Advertising, The Uneasy Persuasion

Its Dubious Impact on American Society

Michael Schudson

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9781138966185
• eBook ISBN: 9781136668258
• Edition: 1
• Topic: Business
• Subtopic: Advertising
• Index: Business

What does advertising do? Is it the faith of a secular society? If so, why does it inspire so little devotion? Advertising, the Uneasy Persuasion is a clear-eyed account of advertising as both business and social institution.

Instead of fuelling the moral indignation surrounding the industry, or feeding fantasies of powerful manipulators, Michael Schudson presents a clear assessment of advertising in its wider sociological and historical framework, persuasively concluding that advertising is not nearly as important, effective, or scientifically founded as either its advocates or its critics imagine.

'Dispassionate, open-minded and balanced... he conveys better than any other recent author a sense of advertising as its practitioners understand it.' Stephen Fox, New York Times Book Review

First published in 1984.

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The Advertiser's Perspective

THE BASIC FACT to remember about advertising,” Jeremy Tunstall wrote in his study of British advertising agencies, “is that little is known about what effect it has; even to talk of advertising having an effect is misleading.”¹ This is not exact. More precisely, much is known about the effects of advertising, but the results do not, and by the very character of business practice, cannot add up to a simple or consistent conclusion.

Manufacturers and retailers who want to use their advertising dollars efficiently worry about the effectiveness of advertising. So do advertising media that live off advertising revenue and seek to encourage businesses to advertise. So do advertising workers themselves. One of the fathers of American advertising, George Rowell, reminisced in 1905 about advertising in the 1860s, and observed:

Then as now the idea that “advertising always pays” was promulgated and the assertion was made then as frequently as now, and is now made as frequently as then that advertising does not amount to anything and is a waste of money.²

In the 1980s, as at the turn of the century, the same thing can be said. Indeed, the view that advertising works and that it doesn't work may be expressed by the same person. A copywriter at one of the ten largest ad agencies wondered out loud, when I spoke to him, if advertising really sells products:

Ads don't sell products, do they? Take Charlie the Tuna. Do you really go into the store and buy Starkist because Charlie the Tuna said they're picky about what they put in the can? The kind of ad that sells, that has to sell, is retail advertising, the one that says, Starkist Tuna, fifteen cents off.³

Then the same man, in the same interview, noted that Procter and Gamble spends enormous sums on advertising and that “they have research up the ass to show it works. They know their ads work.” Well, does she or doesn't she?

The few economists who have studied advertising closely conclude that it has modest effects, at best, on general consumer demand for advertised goods. Julian Simon, for instance, concludes his overview of the economics of advertising in this astonishing manner:

Those branches of advertising which are most in dispute—advertising for such products as beer, autos, soap, and aspirin—do not seem to have much effect upon the economy in any way, direct or indirect, and hence from an economic point of view it is immaterial whether they are present or absent…. All this implies that the economic study of advertising is not deserving of great attention … (As the reader may realize, this is not a congenial point at which to arrive after spending several years working on the subject.)⁴

Not everyone takes so dubious a view. While economists tend to be skeptical about the power of advertising, many television and radio stations, magazines and newspapers, market research firms, and the trade associations representing these various groups, generate data to suggest to potential advertisers the power of advertising. The advertising agencies and the media can argue the point either way. If they are trying to convince an advertiser to increase its media budget, they can cite examples of devastatingly successful advertising campaigns. But if they are defending themselves before the Federal Trade Commission (FTC) or a civic organization decrying television advertising to children, they trot out the data that demonstrate that advertising has slight or no effect on product sales. Advertising research, advertising trade journals, and conferences of advertising practitioners repeatedly assert that advertising is an effective business tool, but one wonders if they do not protest too much and reveal an underlying uneasiness about their trade.

Does advertising help sell products? That is the question I will address in this chapter.⁵ Again, I focus on the national consumer goods advertising that makes up most of what people see on network television and national magazines and some of what they see in newspapers and other media. This is the advertising that plays a role in shaping the values of a consumer culture and is the advertising most often a subject of controversy and cultural and political criticism. This is the advertising most often said to deceive or mislead people or to persuade them by a variety of emotional means to buy things that they would not, rationally and independently, choose to buy on their own.

Does this advertising move goods? In particular, does it move goods in a socially significant way, not just shifting consumers from one brand to another, but leading consumers to try and to be loyal to categories of goods they would not otherwise have wanted? Strange as it may seem to the citizen bombarded with hundreds of advertisements every day, this is not an easy question to answer.⁶ Even when advertising works, it works in concert with other tools of marketing and it attracts the attention of consumers who are simultaneously influenced by product information from a wide variety of other sources. As I shall now detail, the realities of marketing lead businesses to use advertising while limiting the weight they place on its power to persuade. Advertisers' goals for advertising and their strategies of deployment reduce the risks they take on advertising and, at the same time, limit their ability to evaluate the direct impact of ads in selling goods.

The Realities of Business Marketing Practice

THE ADVERTISING/SALES RATIO AS ARTIFACT

How does a firm decide how much money to spend advertising its products? From the point of view of a marketing professor, the rational approach to determining an advertising budget would be for a firm to arrive at a decision model based on “marginal analysis” so that it would keep increasing the budget as long as the increase is outstripped by the marginal revenue it brings in.⁷ In practice, there is rarely adequate data to make marginal calculation possible. Most firms resort to rules of thumb. A. J. San Augustine and W. F. Foley found that large American advertisers rely on “essentially illogical” approaches to determine their advertising budgets. Colin Gilligan replicated their survey in Britain and found that the British are also “irrational.” More than three-fourths of the ninety-two British companies surveyed calculated their ad budgets as a fixed percentage of either the previous year's sales or profits or the next year's expected sales or profits.⁸ In most cases, the percentage taken had remained unchanged for at least four years and was applied regardless of market conditions. Marketing scholars David Aaker and John Myers find this procedure “disturbing,” and well they might.⁹ Instead of acting as if advertising causes sales, businesses create a situation in which sales are quite literally the single determinant of advertising expenses. This practice makes it “almost always impossible to estimate the impact of advertising on sales volume.”¹⁰

In one of the most thorough econometric studies of the effects of advertising, Richard Schmalensee found that there was a closer correlation between consumption in a given quarter and advertising in the next quarter than between consumption in the given quarter and advertising in the previous quarter. Schmalensee concludes:

We find … that total national advertising does not affect total consumer spending or consumer spending for goods. We find that changes in total national advertising can be well explained by a model which postulates gradual adjustment to changes in the sales of consumer goods.¹¹

More recent studies have replicated this finding. This aggregated data may simply not be appropriate to the questions at issue. But to the extent that there is an answer to the problem of whether, in the aggregate, advertising causes sales, the answer seems to be no, sales cause advertising. And business practice ensures that this will be so. Field experiments varying the amount of advertising and measuring the results on sales have been relatively rare. Especially rare are experiments that dare to lower advertising expenditures below current rates. In a number of these cases, including a celebrated set of experiments at Anheuser-Busch for Budweiser beer, reducing advertising expenses actually led to increases in sales. It is very likely that many firms spend more on advertising than, for their own best interests, they should.¹²

CONFOUNDED VARIABLES: QUALITY OF PRODUCT, ADVERTISING, AND SALES

Not only do ad dollars tend to follow high sales; ad dollars also tend to follow good products, or at least, pretty good products. That is, within a product area, firms will tend to put advertising power behind products that they genuinely believe (and that independent studies actually find) to be products of high quality. This point is made by an FTC study of prescription drugs. In the oral-diuretic drug market, brands offering “important therapeutic gains” were promoted on the average $1.25 million more annually than brands offering no therapeutic gain. There was, however, an even greater promotional expense for brands offering “modest therapeutic gains”—$1.44 million per year more than brands offering no therapeutic gain. Similarly, with antianginal drugs, brands offering modest or important therapeutic gains were promoted with more dollars than those offering no therapeutic gains. Firms tend to put advertising dollars behind products whose high quality—or pretty high quality—is likely to be a stimulus to sales itself.¹³

Indeed, it can be argued that advertising promotes or encourages quality products. The more advertising for a product, the more incentive a manufacturer has to keep quality high, since with advertising the consumer has a resource for identifying the product and can stop buying an unsatisfactory product. For repeat-purchase products, the argument goes, advertising can at best lead a consumer to make an initial purchase. From then on, the consumer is greatly influenced by experience with the product itself. For the many household items on which so much advertising is lavished, manufacturers count on repeat purchasing, And repeat purchasing depends on consumer satisfaction. Product quality, then, may have more effect on brand loyalty than advertising does.¹⁴ This is a preponderant view among advertising workers themselves. In the advertising industry, one of the most frequently repeated slogans is, “Good advertising kills a bad product.” Good advertising, that is, can lead a consumer to try a product once. If it is a bad product, the consumer will shun it thereafter and let others know, too, that it is a bad product.

Advertising ideology of this sort should not be taken at face value. The idea that good advertising kills a bad product, first of all, actually refers to bad brands in a product category. It does not mean that consumers will shun dangerous products like cigarettes. Nor does the aphorism accurately account for the sale of products whose quality or cost-effectiveness the consumer cannot easily judge. Life insurance and medicines are notorious instances where consumers continue to buy advertised “bad” products because they are not able to make sound judgments about quality.¹⁵

Not all advertised goods, clearly, are quality products; advertising can be used to give the sheen of status and quality to inferior goods. Nevertheless, in product categories where consumers can judge quality for themselves, there are strong business reasons that advertising will follow quality. If so, it can be argued that quality of product leads to sales (or repeat sales) and that advertising acts only as a mediating factor.¹⁶ Generally, this is well accepted. No one doubts that product quality combined with moderate prices brought on the Japanese challenge to the American automobile industry. Datsun, Honda, and Toyota advertising is certainly attractive but none of the hand-wringing about the decline of Detroit has suggested that marketing practices have won the American consumer to the imported car. Quality and price have made the difference.

THE “MARKETING MIX”

Advertising is but one part of the “marketing mix” of a firm. The advertising most visible to the consumer is a very small part of the marketing efforts of most businesses. Personal selling—human sales representatives—are still vital to businesses. Firms that sell industrial products rather than consumer goods tend to rely heavily on sales representatives. So do some consumer goods firms. Drug companies employ more than twenty-five thousand “detail men” earning $25,000 to $50,000 each to call on the two hundred thousand private physicians and seven thousand hospitals in the country.¹⁷ Even when a firm uses consumer advertising, it may work not only by moving consumers to buy but by motivating the sales force to sell. Coca-Cola advertising, a McCann-Erickson advertising executive has said, “tells the salesmen how to sell a product. It gets them excited about it. It creates an elite product for them. It energizes them.”¹⁸

Only part of a firm's promotional budget goes to advertising. What is called “sales promotion” is generally distinguished from advertising. Advertising is an announcement, a kind of informational or persuasive message about the product for sale. Sales promotion is the provision of some material benefit to the consumer who buys the product (cents-off coupons, premiums, games, sweepstakes) or to the sales people who push the product (travel awards, electronic equipment, cars, and trucks for outstanding sales records). And sales promotion is a major marketing tool in many industries. The food industry, for instance, spends more money on coupons than on television advertising. In a 1979 survey of fifty major package good companies, less than half of marketing dollars were found to go to advertising: 40.5 percent to ads, 34.7 percent to promotion to the trade, and 24.8 percent to non-advertising modes of consumer promotion.¹⁹

Sales promotion often emphasizes a reduced price as enticement to the consumer—as in coupons. This kind of promotion is not only an alternative to advertising but an antagonist of it as well....

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title
• Original Copyright
• Dedication
• Table of Contents
• Acknowledgments
• Preface to the Paperback Edition
• Introduction
• 1 The Advertiser's Perspective
• 2 What Advertising Agencies Know
• 3 The Consumer's Information Environment
• 4 An Anthropology of Goods
• 5 Historical Roots of Consumer Culture
• 6 The Emergence of New Consumer Patterns: A Case Study of the Cigarette
• 7 Advertising as Capitalist Realism
• 8 An Evaluation of Advertising
• Afterword
• Notes
• Index