The positive aspects of modern advertising

I remember the time when advertising often tried to make people feel inferior and inadequate if they didn’t use their product. Amplex (body odour), Moss Bros (looking shabby), Persil (embarrassing your family with grey shirts), worked by manufacturing anxiety and then offering the cure. They were psychologically manipulative in a fairly direct way, creating a problem in the viewer's mind that may not have existed before, then selling the solution. The strategy was effective precisely because it exploited social vulnerability, the fear of rejection, embarrassment, inadequacy. This is no longer permitted.

And the prohibition on false claims, enforced in Britain primarily through the ASA and the Consumer Protection from Unfair Trading Regulations, does provide a genuine floor of factual integrity. Measurable claims must be substantiated. This is defensible on classical liberal grounds because fraud is a violation of contract and consent, and adverts that lie to secure a purchase is a species of fraud.

Critiques of advertising, from Galbraith onwards, have been so dominant in intellectual culture that the genuine case for it tends to be undersold.

The most straightforward defence is financial. Advertising underwrites free-to-air broadcasting, newspapers, search engines, social media platforms, and a vast range of online content that consumers receive without direct payment. The implicit bargain, your attention for our content, is one most people accept voluntarily and could opt out of with some effort and usually some payment.

Without advertising revenue, much of this would either disappear or move behind paywalls accessible only to those who can afford them. Advertising is, in this sense, a subsidy from producers to consumers, and a democratizing one.

The informative function, though partial, is real. When a new product enters a market, advertising is frequently the mechanism by which consumers learn of its existence. Price advertising, supermarket leaflets, comparison sites, and promotional campaigns, directly enable consumers to make better purchasing decisions. The classified ad, the trade directory, and the sponsored search are advertising in forms that are almost purely informational and clearly welfare-enhancing.

Heavy advertising in a competitive market typically signals that firms are competing for consumers rather than colluding against them. It raises the cost of complacency. A firm that stops advertising risks losing share to rivals who do not. This competitive pressure tends over time to improve products and reduce prices, as firms must justify their claims and earn repeat purchases. Markets with vigorous advertising are often markets with vigorous competition.

Advertising finances innovation. The prospect of being able to advertise a successful new product is part of the return that justifies investment in developing it. The pharmaceutical, technology, and consumer goods industries all depend partly on the ability to communicate new products to mass markets. Restricting advertising, as some propose for alcohol, food and financial products, reduces the incentive to innovate as well as the ability to recoup development costs.

Advertising reflects and shapes culture, instead of merely debasing it. At its best it has produced genuine cultural artefacts such as the Guinness surrealism campaigns, the Economist poster series, certain John Lewis Christmas advertisements, and the early Volkswagen campaigns in America that deployed wit and self-deprecation to overturn consumer assumptions. The Oxo family, the coffee couple, the Hovis bicycle boy. These are not trivial achievements. Advertising has been a vehicle for graphic design, photography, music, and copywriting of genuine quality, and has brought those art forms to mass audiences who would not otherwise have encountered them.

It enables small producers to reach large markets in underappreciated ways. The independent craftsman, the regional food producer, and the small technology firm find that advertising gives all of these access to customers they could not otherwise reach. Digital advertising in particular has dramatically lowered the cost of entry, allowing a small business to target relevant consumers with precision that was previously available only to large corporations. This is a genuinely liberating development for market entrants.

The strongest case for advertising is not that it is always benign or that its persuasive elements are unproblematic, but that it is an integral mechanism of the market economy, one that allocates information, funds public goods, enables competition, and connects willing sellers with willing buyers at a scale and efficiency no alternative has matched. Its abuses are real but separable from its functions. The answer to manipulative advertising is not less advertising but better-informed consumers and, where necessary, enforceable standards on factual claims, which is broadly where we currently stand.

Madsen Pirie