Is advertising wasteful?
Critics of capitalism sometimes suggest that advertising is wasteful, diverting resources into promoting goods that might otherwise be used to lower the price. Advertising is an extra, factored into production and sales, and adding to the costs. It has even been claimed that advertising is coercive, tricking a gullible public into buying goods and services by bombarding them with positive images instead of trying to sell on the basis of quality.
Advertising is often informative. It tells the public what goods are available, in what varieties and at what prices. It is a very competitive industry, with creative minds vying with each other to find new and attractive ways of appealing to what the public is looking for, and of emphasizing the merits that people seek in the goods they buy.
Advertising is often used to promote new or improved products by announcing the edge they have over their rivals. Although established brands use it to maintain their edge if they can, newcomers use it to tell the public about some of the alternatives that are now available.
The industry is self-regulated, not permitting ads that try to sell goods by making people feel inadequate or inferior without them. Instead they have to stress the positive aspects of their products. Persil used to advertise by showing the white-clothed child alongside they grey-clad one. Moss Bros for years ran ads in which the helplessly underdressed man was being sneered at by his superiors, with the slogan, “Surely he’s heard of Moss Bros?” Neither would be allowed today.
Some intangible associations add value to products by creating an image for the product that enhances the enjoyment of it. Malt whisky in India is promoted as an aspirational product, so the young Indians who sip it enjoy not only the whisky, but the feeling that they are headed for success. And long after the whisky and its attendant hangover have gone, the memory of that feeling might endure. When some products are bought, the purchaser buys into a lifestyle linked to them by advertising, and enjoys the intangible associations they bring.
Sports companies are sometimes criticized for promoting expensive brands that young people are encouraged to buy into. But the fact is that many teenagers are still discovering who they are, and the brands help them to assert an identity linked to their associations. Long after the clothes and trainers have hit the bin, the feeling of cool that they evoked can persist. In many ways these intangibles are the most durable of all consumer goods.
Far from being wasteful, advertising promotes competition, and that keeps prices keen and quality high; and the images created for products enhance the value of those goods to the purchaser.
Madsen Pirie