are advertisements neccessary
...l Atlanta area stores in case you are interested. I have no qualms about corporations sponsoring the individual teams from countries that will be involved in the Games, but the Olympics themselves should be above the influence of partisan organizations. The best way to do this is to minimize any involvement in the Games from these organizations and to make sure that they do not publicize this involvement for their own benefit. As if the Olympics were bad enough, Tech itself has recently done something which can be considered worse. Last year, the Institute passed a measure to remake Alexander Memorial Coliseum, the home of Tech's basketball and volleyball teams. Of course upon its completion this winter, it will be called Alexander Memorial Coliseum at McDonald's Center. While not everyone was for this action, who is going to stop old men with dollar signs in their eyes from doing something solely on the basis of saving something as frivolous as a school's integrity? Seeing even more money dangling in front of them, the school also agreed to have McDonald's put their restaurants on campus. If this does not seem like that big of a deal to you, think about the possibilities that may result from this. The school might decide not to stop with a McDonald's, why not build a mall on campus? Before you know it, Tech will be known foremost as a Midtown Atlanta's premiere shopping center that happens to be a decent educational institution. Before you fool yourself into thinking that commercial entities can be prevented from having any influence on a neutral institution, weigh the benefits that come from these commercial sources versus the effect on you and your education if you are wrong. Long standing decisions regarding the Web, the Olympics, educational institutions and how much freedom is allotted to advertisers must be made now before things get too far out of hand. ADVERTISEMENTS have always been the bugbear of TV viewers. Yet, companies spend crores of rupees every year on advertisements. Ever wondered what these companies gain through advertisements? With the arrival of star-studded high-profile game shows, the revenues of independent channels as well as the advertisement budgets of companies have soared. The recent instances of Kaun Banega Crorepati (KBC) and the Sydney Olympics show the extent to which companies go to spend money on advertisements. For example, advertisers shell out Rs 10 lakh for a 30-second spot on the KBC show. The prize-money is almost entirely financed through advertisement reserves. Again, at the Sydney Olympics, an elite band of corporate sponsors has paid close to $1 billion to prevent the entry of non-sponsor products into the stadium. Thus, the organisers do not allow Pepsi cans inside the stadium, because Coca-Cola is the official sponsor. What value do these advertisements add to the bottomline of companies? What prompts them to spend so much? Empirical research has brought out different results and viewpoints on this subject. But a final verdict has eluded economists. What follows is a theoretical discussion of the aspects involved rather than any sort of empirical investigation. Advertisements assist consumers make rational choices and serve as stimulants for product development. But these are simple reasons. Companies will have to justify the huge costs on advertisements in a more concrete way. To add to the bottomline, the revenues which they expect to generate should more than offset the advertisement cost. Microeconomic theory suggests that advertisement spending should push up the demand for the products, enough to allow companies charge a higher price. The extra revenue should offset both the advertisement and the additional cost of production (to meet the higher demand) to add to the profits. The extent of profits, thus, depends on the advertisement elasticity and the price elasticity of demand. In other words, profits depend on the extent to which demand responds to increased advertisement and also to the increase in the selling price. The response would, however, depend upon the type of product and the brand value. Click here for Table So, what should a company do to maximise revenues? Shorn of complexities, the relationship is simple. The ratio of advertisement expenditure to sales revenue should equal the ratio of the minus of advertisement elasticity to price elasticity of demand. To put this in perspective, if a company with a sales of Rs 10 crore spends Rs 10 lakh on advertisement, the a...