10 Disadvantages and Limitations of Advertising - ToughNickel - Money
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10 Disadvantages and Limitations of Advertising

Rizwan is a 23-year-old student of management sciences in marketing.

What are the disadvantages of advertising?

What are the disadvantages of advertising?

What Are the Disadvantages of Advertisement?

Is advertising a good or bad thing? What are the pros and cons of various forms of advertising? Marketing strategies have shifted in the last decade to use social media as a primary advertising platform. With these changes and aggressive campaign strategies, ads have made their way into our digital lives—large tech companies track our every move and bombard us at every corner.

But even "successful" advertising has its demerits. So, it's important to take a look at the repercussions of product or service marketing and how they affect an audience. I've provided some common criticisms regarding the demerits of advertising below.

Advertising Pros and Cons

ProsCons

Introduces new products

Creates consumer unfulfillment

Expands the market

Encourages monopolistic control

Increases sales

Ad cost might exceed sales

Fights competition

Pushes out small businesses

Educates consumers

Misleads consumers

Eliminates the "middle person"

Eliminates the "middle person"

Higher quality products

Raises the cost of products and services

Supports salesmanship

Creates opportunities to mislead

Creates employment opportunities

Reduces small business employment

Reduces newspaper and magazine advertising

Creates distracting and risky advertising approaches (Billboards)

Creates a higher standard of living

Manipulates people to spend outside of their purchasing allowance

Consumers often have to pay higher prices for advertisements.

Consumers often have to pay higher prices for advertisements.

1. It Is a Costly Function

One strong objection to advertising is that it is a very costly function. Many studies have proved that the cost of ads exceeds that of sales by a small but significant percent. In theory, the high cost of advertising is covered by increased sales of the advertised product, but this usually is not the case.

Advertising is an indirect cost that is added to distribution expenses. When expenses increase, the selling price of products does too. With large advertisers spending thousands of dollars a week solely on ads and marketing, advertising costs make up a significant part of the price of an advertised product. Thus, consumers have to pay higher prices for products.

Advertising is an economic waste because unbalanced advertising causes certain goods to cost more than they should.

[Advertising] acts as a guarantor of demand and so contributes to economies of scale, which then benefit consumers in the form of lower prices or more rapid innovation. By doing so, advertising works—at its grandest—systemically to oil the engine of capitalism.

— Laurence Green

2. Misleading Claims About Products

Some advertisers cleverly create misleading impressions of their goods—they present a very rosy picture of their products with the object of increasing their sales. In reality, their item is of inferior quality. To demonstrate this point, here is a list of some of the most infamous and misleading product claims.

Most Infamous and Misleading Product Claims

  1. "100% Pure Bamboo": Sears was ordered to pay $1.3 million for violating the Textile Products Identification Act. Their "100% pure bamboo" products were actually made of rayon.
  2. Vibram FiveFinger: These shoes were based on the book Born to Run and tied in advertising claims that the shoes strengthened muscles or prevented injuries. The company has since refunded customers who purchased the shoe.
  3. Kellogg’s Frosted Mini-Wheats: Kelloggs had made a claim that mini-wheats increased attentiveness by nearly 20%. Customers between 2008 and 2009 were reimbursed for their purchases.
  4. Snapchat: Snapchat mislead customers into thinking that pictures disappeared forever. The company was also accused by the FTC of collecting customer data.
  5. Kashi: A class action lawsuit was filed against the parent company, Kelloggs, for advertising an "all natural" cereal when indeed Kashi contains pyridoxine hydrochloride, calcium pantothenate, and hexane-processed soy.
  6. Emergen-C: Customers between 2006 and 2012 could be reimbursed for their purchase of Emergen-C over the claim that it prevented the common cold. The side effects of too much vitamin C were not mentioned on the product label as well.
  7. Nissan Frontier: Nissan misrepresented the Nissan Frontier by skewing the camera angle in a commercial to create a visual illusion. The commercial falsely showed a Nissan Frontier successfully pushing a dune buggy uphill.
  8. E.K. Ekcessories: This company was notorious for using "patriotism" in marketing by claiming their products were "Made in the USA" (as also listed on Amazon.com), when indeed they were manufactured abroad.
  9. Sensa: Sensa misrepresented their product by advertising that one can simply sprinkle the saltlike product on food and that it would help a customer to lose weight—"Shake, eat and lose weight."

3. Encouragement of Monopoly

Advertisement restricts competition among products. Big industrialists and manufacturers can use advertising to increase their monopolistic control over the market against the public interest. Advertising increases awareness about a few products but causes all other options to be overlooked.

The U.S. is home to 46 of world's 100 top advertisers besides China and Germany. According to Adage.com: "The group includes 47 companies based in North America (46 in the U.S., telecom firm América Móvil in Mexico); 33 in Europe; and 20 in Asia." The 16 monopolies in the automotive industry, for example, spend $47.0 billion on advertising (in 2015). Monopolies listed in the following categories spent a total of $240.5 billion dollars on advertising in 2015 alone (ranked highest-spending industry to lowest):

  1. Automative
  2. Personal care and household products
  3. Entertainment and media
  4. Retail
  5. Food and beverage
  6. Telecommunications
  7. Financial services
  8. Beer, wine, and liquior
  9. Apparel
  10. Technology
  11. Pharmaceuticals
  12. Restaurants
  13. Travel

World's Largest Advertisers by Region

Source: https://adage.com/article/advertising/world-s-largest-advertisers/306983/

RegionNumber of Companies2015 SpendingShare of Top 100's Spending Worldwide

North America

47

$116.7 billion

48.5%

Europe

33

$89.3 billion

37.1%

Asia

20

$34.5 billion

14.3%

Total

100

$240.5 billion

100%

World's Five Largest Advertisers

Source: https://adage.com/article/advertising/world-s-largest-advertisers/306983/

RankCompanyHeadquarters2015 Worldwide Advertising Spending

1

Procter & Gamble Co.

U.S.

$10.4 biollion

2

Unilever

Netherlands/U.K.

$8.9 biollion

3

L'Oreal

France

$8.2 billion

4

Volswagen

Germany

$6.6 billion

5

Comcast Corp.

U.S.

$5.8 billion

4. High Prices of Products and Services

It is undoubtedly true that effective advertising increases sales volume. These increased sales require more products. Large-scale production brings down the cost of goods per unit, which in turn reduces the selling price. But if the producers do not lower the prices, the burden of advertising falls on the shoulders of the consumer.

Products With High Markups

In 2016, Mylan Pharmaceuticals received tons of backlash for marking up their EpiPen to $600 because of the lack of generic pharmaceutical competition. These types of markups generally occur because of high demand, difficult manufacturing, or symbolic value.

  • Smartphones: According to Time Magazine, it costs $370.25 to make an iPhone X whereas consumers are expected to pay $999.
  • Designer jeans: True Religion Super T Jeans cost $50 to make and sell for more than $300 largely due to a big marketing budget.
  • TI-83 graphing calculators: TI-83 graphing calculators cost around $15–$20 to make and sell for $100—not to mention Pearson textbooks feature the use of the calculator.
  • Diamond rings: The average wholesale price of one-carat is around $1,000 to $3,000. Kay Jewelers and Jared charge around $4,000.
  • Printer cartridges: A black ink cartridge costs about $4–5 to make and resells for $14–50 which is why cheap printers are so widely available.

5. Small Businesses Have Restricted Access

Small businesses cannot properly advertise their products due to limited resources. The entire market for many goods and services is dictated by the whims of large advertisers. This makes it virtually impossible for small businesses to compete, so they eventually disappear from the market.

Reasons Why Small Businesses Are Important

According to Inc.com's article, "How Small Businesses are Key to the Survival of Corporate America":

"Corporate giants love to take market share away from the little guys. But, the uneasy fact they don't like to consider is that they need these small businesses to succeed."

This is true of small businesses for the following reason: they create jobs, they drive innovation, they are important suppliers, and they are key customers.

6. Misdirection of Purchasing Power

Advertising high-priced luxury goods influences the purchasing power of consumers. This results in some people using unscrupulous means to increase their income for the purpose of getting things they perceive as necessities of life. Thus, unnecessary advertising creates societal corruption.

According to Financialsamurai.com, people buy what the can't afford for the following reasons:

  • Self-esteem: TV, movies, and advertising bombard us with visions of attractive, wealthy, successful, and luxurious people. Hence, feelings of inadequacy develop. This might prompt an individual to spend on clothes and accessories.
  • Desire: Again, media blasts us with advertising to create a sense of desire. Perhaps you desired something as a child and you were later able to purchase it—your dream car. You are more prompted to spend on a highly coveted item.
  • Keeping up with others: Social media has made it easy for us to have unrealistic standards—competing with perfect pictures of yachting in the Mediterranean or shopping in Paris. Keeping up with the Joneses or keeping up with the Kardashians has never been so tempting.
  • Lack of financial awareness: Credit cards are easy for anyone to obtain and individuals often lack a sound understanding of how interest rates affect them. "If you pay a 15% credit card rate and pay the minimum each month, your credit card debt will double in five years! If you pay a 20% interest rate, then expect a doubling of debt in only 3.5 years."

7. Dangerous Distractions

Billboards, posters, and electronic moving pictures are placed around important intersections, which distract drivers and pedestrians. Glaring neon lights and signs are hazards and have potentially deadly consequences.

An articled titled "Are Digital Billboards Dangerously Distracting?" published by The Association for Political Science, investigates how digital billboards—light-emitting diode (LED) advertisements—affected 123 subjects; indeed, driver attention was altered. Although "how altered" is still outstanding, emerging data and analyses should incorporate road dynamics, traffic patterns, and similar parameters. In reproducible data, more steering wheel corrections were confirmed.

Huffington Post also featured an excellent article titled "Driven to Distraction: The Absurdity of Roadside Digital Billboards" which explains that "Some studies show a significant increase in collisions while others show little or no change at all." Lobbyists for the billboard industry use this lack of data to deny the safety issues—even though driver distraction is the number one cause of traffic fatalities.

8. Unfulfilled Desires

Another disadvantage of advertising is that it influences the mind of the public and creates a desire and taste for new products that are not necessities and that most cannot afford. Thus, advertising fosters unrequited desire and causes unhappiness. The list of non-necessities that are highly sought after, according to a publication by Time Magazine, includes: PlayStation, the Toyota Corolla, and IPads.

Whereas a car might be essential for transportation, PlayStations and iPads are not. Trending commodities are said to have an emotional impact, hold practical value, provide social currency, and offer visibility and recognition. The most sought-after commodities of 2018 are listed below.

The Most Sought-After Products of 2018

Essential Oil Diffusers

Terrariums

Drones

Matcha

Detox Products

Nootropics

Macronutrients

Workout-Enhancing Powders

Vegan Foods

Keto Foods

Smartwatches

Coconut Oil Products

Charcoal Beauty Products

Balayage Products

Fake Lashes

Bamboo Toothbrushes

Fitness Leggings

Unicorn Pajamas

9. Promotion of Social Evils

Some businesses support immoral and sensational programs as well as crime stories on television and radio, thus choosing them as vehicles for advertising. These programs corrupt the values of young people and promote social evils. Russ Henneberry, in his article "How To Sell Using Fear," describes how buyers and people are manipulated by three factors:

  • Perceived vulnerability: How likely it will hurt
  • Perceived severity: How bad it will hurt
  • Efficacy: Whether or not the person feels they can do something about it

Logitech video security used the headline "Who's babysitting your babysitter?" to promote their "Busted" campaign where users submit clips of trespassers on their private property. Victoria Secret also serves as a strong example of a company that plays on people's panic by using lines like "Last day!" and "Don't Miss Out!" Whereas these campaigns are fairly benign, there are historical examples of when businesses sensationalize major issues.

The topic of fake news and false advertising has become a popular point of discussion thanks to social media. False news is a form of deliberate misinformation. This type of news is usually written with the intent to damage an agency, entity, or person. A great example of this is President Donald Trump using the term "fake news" to describe and reduce negative representations of himself by the press.

10. Confusion About Characteristics of Products

Many similar products are advertised on the market, but producers put great emphasis on minor differences in the formula, technique, or make of advertised goods. For example, there are many brands of shaving creams that perform the same function but are advertised as dramatically different products. Due to misinformation disseminated by advertising, it has become impossible for the average buyer to judge with any certainty the quality of the product they are buying.

A perfect example of this is detailed in Guff.com's "Products With Different Names in Different Countries." The following products are duplicates and simply marketed differently:

  • Burger King/Hungry Jack's (Australia's whopper)
  • Twix/Raider (Twix was called Raider in Europe until 1991)
  • Axe/Lynx (Men's body spray)
  • T.J. Maxx/T.K. Maxx (Europe)
  • KFC/PFK (Quebec, Canada; short for Poulet Frit Kentucky)
  • Cool Ranch Doritos/Cool American Doritos ("Cool American" in Europe)

The Disadvantages (and Advantages) of Social Media Marketing

The preferred form of advertising has changed dramatically since social media took over. Traditional forms of advertising via newspaper, television, and direct mail have been replaced by the internet.

Search engine optimization, which favors sites with strong brand awareness and converts visits to money via pay-per-click (PPC) ads, banner ads, and Google's AdWords (for example), is the modern-day marketing strategy. Many digital advertising agencies will work with clients to convert potential customers in the most cost-effective and strategic manner possible by using search engine optimization, campaigns, and branding.

Influencer Marketing on Social Media

Social media advertising is an extremely lucrative way to make sales. Instagram is one such outlet where companies use influencers who have a strong audience or network of followers to promote goods. Influencers are used for anything from products or services like environmental campaigns to promoting an all-natural market by using store-bought ingredients for a how-to video. According to the Hootesuite.com blog: "As of 2018, there are 3.196 billion people using social media on the planet, up 13 percent from 2017 to 2018."

What Are the Benefits of Media?

Nearly 70% of users access social media daily in North America and spend even more time on social media than watching TV—an obvious disadvantage to TV advertising. Even so, ad revenue for 2018 is up to $51.3 billion USD and is predicted to grow at 10% annually. With this kind of information, statistics show that user-generated content (pictures and videos) are more likely to get consumers to buy a product from a social media channel. WhoSay found that 89% of U.S. agency and brand marketers said influencer marketing can positively impact how people or an audience feels about a brand.

Nearly 70% of users access social media daily in North America.

Nearly 70% of users access social media daily in North America.

Social Responsibility in Advertising

While there are both disadvantages and advantages to advertising, the most important aspect is making sure that information is communicated to consumers transparently and accurately. By looking at the examples of the above-mentioned lawsuits, it's hard for a company to regain its reputation once their brand, product, or campaign is tarnished. What are your thoughts?

Sources

Video: The Advantages of Online Advertisement

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

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