I was writing something today for something else when I had the obvious thought that the relationship between the media and consumer spending is a self-perpetuating machine. The media rely on advertising dollars to grow big. The more advertiser dollars they have the bigger they become. And the more advertiser dollars the media receive, the more advertising and consumer messages they propel into culture. The more the advertising there is, the more we consume. The more we consume the more money the manufacturer gives to the media company to advertise and so on.
SO what would happen in a world of non-advertiser funded media models. The same money-multiplier effect would not come into play, and there will be a massive reduction in ‘traditional’ advertising. Less advertising = less consumer spend. If consumer spend makes up approximately 65% of Gross Domestic Product (GDP) then the less consumer spend = a slowing down of GDP.
3 comments:
Does advertising cause us to spend money, or only spend it differently than we might otherwise? Would everyone really start sitting on their cash?
Just more questions to mull over.
There is another thing to consider. Advertising allows markets to function more efficiently through allowing new entrants to raise awareness of their product and compete with more entrenched participants. If you remove advertising you effectively undermine market efficiency. Prices will rise, competitiveness drop, ultimately leading to a lower GDP.
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