I have been noticing a lot more Kiwisaver advertising recently. This is a good thing.
Wait, what? How can advertising be a good thing? Doesn’t it persuade us to do things we shouldn’t because we are weak and powerless individuals? *
Advertising is a way of getting information about valuable products and services to the marketplace.
Without advertising, we are fumbling around in the darkness. Because we have no brands or products to connect with different things we need in our grocery shop, it could conceivably take hours to get around your local Countdown or New World.
More Kiwisaver advertising is a sign of a developed market. Firms are prepared to spend money on advertising.
Because advertising is a sunk cost – once it is spent it can’t be recovered – a firm will only advertise when it believes that it will earn a return on that advertising.
Advertising in the age of Google triggers searches for product information, comparing prices with other potential suppliers and reading product reviews.
It directly enhances the price discovery process because firms have to differentiate their product offerings somehow – either cosmetically or substantially.
As the Kiwisaver industry develops, firms will need to ensure that their fees and services available to Kiwisaver members are competitive.
The differences between firms can be highlighted in rival’s advertising, so the process of competition and comparison in advertising acts as a “mic check” on competitors claims.
I’d be really worried if there wasn’t Kiwisaver advertising – firms would be revealing that they think Winston Peters will seize everyone’s Kiwisaver accounts.
* Some people actually believe this.