Every day we face a multitude of advertising messages, so many that we probably fail to notice the vast majority of them. Not only are advertisements presented via television, cinema screens, billboards, the radio, magazines and newspapers — there are also increasing attempts to catch our attention by advertising when we play computer games, use our mobile telephones, make internet searches and use social media. In 2013 the total value of advertising in the UK was £17,877 million, with online advertising making up the largest share at £6,300 million (just over 35%), while further increases in online and mobile telephone advertising are predicted for at least the next two years (source: the Advertising Association, http://www.adassoc.org.uk).
Firms may advertise for many reasons, but a primary reason is to increase demand for their products. Figure 1 shows that when a firm advertises, it hopes that advertising will lead to an increase in demand, depicted by a shift to the right of the demand curve. New consumers may be tempted to buy the product, while existing consumers may decide to buy more. For example, when Apple advertises the iPhone 6, it hopes that new customers will decide to buy an iPhone, while existing iPhone users will be tempted to upgrade their current mobile telephone.
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