BBC became a propaganda machine for climate change zealots

Sometimes advertising builds a brand identity that allows the company to charge a higher price. If you don't watch this advertising, and don't believe in the brand there is no reason to pay the higher price. So in the second case the ad cost you nothing. If you bought a sham wow you may be paying for advertising, but prices can be passed along on other products like ipads. Note even without the commercials apple would be charging as much, but you might not be driven to pay it, and the stock would not ride as high.

More commonly advertising is used to drive higher sales. The company makes up for the costs of the commercials with the profits on those additional sales. Think about your sugar water. Coke and pepsi have massive advertising budgets but these amount to less than a cent per product sold. They have huge profits per item and if you buy more, then they make more money. Other companies may actually drive the price down as added volume cuts their costs enough to drop the price.

 

The comment that raised my eyebrow was "...it is absolutely untrue that prices are higher because of advertising." When I was last in Cheddar's the manager specifically stated that the prices were lower since they did not advertise. I have also run into companies that have massive advertising budgets, like Geico, that is a significant chunk of the product price. Where I work, there is a "marketing budget" that factors into the pricing charged for products. Hopefully you can see where these real world examples don't mesh really well with your quote.

I'm not arguing the point that in some situations advertising costs are more than made up in increased sales. But at the end of the day, the money that ends up in advertising firms had to come out of the cash flow being paid for the advertised products. Where else would it come from?

 

You are quite right. I should have qualified that. Advertising costs are generally not passed directly onto consumers.

I'm not sure I believe the manager. Do people consider that Cheddar's is as good as restaurants charging more? This is subjective, so I can not evaluate the manager, but I try to eat at local restaurants and not chains like cheddar's. These also don't advertise. So do I end up paying for advertising on restaurants I don't eat at? I don't think so.

Is geico more expensive than other insurance companies? It was for me, but then again the company I bought from also advertised. The smaller non advertising insurance companies other than USAA are often more expensive for good drivers.

Yes there are definite cases where advertising adds to price. I don't think the cheddar's one or geico make the cut though. I definitely get your point. My point is prices are not lower in england because of the bbc is partially not commercial? You can confirm this by looking at a basket of goods. Like everything else there are goods that will be less expensive, but also those that are more. England actually has a higher price for a typical basket of goods than the united states, although the higher prices have nothing to do with advertising. I was trying to counter the claim that prices are higher even for those that don't watch television, because we allow advertising.

On the bottom line the costs are paid. This does not mean prices to the consumer are necessarily higher. If you don't buy the product it is rare that you are paying for the advertising. Advertising when sales or brand image does not increase does not generally lead to higher prices just lower profits. If you don't watch the ad, there are often alternatives that do not advertise which is the case for restaurants. If you choose to eat at a fast food heavily advertised restaurant, you are choosing to pay for the advertising, but again this is your choice.

 

OK. The viewpoints differ a little, but the real point was the economics, not terminology.