Banning Food Advertising Won't Do What You Think It Will Do

It's no secret that the USA--and most of the developed world--has an obesity problem. And in order to fight this trend, there are calls from various food policy advocates to limit or even outlaw various types of food advertising. Some food pundits have called for ending food companies' efforts to advertise to kids. Others have called for limits to the marketing and advertising of soda, candy and junk foods. Still others have called for limits to corporations' rights to free speech.

The logic is this: if we stop those companies from advertising unhealthy food, people won't eat so much of it.

On some level, there's a lot of sense here. But I want Casual Kitchen readers to think a little deeper on this issue. Things are not always as they seem.

And as a culture and as a society, we have a very short memory, and we tend to overlook or ignore unintended consequences of a policy that seems reasonable on its face. So instead of approaching this issue by considering the constitutionality of limiting advertising, or by considering civil liberties aspects of this debate, I'm going to approach the issue from a radically different angle. I'll share an example from the past to illustrate what really happens when we ban marketing and advertising for a specific product. I have a suspicion that it might help balance today's debate on junk food marketing.

Most readers here at Casual Kitchen have never seen a cigarette ad on TV. Why? Because in 1971, cigarette advertising was banned on television and radio in the United States. It turned out to be the first of many steps towards eliminating all tobacco company advertising and branding activity, and over the next two decades, more and more marketing outlets were deemed off-limits. Now, cigarette makers can't even sponsor sporting events, or even display their logos on T-shirts or hats.

You can easily argue that there's nothing wrong with this. But here's the most soul-crushingly counterintuitive thing about banning tobacco marketing and branding: it's also great for the cigarette companies.

That's right. They love it.

Wait. How can I say that with a straight face?

Here's how: imagine you're a new consumer products company--let's say a shampoo maker--and you have new shampoo brand you'd like to introduce into the market. How do you tell consumers about it? You advertise. You spend money (millions, eventually perhaps billions of dollars) to establish your brand. The battlefield for market share, in other words, plays out in the media. That's how companies reach us and that's how new competitors enter the market.

So now, in an era where cigarette companies can no longer advertise or market (and in some countries their products can't even have any distinctive labeling or branding at all), the existing players in the market are essentially guaranteed, by government fiat, a permanent established brand position.

Ergo, no more new competition, ever.

These advertising and marketing limitations actually protect them. The Marlboro Man will dominate forever because he's been grandfathered in, while regulations eliminate any possibility of a new brand ever competing with him. Better still, there's no need for the existing players in the marketplace to pre-emptively spend millions and billions of marketing and advertising dollars to defend their market position. They can't! The new rules make it so there will never be any new players to defend against anyway. (By the way, would you like to guess where that unspent marketing money goes? It goes to shareholders in the form of profits and dividend payments.)

It bakes your noodle just to think about it.

Now, I know the analogy between the cigarette and food industries isn't perfect. For one thing, cigarettes are dangerous, so it's possibly oxymoronic to think "competition" in the cigarette industry could be "pro-consumer." You might argue that, well, maybe the world doesn't really need a new cigarette company. Perhaps it's a good thing to have high barriers to entry, high prices, and no new competition.

Trust me, the existing cigarette companies are 100% in agreement with you.

So, what's the conclusion here? First, be careful what you wish for. Banning marketing or advertising in the food industry will only serve to protect and enrich the companies already in business. It stifles pro-consumer competition and keeps prices artificially high.

Cigarettes are one thing. But we need food to live. We want a highly competitive marketplace to keep prices reasonable, rather than artificially inflated. If we screw everything up by banning future food advertising and branding, there won't be new companies coming along with new, healthier and better alternatives. Do we really want to stifle this?

One final thought. If we actually do someday make the mistake of banning or restricting food company advertising, I have one important piece of advice: invest in the companies already in the marketplace. Regulation raises the barriers to competition--and those companies just got a profitable dose of government-sponsored protection.


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