Are Advertising Bans Ineffective?

In the era of the Internet, turns out banning billboard ads for alcohol, cigarettes or drugs is ineffective.

Strictures on such traditional advertising are superseded by the ubiquity of online ads, which actually make the latter more effective according to a recent study entitled Advertising Bans and the Substitutability of Online and Offline Advertising, published in the April issue of the Journal of Marketing Research.

“When a ban is in place, online advertising becomes substantially more effective. No one has shown that before,” commented Avi Goldfarb, a marketing professor with the University of Toronto’s Rotman School of Management and co-author of the study, to the Toronto Star.

Goldfarb’s co-author, Catherine Tucker, assistant professor of marketing at MIT Sloan Management adds, “If you look back in history, local governments have constantly tried to ban various forms of advertising, whether it’s video games, junk food, alcohol, or cigarettes. It shows how the Internet is making that kind of regulation harder.” 

The study found consumers 8% less likely to buy alcohol in 17 U.S. states where billboard ads for alcohol are banned; but the gap narrowed to 3% if those consumers had seen alcohol ads online.

While those figures seem low, each percentage point equals hundreds of millions of advertising dollars, says Tucker.

"I was very surprised by how big the effects were," adds Goldfarb. "Your online advertising becomes more effective if people can't see ads for your products or don't see ads for your products offline." 

Goldfarb and Tucker used U.S data from 275 advertising campaigns for specific alcoholic products, and ad effectiveness appeared specific to new products, suggesting that “the ads are really about information and creating awareness, rather than persuasion,” Goldfarb said.

In Canada, television ads for food, beverage and over-the-counter drugs receive “pre-clearance” from regulators according to provincial and federal restrictions before being broadcast; but online ads have a different standard.  

In a somewhat perverse bottom line, changes in online advertising effectiveness are related to offline ad restrictions.

[Image at top from Minnesota's We All Pay the Price anti-smoking campaign]