I remember reading the tobacco industry was actually secretly grateful when the EU banned them from advertising.
As I remember it, they were in a stale-mate. The market was pretty much divided up. Most people were loyal to their brand and that was that. Despite that, they were spending a massive amount of money on advertising even though their market shares remained unchanged.
The reason was that if one of them stopped funnelling massive amounts of cash into advertising, they would lose a big chunk of their market share to the others. So they were all paying mostly to maintain the status quo.
With the ban on advertising, the amount of money saved greatly outweighed the revenue lost as others couldn't advertise either so it really only affected new smokers rather than convince current smokers to switch brands.
I see a similar thing happening in my line of work. In our niche of e-commerce every player of importance works with the same online marketing networks and paying rather a lot per sale or click.
There's a whole lot of sites out there which basically exist to infest organic search results, send traffic to us and our competitors and collect their referral fee from the advertising network. They add no value[1]. Without them, the customer would have been similarly divided amongst the competition as well without having to pay for it. Yet, if we stop paying them, we'll lose a lot of business as our competitors will continue to do so.
Disclaimer: this is all as I understand it and in no way my employers opinion or persepctive ;)
1) Some do, by providing extra information or ranking the shops by what's best for the consumer (price, reviews) rather than the most cash-per-click.
Tobacco advertising was never about trying to persuade existing smokers to switch brands - that was the 'cover story'. In reality it was about trying to persuade young people to smoke their brand rather than some other brand. By young people < 21 years old - people do not start smoking once they get past those formative years. Sure the marketing message was different to what Kellogg's have for Coco Pops, however, the 'sophistication' of the imagery was very much targeted at young people wanting to be 'adult'.
Everything tobacco is controversial, however, how does this relate to online advertising for regular things? The only people who haven't heard of eBay will be people too young to have seen the adverts already. Same with every other brand. Everyone will know you can get everything and anything from Amazon. But there will always be this new supply of kids getting old enough to have their own debit card, they will also have impressionable minds and not have their habits cast in stone. Therefore the high pay per sale per click is actually about getting new life-long customers, in much the same way as it was for Big Tobacco.
The tobacco adverts appeared to be about persuading existing smokers to switch brands yet they had this secret darkside 'get em young' agenda. With online adverts there may be genuine 'switch brands' thinking to it yet in reality all that is effective is 'get em young', where this 'get em young' idea is not even being thought about or being looked for in the analytics.
I think they do a good job via product placement in movies and shows. Sometimes they are in "historic" or period pieces. I mean the ones create today by portraying historical periods. Sometimes there is what seems like a deliberate advertising or showing off someone lighting up. Sometimes it is cool villains so it works on a more subtle level "Oh see we are only show bad guys smoking, so we are dissuading young people to smoke".
In the branding world, the general philosphy is that PR and word of mouth build brands and advertising defends brands and market share.
In your theory, if advertising stopped existing the world would save a ton of money and everyone would maintain market share... but since brands are built on PR and Word of Mouth, brands will always be at risk if they can't advertise and keep you on the forefront of their mind.
They might not lose market share to other big brands, but new brands with a fresh positioning will be able to uproot their position.
Advertising creates a disincentive for trying unknown products. Combine this with brand loyalty from good PR, and you keep control of your market share.
This is well illustrated with Ironbru in Scotland. Lucozade and Tango in the UK in general. The introduction of Fanta into the North American market too, I knew it from the UK and one of the last flavours introduced was actually Fanta Orange (the most popular one in the UK, direct rival with Tango) due to the saturated market for that type of drink.
Because advertising typically reinforces a products quality. Why would you try a no name brand when you buy Heinz who is the leading national brand.
If you have a vending machine selling Coke, Pepsi and Joe's Discount Soda, you're going to go with Coke or Pepsi.
Personally (here in Canada) I prefer the Noname brand baked beans over the Heinz brand due to the Heinz brand over using the hickory flavouring. However, this is because I grew up in the UK and the Noname brand in Canada tastes exactly the same as the Heinz Baked Beans formulated for the UK market.
I actually continued to buy Heinz Baked Beans for a couple years before I finally gave in and bought one of every brand to get one that tasted like I was used to.
If it wasn't for the advertising I would have likely bought a different brand of beans within a month, not within a couple of years. Why? Because Heinz is the best, surely the others must taste worse! Since then I always try the store brand and lesser brands
That also describes presence at trade shows and conferences.
Quite often those are useless and costly in time and money. Yet companies do it because if they don't and the competitors do then everyone will ask "How come so and so wasn't at the show? Are they have financial issues?" and so on.
So companies spend money on booths and talks without getting much back except to stave off the appearance that something might be wrong.
There's also often a quid pro quo with partners. At a long ago employer, I remember when we decided to drop out of a show put on by a large ISV who was important to some big accounts but certainly wasn't a source for new business, our CEO got a call from their CEO and pretty much was told to get on board if we wanted the partnership to continue.
I've also seen big shows that creaked along for years until one or two major vendors in the space decided to stop exhibiting. Suddenly the emperor had no clothes and the show didn't last much longer.
(There's also just a lot of momentum and interest behind the status quo. Mind you, there can be a lot of value in sessions for attendees and, generally, just getting people together in one place. But a lot of money also goes into staging trade shows that's arguably not really necessary except for appearances sake.)
This has happened to me.
We decided last year to take our tradeshow budget and spend it on "point of purchase" materials for our resellers. This has worked well, sales are up 20% this year.
NB, while tobacco ads are banned from TV, they are still everywhere on outdoor advertising, at least here in Germany. Actually, I went on a "street art tour" that turned out to be sponsored by a cigarette company, and they were handing out free cigarettes. So: tobacco advertising is alive and well in Germany.
Australia is very different from that. They banned advertising to consumers in most ways. They still can put ads in magazines for retailers (because they aren't the end user).
Now we also have "plain packaging laws" which means packets cannot have the Tobacco companies design on it. They must be olive green and have government anti-smoking ads, and the product name in plaintext.
As I remember it, they were in a stale-mate. The market was pretty much divided up. Most people were loyal to their brand and that was that. Despite that, they were spending a massive amount of money on advertising even though their market shares remained unchanged.
The reason was that if one of them stopped funnelling massive amounts of cash into advertising, they would lose a big chunk of their market share to the others. So they were all paying mostly to maintain the status quo.
With the ban on advertising, the amount of money saved greatly outweighed the revenue lost as others couldn't advertise either so it really only affected new smokers rather than convince current smokers to switch brands.
I see a similar thing happening in my line of work. In our niche of e-commerce every player of importance works with the same online marketing networks and paying rather a lot per sale or click.
There's a whole lot of sites out there which basically exist to infest organic search results, send traffic to us and our competitors and collect their referral fee from the advertising network. They add no value[1]. Without them, the customer would have been similarly divided amongst the competition as well without having to pay for it. Yet, if we stop paying them, we'll lose a lot of business as our competitors will continue to do so.
Disclaimer: this is all as I understand it and in no way my employers opinion or persepctive ;)
1) Some do, by providing extra information or ranking the shops by what's best for the consumer (price, reviews) rather than the most cash-per-click.