Advertising in a Free Society

Advertising in a Free Society

Ralph Harris and Arthur Seldon. 16 Sep 2014

A book about the importance of freedom within the advertising industry

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Summary

In practice it is impossible to distinguish between advertising that is intended to be persuasive and advertising that is intended to be informative. Persuasive advertising normally has information content and even basic information provided by a company about its products will normally be intended to make consumers more interested in the product.

Advertising is more likely to reduce, rather than increase, costs and prices. Advertising increases the extent of the markets in which companies are able to operate, therefore leading to greater economies of scale. This is confirmed by the empirical evidence.

Advertising effectively subsidises the press and broadcast media.

It is a mistake to regard advertising as a waste of resources which, if it were regulated, could be eliminated. Businesses have to transmit information about products in one way or another. If they did not advertise, they would have to find other – probably more expensive – ways to do this.

There is no evidence that advertising creates monopolies. Indeed, if anything, advertising increases competition by improving information to consumers.
Advertising is less of a reflection of corporate power than of corporate vulnerability. Advertising tends to be used by established companies as a way of building brand loyalty.

The evidence suggests that advertising is not manipulative in any meaningful sense. It is not an important determinant of consumer behaviour, though it can help build brand loyalty. Certainly, advertising does not effectively contrive ‘wants’ in the way suggested by critics such as J. K. Galbraith.

All serious studies of the advertising of alcohol and tobacco suggest that it has the same impact on the overall consumption of these products as on the consumption of any other product: none. This is a conclusion that is at odds with the assertions of political campaigners.

An attack on advertising is, in effect, an attack on free speech. While commercial free speech may not be valued as highly by some as other forms of free speech, it should, nevertheless, be defended as an important principle.
Ironically, though it is politicians who are responsible for any prohibition or limitation of advertising, it is advertising by politicians themselves that Harris and Seldon found to be systematically and incorrigibly dishonest.

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2014, Hobart Paper 176