Advantages of Advertising

Advertising is arguably the most versatile promotional strategy in business today. You can run ad campaigns on traditional print media, TV/radio, and on digital platforms, allowing you to reach out to different consumer demographics all across the globe. 

While the advertisement has its upsides and downsides, the advantages far outweigh the disadvantages, making it a formidable marketing strategy. To realize the benefits of advertising, businesses have to implement effective advertising strategies.

What are the benefits of Advertising?

Here are the main benefits of advertising:

i. Increased market share

ii. Increased sales

iii. Lower cost of doing business

iv. Improved brand image

v. A channel for informing/educating customers

Increased market share

Effective advertising strategies enable a business to grow its customer base quickly. Advertisement of updates to existing products/services can help to retain existing customers, while advertisement of products targeted to new markets can reel in new customers.

Moreover, advertising is a versatile promotional strategy that allows brands to reach out to wider audiences than other promotional methods. For instance, public relations campaigns and direct marketing are usually targeted at specific audiences in specific locations. On the other hand, an advert on a globally-recognized TV station or a globally popular social media platform will reach more people simultaneously.

Increased sales

Advertisements are a great way to boost public awareness and increase consumer demand for your advertising products. And with more buyers, businesses can increase overall sales revenue and achieve higher Returns on Investment (ROI).

Additionally, advertising enables you to leverage marketing strategies such as upselling and cross-selling, thereby allowing you to achieve higher sales. 

Lower cost of doing business

Besides inventory and facility maintenance costs, promotional expenses also take up a large chunk of a business’s expenses. However, by using smart advertisement strategies, you can significantly reduce the promotional expenses of your enterprise, thereby lowering the Cost of Goods Sold (COGS).

Alternative promotional strategies like events and Corporate Social Responsibility (CSR) campaigns can result in high COGS and reduced profit margins, as they typically require substantial financial resources to be effective. On the contrary, you can run advertisement campaigns on social media platforms at low costs or for free, thus cutting down on the brand’s total COGS.

Improved brand image

Regardless of whatever sector your business is in, new competitors with similar products emerge every now and then. This can water down your brand awareness, as consumers may forget about your business and your products in the face of many alternatives and competitors.

A good way to stay ahead of the competition and establish your business as the brand of choice is by implementing a consistent advertising campaign. Within your adverts, you can differentiate your brand from competitor brands by highlighting the unique value of your products, affordability/anticipated value addition, and the quality level of after-sales services.

A formidable ad campaign can cast a favorable image of your brand or cool down any existing negative brand image. This is especially true if the advert campaign focuses on the company’s values, customer service policies, product efficiency, pricing policy, and trustworthiness.

Informing/educating customers

Customers are more likely to purchase if they’re sure that the product or service they’re paying for effectively meets their needs. Advertisements are a great way to inform/educate prospective customers about the usefulness/benefits of your brand’s products. 

Advertisements that feature insightful content can be used to address frequent customer concerns/queries regarding the products/services of a business. Such informative adverts can position your brand as an industry leader, thus improving the level of confidence/trust that consumers have in your products/services.

Effective advertisements

To successfully realize the aforementioned advantages of advertising, brands must ensure that their advertising strategies are effective. Effective advertisements are usually credible, attract high audience attention levels, and are usually well-received by consumers. Ad campaigns that leverage creativity is usually effective as they’re more likely to stand out and capture consumers’ attention.

What are the positive effects of large Oligopolists’ advertising?

An oligopoly is a business environment whereby just a few firms have significant influence over the entire market. The automotive and crude oil industries are examples of oligopolies, as these sectors are characterized by just a few companies selling identical products with very little competition.

Oligopolistic companies typically spend a large share of their expenditure budgets on advertising to gain and maintain market share. As such, a company can use ad campaigns to differentiate itself from similar competitors in a highly concentrated marketplace where it’s difficult to gain a competitive advantage due to price rigidity.

Disadvantages of advertisement

While advertising has its benefits, it also comes with some negatives. The disadvantages of advertisement include:

i. It raises ethical concerns

ii. It creates unfair competition

iii. It encourages price stickiness

Raises ethical concerns

Advert campaigns, especially those run by oligopolies, have raised ethical concerns in the past that aggressive advertising can be used to manipulate consumer buying habits and influence their decisions. Some researchers have argued that the presence of large oligopolistic advertising diminishes consumer welfare by making misleading claims to dictate consumer tastes. 

Sometimes, advertisers knowingly create an appealing image of their products to increase their sales when, in fact, the products are of inferior quality. As such, advertisements with false product claims lead to the customers being shortchanged.

Creates unfair competition

In oligopolistic industries, the major players spend aggressively on advertising, effectively locking out smaller competitors that are trying to gain a foothold in the industry. Due to the substantial advertisement budgets of the oligopolies, a large percentage of consumers only become aware of their products, with no knowledge of the smaller competitors with smaller advertising budgets.

Price rigidity

So long as businesses, especially those in concentrated markets, continue to attract new customers through advertisements, they’ll have no incentive to lower product prices. Moreover, they won’t have a reason to use sales promotion strategies like price discounts if the ad campaigns continue to convince consumers to purchase at the current prices.


Cambridge University Press: Oligopoly and advertising

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