Fantasize About A World Without Advertising? Try Cuba

Fantasize About A World Without Advertising? Try Cuba



Surveys routinely show that consumers hate advertising. If given the

option, I'm sure a super-majority of consumers would choose a world

where advertising simply didn't exist. As it turns out, that world does

exist—it's called Cuba. However, Cuba's lack of advertising highlights

some important tradeoffs.



When I say Cuba doesn't have advertising, I'm obviously exaggerating a

bit. I just didn't see much advertising. No billboards. No television

ads (as far as I could tell—though cable channels originating outside

Cuba did have ads). No Internet ads (few Cubans can even afford Internet

access). No leafleting. About the only "advertising" I encountered was

store signage and oral pitches.



This ad-free environment may sound utopian, but consider the principal

reason why advertising is so scarce: because there aren't a lot of

things to buy, and not many people can afford to buy them. In effect,

the lack of advertising is correlated with the Cuban economy's consumer

activity. With only a thin layer of consumer activity, advertising isn't

needed and rarely could be profitable.



Cuba also doesn't have much advertising because there's little

competition in Cuba. The government effectively runs all of the retail

stores (other than mom-and-pop knick-knack stands), so there's no

inter-retailer competition and no need for retailers to advertise

against each other. The most visible private sector are the tourist

services like privately-run restaurants and transportation. Even then,

most of these services aren't high-margin or differentiated enough to

support advertising.



Manufacturers also don't advertise in Cuba. There aren't that many

domestic Cuba manufacturers of consumer goods, and due to government

control, they rarely compete with each other—and unless the government

subsidizes them, most Cubans can't afford the goods anyway. Foreign

manufacturers have little incentive to advertise as well; even when they

crack the tiny domestic market, often retailers only carry one choice.

So, for example, I visited a couple of government-run stores selling

appliances like refrigerators and dishwashers. Although the range of

different available goods was better and more technologically current

than I anticipated, typically the retailer offered only one

manufacturer's option for each good. (See photos 1 and 2). Thus, a Cuba

consumer who wants a 30 cubic foot refrigerator may only have one

choice—and the manufacturer's guaranteed sale eliminates the need for

advertising. Further, because of the lack of competition, the low sales

volume and the costs of importing the goods (none were manufactured in

Cuba), prices were high–at least as high as prices in California, and

far out of reach for all but the wealthiest Cubans.



So, how do you really feel about advertising? Consider two options:



Option A: an economy where advertising is unnecessary because there are

limited product choices, no competition either at the retailer or

manufacturer level, and a tiny consumer class able to buy the goods in

the market.

Option B: an economy overrun by advertising, much of which creates false

distinctions between products, manipulates consumer preferences, creates

consumerist anxieties about their perceived deficiencies, and increases

consumers' costs for the branded goods. At the same time, it has a

robust competitive market with a wide range of high-quality goods at

attractive prices, where advertising informs consumers of new product

offerings and features and helps competitors differentiate between

marketplace offerings so that consumers can find what they're looking

for and determine their reservation price accordingly.

I imagine many consumers would prefer a hypothetical option C, where

consumer get all of the benefits of a fiercely competitive market

without the "costs" of ubiquitous and sometimes-manipulative

advertising. But option C may be oxymoronic; one possibility is that

advertising is a precondition to fierce competition.



If Option A sounds attractive to you at all, get to Cuba pronto. Cuba

seems destined for Cancun-ification, in which case any advertising-free

charm it currently has will be erased completely.



Source: "Fantasize About A World Without Advertising? Try Cuba - Forbes"

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http://www.forbes.com/sites/ericgoldman/2013/08/22/fantasize-about-a-world-without-advertising-try-cuba/