Tuesday, July 28, 2009
Revising ads to avoid sudden falsity
Microsoft alters price comparison ad after Apple drops prices. The article is (1) a reminder that comparative ads have to be up-to-date, (2) a pronouncement of victory for price advertising as a way to decrease prices, and (3) a reminder that altering an ad to avoid falsity often doesn’t take much—here, the ad was simply edited to eliminate the specific price comparison, as it remains true that Apple laptops are pricier than Microsoft laptops. (Insert “you get what you pay for” here.) This also ties into a debate over false advertising regulation in general: now that the specific price information has been removed, what information do consumers get from the ad? If they are likely to infer a much bigger, or much smaller, price difference than actually exists, the welfare effects of removing the untrue comparison are unclear. Except that’s also arguably an unfair framing of the issue: if Microsoft edited the ad to update it with the true price differential, consumers would clearly benefit. In a perfect world, that’s what Microsoft would do. But, since the law doesn’t require it, we should probably compare the information provided by the vague ad with the information provided by the specific-but-wrong ad. How does that come out?