Advertising is hugely expensive. Also, it doesn’t work. At least, it doesn’t work perfectly, which means that a good deal of that huge amount of money is wasted. Not surprisingly therefore, advertising is commonly berated by the general public as a waste of time. They cannot see why they cannot have a price cut instead. Advertising to many people is a conspiracy of the marketing fraternity to make products more expensive for the real purpose of financing the advertising executive’s Porsche and sharp suit. Jamie Whyte, in this article from last week’s Financial Times asks us to think wider and deeper before jumping to this conclusion.
Spread the word about the benefits of advertising
By Jamie Whyte
Financial Times: June 27 2007
Advertising is unpopular with those concerned for our welfare. They see it as a kind of coercion, making us “want things we do not really need” and, sometimes, things that are positively bad for us. Ban the ad, they demand.
Modern regulators are happy to oblige them. On Sunday, two moves to tighten up on advertising junk food to children come into force. Ofcom, the media regulator, introduces new content rules (including banning the use of celebrities), prior to banning advertising of foods high in fat, sugar or salt during television programmes popular with under-16-year-olds next January. The Committee of Advertising Practice, an industry group, is bringing in similar content rules for press, posters and paid-for internet space.
These prohibitions are unlikely to achieve their goal of reducing demand for junk food. For advertising is not the only way to promote a product. The money that manufacturers are forced to save on advertising may, for example, be diverted into research and development: ad-banners might inadvertently be helping to create even more irresistible junk food. Or the unspent advertising budget may simply be used to cut prices – and cheaper, unadvertised junk food may sell in greater volume.
Regulation that is vulnerable to such obvious “substitution effects” is foolish. But, in this case, the foolishness is not a consequence of economic ignor-ance (Ofcom surely employs economists). It is due to a widespread, misguided prejudice against advertising.
Consider a car manufacturer suffering from declining sales of its “sports utility” model, the Lumberjack. After strenuous research, the company arrives at what it believes to be three equally cost-effective options for boosting demand: a £2,000 price cut; adding leather upholstery; or a campaign of adverts filled with trees, axes and red check shirts. For the manufacturer these options, equally cost-effective, are equally attractive. But surely not for the consumer. The third option looks like a trick. Cutting the price or adding leather seats makes the Lumberjack a better deal. But an advertising campaign does not. It increases demand by messing with our heads.
The idea that advertising works not by improving products but by psychological manipulation lies behind its bad reputation. It explains why advertising is always at the top of do-gooders’ hit-lists. But it is wrong, because psychological manipulation is a perfectly good way of improving things.
If I messed with your head so that you found standing on one leg immensely enjoyable, then I would have improved standing on one leg. If an advertising campaign messes with your head so that you find owning and driving a Lumberjack more gratifying, then it has improved Lumberjacks. After all, what makes leather upholstery so good if not the fact that we enjoy sitting on it?
There are two ways to improve a product: change its material properties or change the way consumers respond to it. Advertising works in the second way. In many cases it is fantastically successful. The pleasure of consuming some products, such as Chanel perfume and Nike trainers, is largely due to their brands. Why bemoan this fact? Why regret that advertising works? When it does, it makes things better.
Usually. Sometimes advertising increases desire for something without changing the experience of consuming it and hence without improving it. But even then advertising benefits us. Because the Buddhist idea that we are better off with less desire is wrong.
You can, of course, want something more than you should. This happens when you overestimate the benefits or underestimate the costs. If you do not know about hangovers, for example, you will probably want to drink more than you should. But such mistakes are self-correcting. An inflated desire makes you do things you should not. Then you regret it and your desire is deflated. Excessive desires have remedial consequences. So advertising that wrongly increases your desire will cost you little in the long run.
But what if you desire something too little? What if you underestimate its benefits or overestimate its costs? If you do not know how much fun it is to be drunk, you might want to drink not nearly enough. Since this mistake leads to no action and, hence, to no feedback, it can persist indefinitely. You can spend your entire life failing to consume or do things that you should. More desire is what you need. That is why advertising is a source of untold good for mankind. It should be the last thing regulators consider banning.
The writer is author of Bad Thoughts: A Guide to Clear Thinking (Corvo)
