Advertising: Someone is being irrational

JDN 2457285 EDT 12:52

I’m working on moving toward a slightly different approach to posting; instead of one long 3000-word post once a week, I’m going to try to do two more bite-sized posts of about 1500 words or less spread throughout the week. I’m actually hoping to work toward setting up a Patreon and making blogging into a source of income.

Today’s bite-sized post is about advertising, and a rather simple, basic argument that shows that irrational economic behavior is widespread.

First, there are advertisements that don’t make sense. They don’t tell you anything about the product, they are often completely absurd, and while sometimes entertaining they are rarely so entertaining that people would pay to see them in theaters or buy them on DVD—which means that any entertainment value they had is outweighed by the opportunity cost of seeing them instead of the actual TV show, movie, or whatever else it was you wanted to see.

If you doubt that there are advertisements that don’t make sense, I have one example in particular for you which I think will settle this matter:

If you didn’t actually watch it, you must. It is too absurd to be explained.

And of course there are many other examples, from Coca-Cola’s weird associations with polar bears to the series of GEICO TV spots about Neanderthals that they thought were so entertaining as to deserve a TV show (the world proved them wrong), to M&M commercials that present a terrifying world in which humans regularly consume the chocolatey flesh of other sapient citizens (and I thought beef was bad!).

Or here’s another good one:

In the above commercial, Walmart attempts to advertise themselves by showing a heartwarming story of a child who works hard to make money by doing odd jobs, including using the model of door-to-door individual sales that Walmart exists to make obsolete. The only contribution Walmart makes to the story is apparently “we have affordable bicycles for children”. Coca-Cola is also thrown in for some reason.

Certain products seem to attract nonsensical advertising more than others, with car insurance being the prime culprit of totally nonsensical and irrelevant commercials, perhaps because of GEICO in particular who do not actually seem to be any good at providing car insurance but instead spend all of their resources making commercials.

Commercials for cars themselves are an interesting case, as certain ads actually appeal in at least a general way to the quality of the vehicle itself:

Then there are those that vaguely allude to qualities of their vehicles, but mostly immerse us in optimistic cyberpunk:

Others, however, make no attempt to say anything about the vehicle, instead spinning us exciting tales of giant hamsters who use the car and the power of dance to somehow form a truce between warring robot factions in a dystopian future (if you haven’t seen this commercial, none of that is a joke; see for yourself below):

So, I hope that I have satisfied you that there are in fact advertisements which don’t make sense, which could not possibly give anyone a rational reason to purchase the product contained within.

Therefore, at least one of the following statements must be true:

1. Consumers behave irrationally by buying products for irrational reasons
2. Corporations behave irrationally by buying advertisements that don’t work

Both could be true (in fact I think both are true), but at least one must be, on pain of contradiction, as long as you accept that there are advertisements which don’t provide rational reasons to buy products. There’s no wiggling out of this one, neoclassicists.

Advertising forms a large part of our economy—Americans spend $171 billion per year on ads, more than the federal government spends on education, and also more than the nominal GDP of Hungary or Vietnam. This figure is growing thanks to the Internet and its proliferation of “free” ad-supported content. Insofar as advertising is irrational, this money is being thrown down the drain.

The waste from spending on ads that don’t work is limited; you can’t waste more than you actually spent. But the waste from buying things you don’t actually need is not limited in the same way; an ad that cost $1 million to air (cheaper than a typical Super Bowl ad) could lead to $10 million in worthless purchases.

I wouldn’t say that all advertising is irrational; some ads do actually provide enough meaningful information about a product that they could reasonably motivate you to buy it (or at least look into buying it), and it is in both your best interest and the company’s best interest for you to have such information.

But I think it’s not unreasonable to estimate that about half of our advertising spending is irrational, either by making people buy things for bad reasons or by making corporations waste time and money on buying ads that don’t work. This amounts to some $85 billion per year, or enough to pay every undergraduate tuition at every public university in the United States.

This state of affairs is not inevitable.

Most meaningless ads could be undermined by regulation; instead of the current “blacklist” model where an ad is legal as long as it doesn’t explicitly state anything that is verifiably false, we could move to a “whitelist” model where an ad is illegal if it states anything that isn’t verifiably true. Red Bull cannot give you wings, Maxwell House isn’t good to the last drop, and Volkswagen needs to be more specific than “round for a reason”. We may never be able to completely eliminate irrelevant emotionally-salient allusions (pictures of families, children, puppies, etc.), but as long as the actual content of the words is regulated it would be much harder to deluge people with advertisements that provide no actual information.

We have a choice, as a civilization: Do we want to continue to let meaningless ads invade our brains and waste the resources of our society?

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5 thoughts on “Advertising: Someone is being irrational

  1. Much of consumer behavior is irrational by your standards. But people often like to spend money just for the sake of spending and for showing off. Why else does a Rolex carry a price tag for $10,000 for a Rolex watch when a $100 Seiko keeps better time and requires far less maintenance?

    It would indeed be revolutionary if our society adopted a code in which ad contents would be constrained, by law, to verifiable truth — your “whitelist” model. Trying to create some examples of such ads would be an instructive exercise or at least an amusing party game. .

    Like

  2. Also, you might have picked on the Budweiser holiday TV commercials which are wildly popular but have nothing to do with beer as a beverage. These are obviously designed to make people feel good about the brand as a sponsor of heart-warming messages.

    Your WalMart-CocaCola example seems similar but not nearly as well done.

    Like

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