it.

It is, of course, true that the main function of advertising is to inform customers about the product that the entrepreneur offers; the seller then profits from presenting the product or service in the best light possible, so that people buy his product, while these people benefits from information they get from the advertisement. For some types of goods and services, it is a common knowledge that they exist, so the ad can informatively enrich customers just about little differences between the goods offered by individual suppliers; but in many cases – especially when it comes to something brand new – the advertising function is absolutely crucial because without it, potential buyers would not have to know about the product.

Any attempt to abolish or restrict advertising by law is condemned to failure because it is not possible to completely get rid of advertising, since even a nice packaging or mention of anyone about the product basically equal its promotion, and if only certain forms of advertising are prohibited, entrepreneurs will then invest more in allowed forms. The state may then begin to restrict these, too, but the situation only repeats itself; and although free people often find a way to bypass nonsensical laws (even though it costs something), in this case it is so absurdly easy that restricting advertisement makes no sense.

However, I believe that these considerations (and many others on the same subject) assume that advert only informs about the product, but does not improve it; although it is often true, there are examples when it is not true, and after thorough thinking I came to the conclusion that these are not so exceptional as it might seem at the first sight. This applies to all goods and services, for which customers it is for some reason better when there are more of them (customers); in some cases, this advantage is quite negligible, but sometimes significantly greater.

The most striking example that came up in my mind are operating systems; for users of any OS, into which they install third-party software, it is absolutely essential to have programs that are executable in the operating system. The more advanced this OS is, the more applications will be compatible with it; the same applies to the drivers that are developed by producers of hardware that can’t be reasonably used without the OS support. One of the biggest the benefits (if not the biggest) of Windows is the compatibility with the vast majority of products on the market; of course, this is not because the Windows would have to be the best OS – it’s just because every developer, if he wants to sell his goods, he will ensure this compatibility.

In addition to operating systems where the effect of advertising that improves the product itself is probably the most obvious, we can observe the same for all products that are modifiable and their individual parts (or possibly spare parts) can be purchased; these are of course computers, cars (owning a brand of car whose nearest car service is thousands of kilometers away, is certainly a disadvantage), but also mobile phones (it can be a problem, for example, just to replace a broken screen of less common phone) or home appliances (again, with exotic types, problems with repairing can occur).

This implies, among other things, that advertising is an important element of creation of free-market standards, because precisely with these standards, the customers of some brand do better when there are more customers of it, because this is the way the standards are created; if there was no advertisement, it would be much more difficult (if not impossible, it depends on what we call advertising) to popularize and spread any product, so there would not be voluntary standardizations, as it would be very difficult for any product to get big enough, so no other big manufacturer will try to have a mutual compatibility.

I have never doubted the benefits of advertising, its usefulness (not just for sellers, but also for customers) has been shown to me by many libertarians in their writings; but recently, I realized that in some cases, advertising can also improve the product itself. I believe that this is something we should not forget in the debates with those socialists who reject advertising and call it unnecessary. And the more I think about this topic, the more examples of products that are directly improved by advertising come up in my mind; in case you know any other products I didn’t mention in the article, I will be happy if you share it in comments.

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Česky: https://www.mises.cz/clanky/prinos-reklamy-1882.aspx
Author: Urza

Who is him?

Urza is Czech anarcho-capitalist author, he has written about thousand of libertarian texts on the web and printed media and also the first Czech book on anarcho-capitalism. He lectures at schools and conferences, made a number of videos and is often invited to many discussions.