Businesses vary greatly in terms of the goods and services they offer customers and how they produce and deliver their products and service to consumers. Every business needs to attract customers to be successful. Marketing describes the steps businesses take to attract and retain customers, which includes creating advertisements that raise consumer awareness about products and services.
Advertisements can be beneficial to a business because they can inform new customers of the existence and virtues of its products and services. Doing so may increase the number of customers that frequent the business. The U.S. Small Business Administration lists the following as other potential benefits of advertising: increasing the loyalty of existing customers, replacing lost customers and encouraging existing customers to buy more of a company's products or services.
Establishing an Identity
Another reason advertisements can be beneficial to a business is that they can help a business establish an identity and a reputation within a certain industry. They can also help businesses build brand recognition. For example, an advertising campaign that focuses on a trademark symbol or character that is used in conjunction with a company's products or services might help consumers recognize the company's products and services when they are shopping.
The ultimate goal of a for-profit business is to make more revenue through selling goods and services than it spends. Advertising can be expensive, but if an advertising campaign increases revenues enough to offset the cost of running ads, they can result in higher profits. One of the main drawbacks of advertising is that there is no guarantee that ads will result in higher profits in the future.
The advertisements businesses create in the U.S. are subject to legal regulation by the Federal Trade Commission or FTC. The U.S. Small Business Administration states that under the Federal Trade Commission Act, advertisements must be truthful and non-deceptive and they have to be able to back up claims they make. Advertising laws help protect consumers against false advertisements, which improves the information consumers can use to make decisions about which products and services to buy.