This Economics of Advertising Essay example is published for educational and informational purposes only. If you need a custom essay or research paper on this topic, please use our writing services. EssayEmpire.com offers reliable custom essay writing services that can help you to receive high grades and impress your professors with the quality of each essay or research paper you hand in.
The economics of advertising shape the history, current state, and future of media. Advertising revenue influences media not just through the insertion of ads, but also its nonadvertising content and access.
By 1900 both the uS newspaper and magazine industries generated most of their revenue from advertising. Readers went from being primarily revenue providers – the customer/market of media – to being the commodity sold to the media’s larger customer, advertisers. For-profit broadcasting was nearly completely dependent upon advertising. Other media carry only advertising and promotional messages, including billboards, direct mail, and branded websites. The advertising industry involves three powerful groups: advertisers, advertising agencies, and media. The largest advertisers are multinational conglomerates such as Procter and gamble, spending billions annually. The US receives the most advertising spending, with China a rapidly growing second. Agencies engage in creative, research, media planning and buying. Large global holding companies such as Omnicom own multiple full-service agencies that integrate marketing, advertising, and public relations functions, and leverage their market share in negotiations with media companies.
Advocates contend that advertising encourages lower prices through economies of scale, economic growth, and ‘free’ media. Criticisms include the barrier to entry for new commodities, and incentives for the growth of large media monopolies. Advertising also suppresses criticism of the industry and encourages pro-consumption messages in media content. Some media audiences are more valuable than others: audiences with disposable income and a susceptibility to advertising may find many content options.
Changes in advertising spending affect media viability. Decreasing advertising revenue for newspapers triggered concern about the future of journalism. Digital’s interactivity and convergence have attracted advertising spending and facilitated behavioral measures such as ‘cost-per-click.’ The resulting emphasis on data mining has turned media companies into audience information brokers that collect audiences’ media use and consumption patterns.
Branded entertainment, where advertisers involved in the production processes and integrate the selling function in traditionally autonomous genres, also changes the economic conventional wisdom of advertising.
- Baker, C. E. (1994). Advertising and a democratic press. Princeton, NJ: Princeton University Press.
- Sinclair, J. (2012). Advertising, the media, and globalization: A world in motion. London: Routledge.
- Turow, J. (2011). The Daily You: How the new advertising industry is defining your identity and your worth. New Haven, CT: Yale University Press.