The Obsolescence of Advertising in the Information Age

Abstract

The vast amount of product information available to consumers through online search renders most advertising obsolete as a tool for conveying product information. Advertising remains useful to firms only as a tool for persuading consumers to purchase advertised products. In the mid-twentieth century, courts applying the antitrust laws held that such persuasive advertising is anticompetitive and harmful to consumers, but the Federal Trade Commission (FTC) was unable to pursue an antitrust campaign against persuasive advertising for fear of depriving consumers of advertising’s information value. Now that the information function of most advertising is obsolete, the FTC should renew its campaign against persuasive advertising by treating all advertising beyond the minimum required to ensure that product information is available to online searchers as monopolization in violation of section 2 of the Sherman Act.

Keywords: Advertising, Marketing, Promotion, Antitrust, Product Differentiation, First Amendment, Commercial Speech, Monopoly, Persuasive, Informative, Information Age, Product Reviews, Electronic Word of Mouth, Innovation, Consumer Welfare, Refusal to Deal, Trademark, Intellectual Property

JEL Classification: M30, M31, M37, M38, L40, L41, K21, D80, D18, Z10