Confronted with a progressive deterioration and an increasing “Americanization” of mass media in Britain, the British Labor Party appointed a Commission under the Chairmanship of Lord Reith the assignment of which is “to consider the role of commercial advertising in present day society and to recommend whether reforms are required; if so, what?” This Advertising Commission solicited oral and written testimony from various workers in that field, submitting to them a questionnaire covering the principal points on which comments were invited. Having also been asked for our reflections on the matter, we prepared the following statement the purpose of which is not so much to answer all the questions posed in the questionnaire, as to present a more or less integrated view on this, most important, subject. Being inadequately informed about conditions prevailing in Great Britain, we addressed ourselves to the experience in the United States—on the assumption that much of it is relevant to problems existing in other countries.
I. Advertising and the Economy
1. Since the last quarter of the nineteenth century, American industry has constituted an oligopolistic system in which small numbers of large firms have been responsible for the bulk of their industries’ output. At the present time, “the one-hundred-and-thirty-odd largest manufacturing corporations account for half of manufacturing output in the United States. The five hundred largest business corporations in this country embrace nearly two-thirds of all nonagricultural economic activity.” 1
2. Except during a few comparatively brief periods of war and postwar reconstruction, American business has been plagued by a persistent shortage of effective demand in relation to its productive potential. In the words of a marketing specialist, “The problem of business used to be how to manufacture and produce goods; but the principal problem has become now how to market or sell goods.” 2
3. Under oligopolistic conditions, price competition is avoided as a response to the insufficiency of demand and other forms of sales effort are substituted. “The rivalries of the business world are nowadays as keen or keener than ever. Competition with respect to the quality of products and the services associated with them has increased. However, less stress is being placed by many of our larger businesses on price competition.” 3 This is, if anything, an understatement.
4. Advertising sensu stricto should be considered as merely one species of the large genus of non-price-competitive devices. Perhaps equally important are spurious product differentiation, artificial physical and/or “moral” obsolescence, and the like; these are, however, for the most part rendered possible by advertising. In the words of the McGraw-Hill Department of Economics: “Today, the orientation of manufacturing companies is increasingly toward the market and away from production. In fact, this change has gone so far in some cases that the General Electric Company, as one striking example, now conceives itself to be essentially a marketing rather than a production organization. This thinking flows back through the structure of the company to the point that marketing needs reach back and dictate the arrangement and grouping of production facilities.” 4 In the following remarks, however, we confine attention to mass-media advertising, both in view of the Commission’s stipulated terms of reference and because such advertising taken by itself not only plays an important part in the non-price-competitive sales effort but also serves as an indispensable adjunct of most other sales stratagems. “The secular rise of advertising expenditures is a sign of secular…decline of price competition.” 5
5. The growing “oligopolization” of the American economy has been paralleled by a corresponding expansion of advertising. Expenditure upon newspaper and periodicals advertising in 1890 amounted to over $76 million, about ten times as great as similar expenditure at the time of the Civil War. By 1929, it had climbed to over $1,100 million and constituted 1.38 percent of National Income as against .59 percent in 1890. This process gained momentum with the appearance of new advertising media (radio and particularly television), so that at the present time business outlays for advertising and related services (advertising agencies, market research bureaus, public relations advisors, and the like) exceed $15 billion annually (approximately 4 percent of National Income). It should be noted that this amount does not include the costs of market research, designing for advertising purposes, and the like carried on within the producing or selling concerns themselves. While reliable estimates on the latter are not available, $10 billion per year is considered by experts to be a not unreasonable figure.
6. In appraising the economic effects of advertising, economics has traditionally followed the lead of Alfred Marshall by distinguishing between “good” and “bad,” “constructive” and “combative” advertisements. Those in the former category are commended as providing useful information on new products and helping “to draw the attention of people to opportunities for buying or selling of which they may be willing to avail themselves.” 6 Other types of advertising are condemned as a waste of resources, doing harm by adding to the imperfections of the competitive process, causing a distribution of income different from what it would be under more perfectly competitive conditions, and manipulating (and distorting) consumers’ tastes and motivations.
7. The advent of the new advertising media (radio and television) and the concomitant proliferation of advertising, although not introducing any substantially new arguments into the economic discussion of the subject, lend emphasis to those previously employed. The defenders are able to point to the powerful spur to spending and consumption provided by modern advertising and to stress the resulting stimulation of mass production methods, the introduction of new products, and the consequent opening up of new investment opportunities. Occasionally, they also credit advertising with furnishing the media with financial means for valuable cultural activities such as broadcasting of classical music, presentation on television of good films, plays, and educational material. 7
8. The economists who are critical of advertising deplore the now massive waste of material and human resources associated with the advertising process itself as well as with other forms of the non-price-competitive sales effort which it renders possible—the increasingly fraudulent product differentiation, less and less warranted and more and more costly model changes in consumers’ durable goods, propagation of ever more superfluous gadgets, etc.
9. The debate between the critics and the defenders of advertising remains of necessity inconclusive in view of self-imposed limitations on the scope of the debate. The critics’ rejection of advertising generally is predicated upon the assumption that full employment would prevail in the absence of advertising. Then, indeed, the resources now devoted to advertising would be more usefully employed elsewhere since, as Chamberlin puts it, “as a result [of advertising] demand for the advertised product is increased, that for other products is correspondingly diminished.” 8
10. Defenders of advertising argue that by stimulating consumption and investment it plays an indispensable role in the functioning of the capitalist economy. On this basis of American experience, this argument appears to us to be sound. There can be little doubt, we think, that the chronic underutilization of resources which has plagued the United States for more than a generation now would have been a good deal more severe if it had not been for the spectacular growth of advertising during this period. If this is correct, it follows that attempts to abolish or curtail advertising could have seriously adverse effects unless accompanied by comprehensive and effective planning for full and socially desirable employment. This is a point which critics of advertising consistently neglect and which should certainly be given great weight in the formulation of new policies regarding advertising.
II. Advertising and the Consumer
11. In the appraisal of the mass media’s over-all impact on the public, opinions differ greatly. (See Section IV below.) There is more consensus among experts on the power of advertising to influence buying on the part of the consumer, although disagreement exists on the extent of that power.
12. The critics of advertising contend that advertising campaigns if sufficiently large, persistent, and unscrupulous (availing themselves of such methods as subliminal suggestion and the like) can sell to the consumer “almost anything.” This contention is supported by some of the most authoritative experts in marketing techniques, one of whom observes that “a superior product means superior in the eyes of the consumers. It does not necessarily mean superior in terms of objective value or according to laboratory standards,” and reports that “studies…conducted in the last twelve years show conclusively that individuals are influenced by advertising without being aware of that influence. An individual is motivated to buy something by an ad, but he often does not know what motivated him.” 9 The most striking examples of the capacity of advertising to generate demand for worthless or even harmful products have recently been provided in the area of pharmaceuticals, cosmetic products, and the like. 10
13. The defenders of advertising, on the other hand, maintain that no amount of advertising, however conducted, can induce the consumer to buy a product which does not represent a useful innovation or is not better or cheaper than what is otherwise available in the market. As stated by Rosser Reeves, Chairman of the Board of Ted Bates & Co., one of the largest American advertising agencies, “If the product does not meet some existing desire or need of the consumer, the advertising will ultimately fail.” 11 The case most frequently cited in support of this view is the Ford Motor Company’s failure to establish a market for its Edsel automobile in spite of a vast outlay on advertising.
14. It is erroneous to seek to measure the impact of advertising on consumers by studying their responses to specific advertising campaigns. That impact can only be adequately assessed if consideration is given to the totality of biotic urges and social forces which is responsible for the formation of human wants in any given historical environment. By setting standards of values, by establishing criteria of success, by molding its members’ fears and aspirations, society lays the foundations from which advertising as a whole draws its lifeblood. The outcome of individual advertising campaigns is determined by a multitude of more or less fortuitous circumstances particular to each case.
15. One of the functions of advertising is the reinforcement of the socially and/or biotically determined wants and preferences of consumers. The desire to “keep up with the Joneses,” to own the largest or the newest automobile, to furnish one’s house with the most recently manufactured gadgets, cannot be attributed to advertising; it stems from the general “climate” prevailing in society. Advertising, however, intensifies these propensities and facilitates their gratification. “Madison Avenue…serves as alarm clock for America’s sleeping desires.” 12
16. Advertising provides the consumer with ex post rationalization of behavior which may be unacceptable to him on other grounds. While tobacco, liquor, profligacy may be rejected by an individual on rational grounds, the recurrent reassurances by advertising assuage his misgivings about indulging in smoking, drinking, and the like, despite his own disapproval. 13
III. Advertising and the Mass Media
17. With the exception of the relatively insignificant sprinkling of non-commercial FM radio stations, all radio and television broadcasting stations in the United States are privately owned and depend for financial support on advertising revenue. Newspapers and periodicals, on the advertising services of which approximately 27 percent of all advertising outlay is spent, rely for more than two-thirds of their budgets on the sale of advertising space.
18. All media solicit advertising, and most provide advertisers with services of various kinds, maintaining so-called merchandising departments which collaborate with advertisers in making decisions on the timing and structure of their advertising campaigns.
19. Since the volume of advertising and the price charged for space (or time) are determined by the media’s access to the public (circulation of newspapers, viewing or listening “ratings” of the stations), the need for advertising revenue compels the media to cater to as wide a population strata as possible. This not only militates against too much “highbrow” or even “middlebrow” material, but provides a strong impetus to a wide coverage of sensational material such as crime, sexual deviations, and the like.
20. The influence of advertisers on the editorial policies of the media is not readily ascertained. It is important to realize, however, that there is no need to assume any nefarious collusion between advertisers and media policy-makers to explain the uniformly conservative orientation of the latter’s editorial positions. This conservatism is adequately explained by the fact that the owners and executives controlling the media are in no respect different, as far as basic attitudes, mentality, and political orientation are concerned, from the owners and executives of the advertising concerns.
21. The program designs and editorial policies of the media are subject to two conflicting pressures. Advertisers, naturally seeking to reach the largest possible audience, are anxious to avoid antagonizing any prospective customers and therefore prefer the media to follow a policy of conservative and non-controversial programming and editorializing. Yet the public’s interest in the media’s offerings is more likely to be aroused if the programs contain new material or are rendered more absorbing by the tensions resulting from debates, contests, and rivalries. The solution habitually adopted by the media’s managements is to admit such tensions in immaterial areas: quiz shows, sports, competitions among performers, and debates on more or less innocuous public issues or among speakers of not too widely divergent persuasions.
22. Economies of scale realized in efforts to secure national advertising accounts have combined with the economies of scale resulting from centralized news gathering, features buying, and newsprint procurement to advance rapidly mergers and concentration of media on a national scale. Strictly local media—primarily newspapers, catering to the needs of local business—have gone through a massive merger movement on the local level, with the result that a large and ever-growing number of small and middle-sized localities in the United States have only one newspaper (sometimes with a morning and afternoon edition). The consequences of this to the formation of public opinion and to the functioning of the democratic process are self-evident.
IV. Advertising and Values
23. It is crucial to recognize that advertising and mass media programs sponsored by and related to it do not to any significant extent create values or produce attitudes but rather reflect existing values and exploit prevailing attitudes. In so doing they undoubtedly reenforce them and contribute to their propagation, but they cannot be considered to be their taproot. There is wide consensus among specialists that advertising campaigns succeed not if they seek to change people’s attitudes but if they manage to find, by means of motivation research and similar procedures, a way of linking up with existing attitudes.
24. Status-seeking and snobbery; social, racial, and sexual discrimination; egotism and unrelatedness to others; envy, gluttony, avarice, and ruthlessness in the drive for self-advancement—all of these attitudes are not generated by advertising but are made use of and appealed to in the contents of advertising material.
25. The debasement of cultural standards and the substitution of Kitsch for art in music, the plastic arts, and literature do not stem from advertising, although advertising has become the chief patron and Maecenas of the Kitsch producers inundating the market. To the (not inconsiderable) extent to which the tastes, preferences, and needs of the patrons influence the work of the artist, the advertisers can be held responsible for the corruption of the artistic talent which they purchase.
26. Factors referred to in paragraph 21 have to be borne in mind in considering the influence of advertising and design. Although the desire to reach and influence the largest possible audiences motivates the promotion of least controversial, hackneyed, and corny productions, the drive to expand sales and to create “moral” obsolescence of products stimulates the introduction and promotion of new and sometimes aesthetically valuable articles and models. The search for a compromise between those two requirements leads usually to the cheapening and “watering down” of genuine art or to an outright perversion of the effects of artistic masterworks by placing them in wholly incompatible contexts (e.g., the use of paintings by Giotto in advertisements of travel agencies or of medieval architecture in the promotion of hotels).
27. It is sometimes argued that advertising really does little harm because no one believes it anymore anyway. We consider this view to be erroneous. The greatest damage done by advertising is precisely that it incessantly demonstrates the prostitution of men and women who lend their intellects, their voices, their artistic skills to purposes in which they themselves do not believe, and that it teaches “the essential meaninglessness of all creations of the mind: words, images, and ideas.” 14 The real danger from advertising is that it helps to shatter and ultimately destroy our most precious nonmaterial possessions: the confidence in the existence of meaningful purposes of human activity and the respect for the integrity of man.
28. The causal nexus explaining the nature of values, prevailing standards of culture, and the quality of forthcoming artistic production cannot stop at advertising. It leads rather through advertising to the underlying structure of the market- and profit-determined economic and social order.
29. The failure to recognize the essentially instrumental, mediating part played by advertising largely accounts for the inconclusiveness of the frequently undertaken attempts to explore its effects and impact. Advertising, being a reinforcing and proliferating mechanism, can neither be held responsible nor be absolved of all responsibility for prevailing attitudes, cultural standards, and values.
30. The trouble with advertising is not that it promotes conformity to certain norms of life and behavior. The trouble is that advertising of necessity promotes conformity to norms that, by any rational standard, are worthless or humanly destructive.
31. It is beyond the scope of this paper to discuss the structural changes in the economic and social order which would be required to eliminate the negative impact of advertising on the moral and cultural standards of society. It must never be lost from sight that advertising is a part of the modus operandi of profit-making business enterprise under present-day conditions. As Pigou clearly recognized many years ago, the only way it could be “removed altogether” would be “if conditions of monopolistic competition were destroyed.” 15 America’s long experience with antitrust laws has proved conclusively that this is impossible within the framework of a capitalist society. It follows that the elimination of advertising as we know it today would require the elimination of capitalism. This is a conclusion which socialists should find neither surprising nor disturbing.
32. If action is to be confined to the field of advertising proper, it should be directed not at the enterprises which buy the advertising but at the media which carry it. The maintenance of non-commercial radio and television, strictly refusing to accept advertisements, takes care of one large aspect of the problem.
33. Controlling the contents of advertisements in newspapers and periodicals presents formidable difficulties. Any measures in that direction risk coming into conflict with principles of freedom of speech and expression. Legislation could be promulgated, however, rendering the publication of mendacious and misleading advertisements subject to serious penalties. The principal problem to be solved in this connection is the enforcement of such statutes.
34. American experience suggests that the most important condition for successful curbing of advertising abuses is placing the burden of proof not on the government but on the advertiser. Specifically, a government board entrusted with the supervision of advertising should be entitled to ban certain advertisements in view of their contents, unless the affected firm can prove the truthfulness of its advertised claims. The American arrangement in which the opposite procedure is followed, i.e., the advertiser is permitted to continue publicizing his unwarranted claims until the government agency involved can satisfy the courts of their groundlessness leads to endless red tape and litigation which defeat the entire endeavor.
35. It should be possible to rule out a priori the advertising of certain kinds of products. Just as it is prohibited to advertise and sell narcotics, so the advertising of tobacco, liquor, and other products that are harmful could be outlawed.
- ↩ E.S. Mason, “Introduction,” in E.S. Mason, ed., The Corporation in Modern Society (Cambridge, MA: Harvard University Press, 1959), 5.
- ↩ Steuart Henderson Britt, The Spenders (New York: McGraw-Hill, 1960), 52.
- ↩ Arthur F. Burns, Prosperity Without Inflation (New York: Fordham University Press, 1957), 83.
- ↩ Dexter Merriam Keezer and Associates, New Forces in American Business (New York: McGraw-Hill, 1959), 97.
- ↩ T. Scitovsky, Welfare and Competition (Chicago: R.D. Irwin, 1951), 401n.
- ↩ Alfred Marshall, Industry and Trade (London: Macmillan and Co., 1919), 305.
- ↩ Paul A. Samuelson, Economics, Fifth Edition (New York: McGraw-Hill, 1961), 138.
- ↩ E.H. Chamberlin, Theory of Monopolistic Competition (Cambridge, MA: 1933), 120.
- ↩ Louis Cheskin, Why People Buy (New York: Liveright Publication Corp., 1959), 54ff.
- ↩ James Cook, Remedies and Rackets (New York: Norton, 1958), passim; Meyer Weinberg, TV in America (New York: Ballantine Books, 1962), passim.
- ↩ Rosser Reeves, Reality in Advertising (New York: Knopf, 1961), 141.
- ↩ James Kelly, “In Defense of Madison Avenue,” New York Times Magazine, December 23, 1956.
- ↩ Leon Festinger, A Theory of Cognitive Dissonance (Evanston, IL: Row, Peterson, 1957), passim.
- ↩ Leo Marx, “Notes on the Culture of the New Capitalism,” Monthly Review 11, no. 3/4 (July– August, 1959): 116.
- ↩ A.C. Pigou, Economics of Welfare, Fourth Edition (London: Macmillan and Co., 1938), 199.