Manufacturers, retailers, and advertisers love to tell us that advertising will save us money. They like to tell us that placing ads in and on everything from video games to toilet paper will save consumers money. The theory is that the advertising subsidizes the cost of the item or service, allowing the seller or provider to charge less than they otherwise would. I call BS.
A couple of years ago, I bought a Kindle. I decided to opt for the one with the ads (or “Special Offers” as Amazon called it). The overall purchase price was lower and there were promises of money-saving offers, in addition to basic ads. Well, things were good for about six months. I did indeed receive some offers such as $10 off a $50 purchase, or the opportunity to buy certain books for $1. Then the offers dried up when the Kindle Fire came out. Suddenly the majority of the special offers were restricted to Kindle Fire owners. Now there are very few offers for them, either. The only things I now receive are true ads: Things for me to look at, but which hold no value. The advertising I allowed because it was supposed to be a benefit to me is no longer benefitting me.
Frankly, it makes me mad. I fell for the “Advertising will save you money” gambit that so many retailers like to throw around. I did my research and thought that it would be different with the Kindle. But it wasn’t. Once they needed to sell a different product, those holding the older product got left behind. And now that they need to cut profit margins, even those holding the newer product are not receiving the offers that came in the “heyday” of the special offers. Sure, you pay a little bit less for the model that displays ads, but beyond that the money-saving aspect is long gone.
An unscientific study from other areas of the retail landscape reveals similar findings. Here are some more examples:
Cable and Satellite TV
Nowhere is the disconnect between advertising and cost reduction more obvious than TV programming. Despite the fact that most cable and satellite packages are deluged with advertising, often featuring many channels that are nothing but advertising, prices continue to climb to levels that make many packages unaffordable for many families. Yet the providers like to tell us that advertising is necessary to keep prices down. Really? If that’s true, it makes me shudder to think what prices would be without advertising. Five thousand dollars a month for cable? Yikes.
My favorite mom and pop restaurant started allowing advertising on their menus. They said it was a way to keep from having to pass on food price increases on to the patrons. Yet their prices have not decreased and have, in fact, increased since the advertising started. “Mom and Pop” are, I suspect, keeping the profit for themselves.
Movies and DVDs
Movie theaters and DVD’s have ads before the features. Have ticket prices gone down? Have DVD prices gone down? Have movie rental services decreased their prices? Nope, nope, and nope.
Product mentions in books have not brought the prices of either e-books or paper books down. However, the authors do get (in many cases) bonuses in their contracts.
Many websites/online games carry ads as a way to remain free. However, a fair number of those begin charging eventually, in spite of the ads.
A local bar sells advertising on the back of the restroom stalls “to keep costs down” but yet the cover charge has gone up, as have food and drink prices.
Video game manufacturers like to say that in-game ads help to control costs, yet game and hardware prices keep rising.
In short, advertising almost never benefits the consumer and almost always benefits the retailer or service provider. The money that they are receiving for allowing all of those ads is going into their pockets, not yours. The “advertising saves you money” line is usually just a way to get consumers to passively accept all the junk the advertisers want to sling at us. So beware the next time a retailer tries to sell you a product or service with advertising claiming, “But it will cost you less if you allow the advertising.” Don’t bet on it.
(Photo courtesy of Peter Blanchard)