Negative ads don't occur much in the commercial marketplace. When they do they are quite mild. But negative political ads that are brutal -- e.g., the famous daisy ad from 1964 -- are common and effective. Here's the explanation: commercial advertisers know that negativity drives down consumer demand for the entire generic product, not just the brand that is attacked, but political advertisers don't care about demand for the generic product (voter turnout). Political advertisers are happy with lessened consumer demand for the product, so long as they get a greater market share of a reduced market than the other guy. Until a political system is created that rewards increased voter participation, there will always be negative political ads.
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