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The economics of advertising

The branch of economics that analyses either how much is spent on advertising in different sectors or in what way advertising effects a community and the market. It is not often mentioned in economic analysis because it distorts the very market in which it plays a major role. In a perfect situation, consumers would not give into the number of marketing ploys employed by the various brands, but this is not the case. Although a consumer is expected to purchase based on need or want, they are not always rational and may be swayed by emotion. As the objective of advertising is to boost sales by winning over new consumers or convincing existing consumers to buy more, marketers may use irrelevant information to sell a product or service. On the other hand, a brand may also provide relevant information, known as informative rather than persuasive advertising.


Nielson, Robert. “The Economics of Advertising.” Economics, Politics and Religion. WordPress, 2013. Web, 22 Jan. 2015. https://robertnielsen21.wordpress.com/2013/03/20/economics-of-advertising/

Owrid, John. “Behavior Economics Gives The Advertising Industry A Nudge In The Right Direction.” Forbes. Forbes.com LLC, 2014. Web. 22 Jan. 2015. http://www.forbes.com/sites/johnowrid/2014/02/05/behavioural-economics-gives-the-advertising-industry-a-nudge-in-the-right-direction/

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