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Defending the Advertiser

Mises Daily: Wednesday, June 01, 2011 by

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[Excerpted from Defending the Undefendable (1976; 2008). An MP3 audio file of this article, read by Jeff Riggenbach, is available for download.]

Advertising has long had a "bad press." The case against it is detailed and seemingly compelling. It is claimed that advertising entices people, forcing them to buy products they would otherwise not buy. It preys on the fears and psychological weaknesses of people. It is misleading, with its juxtaposition of a beautiful woman and a commercial product, implying that she is somehow part of the deal. It is foolish, what with its contests, marching bands, and jingles. It is an insult to our intelligence.

The argument is usually capped with an appeal to our selfish natures — advertising is very costly. A minute of prime television time or a full-page advertisement in a popular magazine or newspaper can run into thousands of dollars. The advertising industry as a whole is a multibillion-dollar industry. If we banned advertising, it is alleged, all of this money could be saved. The money could then be used to improve the product, or lower its price, or both. The advertising industry could be replaced with a governmental board which would present objective descriptions and ratings. Instead of sexy, misleading jingles, we would have product descriptions, perhaps summarized by a grade level of "Grade A," "Grade B," etc. In any case, the advertisers, who are nonproductive and essentially parasitical, would be put out of business.

There is much that is wrong with this view of advertising, but it is not without its historical precedents. In fact, it is only the most recent in a long line of arguments purporting to show that one or another industry is parasitical and unproductive. The physiocrats, a school of economic thought in mid-18th century France, thought all industries except farming, fishing, and hunting were wasteful. They reasoned that anything not connected with the soil was sterile, and dependent and parasitical upon the soil-based industries. Other economists have distinguished between goods, which were considered productive, and services, which were not. Still others have held that all goods but only some services were productive. For example, it has been denied that monetary services such as financial intermediation, brokerage, banking, and speculation have any value. It is easy, nowadays, to see the limitations of these theories. A good need not come directly from the soil to be productive, nor need a service be "tangible," such as medical care, to be productive. We know that brokers bring people together at lower costs than they could manage on their own. We know that the nontangible product of the insurance industry provides for the pooling and consequent lessening of risks. But even in these sophisticated times the advertising industry enjoys a widespread reputation as a parasite.

How strong is the case? First, it seems clear that advertising does not lure or force people to buy what they would not otherwise buy. Advertising attempts to persuade people — perhaps in ways some members of the community find objectionable. But it does not and cannot coerce. (Fraudulent advertising is logically equivalent to theft, and is not to be confused with advertising per se. If the seller advertises wheat but delivers rocks, he has actually stolen the money price of "wheat.")

Subliminal advertising, if it exists, would be considered coercive. But it cannot be claimed that ordinary advertising is coercive without completely obliterating the distinction between coercion and persuasion.

Second, advertising does have informational content. This is conceded even by its most fervent detractors, although they think that the government could do a better job. But governmental action in the field of advertising is no less advertising just because it is government advertising. If anything, there are more problems which are harder to deal with in "government-issued" advertisements. Unencumbered by the usual necessity to make profits by pleasing consumers, when the government gets out of hand, there is very little that can be done. Governmental advertising for US War Bonds or the military draft are but two examples that come to mind.

Third, the importance of advertising in helping new companies, and thus encouraging competition, should not be underestimated. If advertising were prohibited, the large established companies would have a powerful advantage in the market. Even with things as they are, older firms are more likely to monopolize a given industry than newer ones. Advertising, by giving a comparative advantage to newcomers, lessens the degree of concentration in the economy.

Finally, much if not all of the advertising that violates community standards of intelligence and decency can be traced to and blamed on governmental edicts in other areas. For example, the government[1] does not allow airlines to compete with one another in trivial areas. Their advertising campaigns bombard us with "news" about early-bird specials, new décor, the number of seats in an aisle, airplanes named after stewardesses, etc. ("I'm Marybeth. Fly me to Miami"). If airlines were free to compete with respect to price, the passengers might be spared this constant reiteration about nonessential affectations.

The same is true for banks. Banks are limited in the amount of interest they can pay to depositors (0 percent to demand depositors, 5.5–7.5 percent to time depositors, as of this date). They compete, therefore, with each other as to which can give the best kitchen utensils, radios, etc., as lures for new depositors. (Note that since they can charge as much as the market will bear for loans, they spend far less advertising money to try to convince anyone to borrow money from them.) The true blame for advertisements of this kind belongs not to the advertising industry, but to the government.

These four arguments, when taken together, constitute a valid defense against the critics of advertising. Yet they do not strike at the heart of the matter. For they ignore the main fallacy of the critics — the assumption that deep down, there is a distinction to be made between motivational advertising and informational advertising, that motivational advertising is "bad" in various ways while informational advertising is "good." The truth is, however, that exposing people to information and motivating them are so inextricably bound up together that it makes little sense to even distinguish between them.

For a better perspective, consider several examples where it is not they who are trying to impart information and motivation to us, but we who are trying to impart information and motivation to them. Most of us, for instance, have had the experience of being interviewed for a new position. How do we prepare? We commence by writing an advertising brochure about ourselves. (This document is sometimes called a "résumé" by those anxious to obfuscate and to hide the fact that each of us is, at almost all times, an advertiser.) In this advertising brochure we put the facts of our employment life as they pertain to the prospective job. And in splendid advertising tradition, we try to make these facts appear as flattering as possible. We hire a professional typist to help "entice" an employer into hiring us, and we have the brochure printed on fine paper in order to "create an impression," as a good advertiser should.

Strictly speaking, we are only providing information on the brochure. It is "merely" informational advertising on the face of it, but the attempt to present the information in a favorable light involves us, willy-nilly, in motivational advertising.

During the interview, we continue to advertise. We "package" ourselves as best we can. Even though we might not do so every day, at the job interview we will give special attention to grooming effects.

Even when not engaged in job-hunting, we advertise, by constantly trying to portray ourselves in a good light. Even unconsciously we try to package ourselves well. From the very cradle parents are busy advertising us or laying the groundwork for future advertising. How else can we explain those ballet, violin, and piano lessons and visits to the orthodontist or skin doctor?

The "Jewish mother," with her constant exhortations about good posture and good eating habits ("Eat, eat, children are starving in Europe and you're not eating"), is the great unsung heroine of the advertising business. And the Jewish mother's bragging about her children? Just more advertising.

As we grow up we carry on the fine traditions of advertising. We wear clothing that flatters our figures. We diet, or try to. At least part of our expenditures on education, psychiatry, hair grooming, and clothing can only be understood as advertising expenditures. Later on we purchase cars, houses, recreation, in large part as advertisements for ourselves. Incidentally, the greater expenditures (as a percentage of income) on "luxury" items such as clothing and cars, made by groups who are discriminated against, such as women and blacks, can be explained by advertising.[2] They feel they must engage in greater advertising expenses in order to counteract the discrimination. The rest need not invest so heavily in advertising because we are in.

Even members of the radical Left, who are among the bitterest critics of advertising, engage in advertising themselves. (This should not be surprising, since we are defining advertising in its proper but broad sense of creative and interesting packaging.) Usually whenever the radical Left has access to a bulletin board, the messages placed on it are at first uniformly small, neat, and similarly printed. After a while, in order to attract attention, some of the messages are printed in different colors, and on different-size placards. Eventually, in the competition to attract attention, larger and larger placards are used, with bolder printing, coloring, and illustrations. In their attempt to spread information, they are led "as if by an invisible hand" to engage in motivational advertising. The reason radicals write messages such as, "OFF THE PIG" or "FUCK THE STATE" on walls or buildings in big red letters, is not entirely out of a desire to shock. It is also out of a desire to impart the revolutionary message, by first attracting attention to it. If it is not read, however informational it may be, it will impart no information. But as much can be said for the typical soap-opera advertisement.

Anyone who has ever been called upon to give a speech where there was a distinct possibility of putting the audience to sleep will understand the difficulty of distinguishing between imparting information and packaging a speech. Surely, no more boring a speech can be imagined than a lecture on economics. The public speaker or teacher will engage in certain practices, such as maintaining eye contact, telling jokes, or posing rhetorical questions. These are sometimes known as public-speaking techniques. A more appropriate term would be "advertising techniques" — packaging the product well, making it appear interesting, highlighting the talk, bringing points into focus, and capturing the attention of the audience. These advertising techniques have about as much to do with the subject of the talk as bicycling has to do with Coca-Cola, as deep, throaty, sexy female voices have to do with shaving cream, or as the sporting events of "the more-than-one-beer men" have to do with beer.

That is not the point. The point is that if one hopes to get information across — even to people who are well-motivated, such as the student in the economics class who has to stay awake to receive a good grade — one must engage in advertising techniques. If this is important when dealing with people who are well-motivated, imagine how much more important it is to "advertise" information when your "audience" is not well-motivated. Television advertising should be interpreted at least as favorably, if not more so, than the advertising engaged in by public speakers. They are both attempts to impart information by making that information interesting and attractive. But the television ad faces the additional burden of keeping the viewer away from his refrigerator. If all content which was not strictly informational was banned, we would have to prevent speakers and teachers from even attempting to be interesting. They would not be allowed to tell jokes, maintain eye contact, or discuss questions with the audience. These techniques are above and beyond the strict imparting of information. Like television advertising gimmicks, they are attempts to "waylay the audience."

Is it possible to ban motivational advertising while allowing informational advertising? No. Information can be presented well or badly (i.e., in such a way as to bore and alienate the audience, or charm and amuse it), but it must be "packaged" or "presented" in some way. For example, imagine that a magic carpet was invented, and it was decided that information about it was to be given out (the flying speed, cruising range, upkeep costs, how to roll it up and store it while not in use, etc.), but the presentation was to be purely informational. Anything which even hinted at "promotion" of the carpet would be banned. Given this condition, a regular television announcer, with his good looks, forcefulness, and self-confidence, could not present the information. His personality might promote the carpet. Nor could there be music in the background. It might seem "inspirational." The carpet certainly could not be shown "in action," that is, with an attractive woman on it. We could not risk fooling people into believing that if they bought the carpet they would get a copy of the inspirational music or of the inspirational woman.

If we could not use a professional announcer, could we use a nonprofessional one, or just an ordinary man off the street? We could not. Some advertising companies with their low cunning are already using testimonials from the "man-in-the-street" with great success, proving that this procedure has a motivational content.

If the information cannot be read, can it be printed? But what kind of typeface should be used? Certainly not a style that would induce someone to — horrors! — buy the flying carpet. It would have to be an almost indecipherable typeface so that people could hardly read it. Otherwise, at a low enough price, many people would be led down the garden path into making a purchase. The whole message would have to be presented in a purposely inferior manner so as not to attract any attention to itself.

Clearly, there is no way to separate the "package" from what it contains. There is no way to present "pure" information. To believe that the presentation of information without motivation is foolishness of the highest degree.

Mises Academy: Tom DiLorenzo teaches The Road to Serfdom: Then and Now

The objection that advertising adds to the cost of the product is an objection that has not been clearly thought out. Would the critics object because wrapping a product adds to the cost? Or transporting it? They would not. It is understood that these additional costs are necessarily incurred if the product is to be made available to the consumer. But the same is true of advertising! Suppose the magic carpet previously mentioned costs $950 to manufacture, $10 to wrap it, and $40 for transportation. If customers want to take advantage of the wrapping and delivery services, they must pay the full $1,000. But they have the choice of picking up a wrapped carpet at $960, an unwrapped one for $950, or an unwrapped one delivered to their homes for $990.

So is it with advertising costs. If it costs $100 to advertise the carpet, the customers have a choice between the advertised brand for $1,100 and an unadvertised brand (which, presumably, they could find if they searched long enough) for $1,000. If a substantial number of consumers were willing to find unadvertised brands or outlets, manufacturers would be foolish to advertise. However, some consumers may not be so enterprising or energetic in shopping for unadvertised brands at cheaper prices. This would give the manufacturer the incentive to advertise, and the costs of the advertisements would be added to the purchase price. It is true, therefore, that advertising would add to the cost of the product. But then it is true that advertising is necessary in order to bring the product to the people. If some refused to buy unwrapped, undelivered magic carpets, but would buy wrapped, delivered ones, could it be said that wrapping costs and delivery costs were added to the total costs unnecessarily? Decidedly not. In the same manner, advertising does not add unnecessarily to the costs of the product.

What of a governmental ratings board for advertising? Before giving the government still another task, because of alleged "imperfections" in the market, consider the dismal record of the government to date. The graft and corruption unearthed by Ralph Nader and his associates should give pause for thought. Regulation agency after regulation agency, from ICC and CAB to FTC, FPC, and others, have been shown to be regulating industry not for the benefit of the consumer, but for the benefit of the industry as against the consumer. And this is not just an accident. There is a reason for it.

Each of us is a purchaser of literally thousands of items, but producers of only one. Our ability to influence regulatory legislation passed by the state is, therefore, much more concentrated as producers than as consumers. Government agencies, accordingly, tend to regulate in favor of the producing industry rather than the mass of consumers. In fact, government regulatory agencies tend to be set up by the very industries they are to regulate. Milton Friedman, in the chapter entitled "Occupational Licensure" in Capitalism and Freedom,[3] brilliantly demonstrates the dismal record of governmental rating agencies in the medical field. There is no reason to assume that a rating agency in advertising would be any different. Rather, it would not be surprising if the calls for governmentally regulated "objective," "informational" advertising were begun by the larger, established advertising firms as a way of slowing down the rising competition from smaller firms and newcomers.

But the strongest argument against governmental regulation of advertising is not the empirical one showing its dismal record to date, strong though that may be. The strongest argument is the logical one. The reasoning employed by those who want governmental regulation contains a self-contradiction. On the one hand they assert that the American people are unalterably gullible. They must be protected because, left to their own devices, they become victims. They can be made to think, for example, that if they use a certain brand of aftershave lotion, they will end up with the girl in the ad. On the other hand, the argument assumes that the boobs are smart enough to pick political leaders capable of regulating these sirens. This is impossible.

In any case, if the public is sufficiently enamored of "objective" information on consumer products, it can avail itself of the services of firms and organizations such as Consumer Reports, Good Housekeeping, the Better Business Bureau, commercial testing laboratories, and other private-enterprise certification agencies. The free market is flexible. It can provide this kind of service too. (But the inability to separate motivational and informational advertising still holds. When Consumer Reports states that Zilch Flakes are the best flakes to buy, it is necessarily motivating people to "buy Zilch" over and above other flakes. It cannot provide information without providing any motivation to do anything.)

Advertising can be defended only when it occurs on the free market. In the case of government or government-aided big-business advertising, none of the free-market defenses hold. Here, people are forced to pay for the advertising whether they choose to buy the product or not. When the government advertises, it is with tax money collected on an involuntary basis. The advertising in which the government engages is highly motivational ("Uncle Sam Wants You") and not infrequently fraudulent. It is strange that government advertising has been so completely ignored, even by the most vociferous critics of advertising. Imagine what would ensue if a private businessman were to engage in fraudulent advertising on even 1 percent of the scale committed by Franklin Roosevelt, Lyndon Johnson, or Richard Nixon, who campaigned on advertised peace planks, and yet involved the country in foreign wars. How can we entrust punishment of fraudulent advertising to the worst fraudulent advertisers of all time — the government?

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Finally, advertising must be defended by those who believe in freedom of speech — for that is all advertising is. It is all too easy to defend the right to speak of those whose speech we favor in any case. But if the rights of free-speech are to mean anything at all, those who are not in public favor must be defended.

Libertarians anxiously await a defense by the American Civil Liberties Union of the free speech rights of advertisers. This organization was ominously quiet during the banning of cigarette commercials from television.

Notes

[1] For the view that it was not the government that initiated controls of this type in an effort to regulate business in the public interest, but rather business in an effort to control the competition of newcomers, see Gabriel Kolko, Triumph of Conservatism (New York: Quadrangle, 1967).

[2] This point has been made by Professor Benjamin Klein of the department of economics, University of California, Los Angeles.

[3] Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962).