Not that uncommon, since I too have done both . . .

The example usually cited by economic theorists are products like fax machines or PC operating systems: an owner of a fax machine gets no value from it if no-one else has one. But almost every product or service has a network component, since, being social animals, almost all our consumption is social. It is rare, for example, for people to wear clothes which are completely different to those of their peers—in many years in business, I’ve never seen 16th-century Elizabethan court dress worn in a corporate environment. Why is this? Because part of the personal utility we each gain from the clothes we wear depends on what others think of those clothes, and hence of our individual choices.

When goods have a network aspect, one essential function of advertising is to help consumers co-ordinate their choices, ie, to allow us to assess what our peers (or people we would like to be peers) are likely to think of some product or service before we make our own individual, separate choices. This function of advertising is more than the mere provision of information, since it concerns actions and likely actions of multiple individual entities. Nor is it usually trivial to engineer. It also means that advertisers can rarely, if ever, manipulate consumer choices against their will. (If Galbraith were right on this point, there would be much more money and far fewer ulcers in the advertising industry.)

It’s easy to become confused about these terms: advertising, marketing, promotion, public relations and publicity, and sales. The terms are often used interchangeably. However, they refer to different—but similar activities. Some basic definitions are provided below. A short example is also provided hopefully to help make the terms more clear to the reader.

One Definition of Advertising
Advertising is bringing a product (or service) to the attention of potential and current customers. Advertising is typically done with signs, brochures, commercials, direct mailings or e-mail messages, personal contact, etc.

One Definition of Promotion
Promotion keeps the product in the minds of the customer and helps stimulate demand for the product. Promotion involves ongoing advertising and publicity (mention in the press). The ongoing activities of advertising, sales and public relations are often considered aspects of promotions.

One Definition of Marketing

Marketing is the wide range of activities involved in making sure that you’re continuing to meet the needs of your customers and getting value in return. These activities include market research to find out, for example, what groups of potential customers exist, what their needs are, which of those needs you can meet, how you should meet them, etc. Marketing also includes analyzing the competition, positioning your new product or service (finding your market niche), pricing your products and services, and promoting them through continued advertising, promotions, public relations and sales.

People believe in God simply because they were raised too – you think that gives you a right to reprogram them or stop them from raising their children the same way?

It is not your job to protect people from their own weak minds.

NO MONKEY BUSINESS Joost Yankee Panky! South of the Border
(upside down sign) Too Moch Tequila? South of the Border

These billboards had value when I was a kid as they distracted me from thinking “Are we there yet?” as we trekked to Florida from Connecticut in the family station wagon. But ‘South of the Border’ is filled with crap.

In their model, an advertisement is any product that is a complement to another product. A good is a complement to another one if demand for it rises with demand for the other—think of hot dogs and buns; the demand for buns rises with the demand for hot dogs.

So, Neel, according to you a bun is an “advert” for a hot dog?

In their model, an advertisement is any product that is a complement to another product. A good is a complement to another one if demand for it rises with demand for the other—think of hot dogs and buns; the demand for buns rises with the demand for hot dogs.

The innovation in the Becker-Murphy analysis is that they recognized that a bad—a product you must be paid to consume—can be a complement to a good. So consuming TV ads can increase your demand for a product. But because the TV ads are bads, they have to be bundled with something you do value (eg, TV programs) in order to persuade you to consume them.

However, this does not preclude the existence of advertisements that are intrinsically valuable. Film studios certainly treat screenings for critics as part of their advertising campaigns, but I think it’s reasonable to think of movie reviews as valuable advertising. (My life would be poorer without Pauline Kael’s essays, or even Roger Ebert, for example.)