Advertising
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In 1998, $351 billion world wide
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Source: The Penguin Atlas of Media and Information, Penguin, 2001.
Average Expenditure per person: $300 or more in the
US ( which has 43% share of world market)
Canada ( which has 1.9% share of world ad market)
averages between $100 and $199
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Almost equal 6 way split: radio,TV,mags, news, cinema, outdoor
CMNS 130
Learning Objectives
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What is advertising?
What are its economic characteristics?
Three views of advertising
Typical Regulation of Advertising
What are its effects?
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Definition
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Persuasive message to buy, sell or change
behavior
Biagi: involves payment to place message and
identification of sponsor as well as selling of
goods and services
Also involves the latin meaning of take note or
consider– that is the goal is to be noticed
Fleras argues there are structural, functional
and ideological elements to the definition ( text:
176)
CMNS 130
Definition Cont’d
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One element of the 4 Ps of marketing ( production,
pricing, promotion, etc)
An indirect or third party form of financing the media
Used to be the dominant form of media financing– still is
in television,mags and newspapers
But in 1990 in electronic media direct consumer payment
( subs, pay per view) exceeded ads
Central to consumer culture: establishing the codes,
cultural norms, expectations of consumption, and market
signalling
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Main Forms of Financing the
Media
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Advertising
Direct Subscription ( cable,
newspapers, etc)
Transaction Revenues
Licence Fees ( BBC)
Taxes ( CBC/ matched by Ads)
CMNS 130
Role of Advertising
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Principal sources of revenue for:
newspapers, radio, television,
magazines
Not books, film, sound recording, or
telecommunication
Uncertain but growing role in the
Internet
CMNS 130
Economic Functions of
Advertising
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Generating profits by selling products
or services
Fostering brand name recognition
Establishing corporate ‘good will’ or
corporate image for social
responsibility
Supporting the economic status quo
CMNS 130
Social History of Advertising
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Earliest known ad 1000 BC offered a “whole
gold coin” for the return of a runaway slave
Only began in mass form with the printed
press after Gutenberg
Associated with the rise of mass production
techniques in capitalism especially in 20th
century
Needed to stimulate mass demand,
synchronize or aggregate demand with
oversupply
CMNS 130
Economic Characteristics
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A function of the gross domestic
product: tied to business cycle
Segmented by global/national/local
markets
Newspapers and Radio: mostly local
retail
TV mostly national/ international
CMNS 130
Economic Paradox
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Just under half of world advertising
spending is from US
Yet 2/3rds of world population cannot
afford the goods the US advertises
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Economic Characteristics 2
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Ad rates rise in condition of
monopoly/oligopoly
Ubiquitous
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Less than 5% of all TV signals are non
commercial
Few magazines, news or other sources are
without ads
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Economic Characteristics 3
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Mainstream, ad supported media exist
to make money from advertisers
Content and style are often reshaped to
comply with demands of ads in a highly
segmented market
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How? Ads laid out first on a newspaper,
then text
How? Media often reposition to appeal to a
better market segment ( eg. Jake)
CMNS 130
Theories of Advertising
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Neo liberal or pro market view
Reform Liberal or pro regulation view
Critical or anti consumption view
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Neo Liberal/Pro Market View
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Implicit model of the rational consumer,
maximizing self interest
Individual recognises wants, searches,
evaluates and purchases
Advertising aids in the consumer’s search
Serves essential market communication
function in the exchange of messages
between buyer and seller
CMNS 130
Neo Liberal cont’d
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Stigler and the Chicago school of economists
argue that ads reduce search time: make the
consumers ‘foraging’ more efficient
Permit better aggregation of demand, thus
facilitate economies of scale
Decrease unit distribution costs
To the extent ads persuade someone to buy,
provide employment, ensures investment in
production is profitable
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Neo Liberal cont’d
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Problem: are sales linked to advertising or the
business cycle?
Neo liberal studies argue that sales depend on
disposable income, not advertising
Advertising thus mediates market forces, but
does not create them ( limited effects thesis)
Consumer is sovereign
CMNS 130
The Reform View
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Eg. Galbraith et al
Sees from a social welfare standpoint, that
advertising is not productive, but wasteful and
inflationary
Advertising creates ‘false wants’
Promotes hypermaterialism/ hedonism/
environmental degradation
Point to evidence that ads have not grown as a
% of the GNP over time as sign that ads are not
‘productive’, or ‘dynamic’ engine
Furthermore argue that ads ‘buy’ consumer CMNS 130
Reform Cont’d
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Refute thesis of consumer sovereignty
Refutation is easiest in ad-supported
media, where intermediate demand of
advertiser creates valuation: not viewers
Argues needs are created: an oligopoly of
producers control demand
Thus the state must play a central role in
regulating ads or ‘policing persuasion”
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The Critical Perspective
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Eg: Adbusters
Sees Advertising as central to the power structure of capitalism
Goes beyond the reformers, arguing for ‘culture jamming’
Voluntary simplicity, preservation of the environment, antimaterialism
In particular, looks at the system of ownership and control of the
advertising agencies and notes 5 out of the big 8 are American
These huge companies( WPP group, Thompson, Ogilvie and
Mather) integrated to Public Relations Firms which service big
business and big government
A Seamless Web of the Persuasion Society
CMNS 130
The ‘Problem’ of Advertising
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Business pay for ads on shows
Shows on TV ( main channels 100% supported by
ads) or newspapers ( 80% supported by ads) are not
the product
The product is ad time or space sold to advertisers
What advertisers buy is the access to audiences
No direct price signal between consumer and editor
or media
No direct cues as to likes/dislikes or customer
preference
CMNS 130
Fleras’ Argument About
Advertising being the Message
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Irony ( Fleras, p. 177): content or
programming exists to deliver audiences to
advertisers
“ Ads cannot be considered interruptions
when market values prevail; they are the very
foundation for programming in connecting
audiences with consumerism”
CMNS 130
The Myth of Consumer
Sovereignty in Ads
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No direct signal between consumers and media
providers
In fact, share of conventional TV audiences is
declining but ad sales increasing
NOT ALL CONSUMERS ARE EQUALLY
VALUED: SOME ARE DISCOUNTED, AND
SOME ARE PREMIUM
Advertisers’s desire to reach the attractive youth
consumer segment explains ‘Friends’, recent
rise of Reality shows
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Also explains exclusion of the low spenders: blacks,
hispanics or old in the US which are less attractive CMNS
ad 130
The Myth of the Free Ad Lunch
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Costs of ads passed on to consumers: affect 10-15%
of cost of goods.
Current estimates of ads in Canada suggest ad
spending of about $900 to reach each hhld: this is
paid by all, even the poor, whether they want the ads
or not
Such hidden, indirect payment is not known to
consumers
Explains why they prefer ad supported, so called
‘free’ media to pay per view or other services on the
Internet: they are unaware they are already ‘taxed’ by
the manufacturers and distributors of consumer
goods
CMNS 130
The Canadian Small Market
Problem
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Canada has half the per capita size of ad spending
as the US– tougher market for Canadian cultural
industries
Overspill of US ads vitiates demand
 Segments of the industry: ( health, law etc) are either
publicly owned, or prevented from advertising
 Retail sector in Canada has not been as competitive
In TV, if US programs are more popular: Canadian businesses
prefer advertising on US shows, weakening indigenous
production markets ( a vicious circle) thus weakening
competition, and leading to increase in market dominance and
higher US ad rates
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CMNS 130
Policy Responses to small
market problem
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Income Tax Act prohibits spending on US media as an
allowable business expense in Canada
This is intended to protect ‘diversion’ of ad money south of the
border
Regulations: ( Canadian Radio-television and
Telecommunications Commission) create rules like the “
simultaneous substitution rule” which allows Canadian
stations who have bought the rights to a program to insert their
ads sold against it in the imported US signal
Tax money used to subsidize public/non commercial media (
CBC, community TV)
As well, tax money increasingly being used to ‘advertise’ in
public sector areas
 Public health issue: allow, like the US pharmaceutical
manufacturers to advertise to Canadians?
CMNS 130
Attack under Globalization
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Before 1999, Canada’s Magazine Policy prevented ‘split runs’ ( except
for Time Canada and Readers’ Digest)
Goal was to prevent US media companies getting around the Income
Tax Act by publishing ‘virtual’ editions which could scoop Canadian
ad spending without producing Canadian editorial
As well, Canadian magazines were allowed to mail free to their
customers ( unlike US mags) ( see Stoffman, cited in Fleras, p. 208)
US launched a trade protest under the World Trade Organization on
the grounds that magazines offended the rules of free trade:
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National Treatment rule: despite exemption of cultural services from
NAFTA
Canada lost. Instructed to strike down legislation: had to create new ones,
and offer subsidies to Canadian magazine sector
FREE TRADE IN AD SERVICES ON US AGENDA
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Classic Forms of Regulation
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Truth in advertising: deceptive advertising may be a
criminal or civil offense
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Prohibition or strict regs on Ads for hazardous goods (
drugs, tobacco, liquor etc)
Policing Ads directed at children
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( but intent must be established as well as proof of harm)
Ad free zones promoted for very young children, since children
cannot distinguish between an ad and a program
Pre airing censorship: to prohibit violence or other anti social
contents
Other types of ad regulation
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Gender portrayal etc.
CMNS 130
The Terms of the Regulation
Debate
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What is permitted
Who is permitted
When and Where it is permitted
To whom
CMNS 130
Regulation Around the World
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Various levels of constraint around the world
Sexual violence against women in ads is banned around
the world except Argentina, Paraguay and Thailand
Some categories of products/behaviors are deemed
offensive and thereby restricted in certain countries:
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Sanitary products
Toilet paper
Undergarments
Undue attention to breasts or buttocks
Physical intercourse: hetero or same sex
CMNS 130
Canadian Ad Institutions
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The Canadian Advertising Foundation (
CAF)
Advertising Standards Council
Receive complaints and preclear ads
directed at children
CMNS 130
Issues in Advertising
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Recent ad issue concerns:
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Historically, ‘patronage’: control of media content
through sponsorship ( Disney)
Increasingly: ad clutter: more than time allotted ( 18
minutes out of every hour)
Sound /noise offense
Product placement: eg. American Idol
Difficulty in measuring ad impacts
Catholic Church in BC protesting VanCity ad
representing a gay couple ( as part of a resistance
to revision of Canadian marital laws to include
same sex couples).
CMNS 130
Marketing Surveillance Society
Thesis
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Movement to e-commerce on line allows single source,
integrated market research intelligence, new levels of custom
advertising to markets of one
See www.redsherriff.com
An internet tracking company which downloads a hidden
Javascript on to y our browser when you visit one of their
affiliated sites
Can track where you visit, how long you stay, what you bought
and create a full virtual data shadow
Sell it to business who will design a marketing applet to
bombard you
Consumer mobility– tracking and ad campaign design now
central to new forms of market/advertising
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Privacy, issues of ‘informed consent’ and other concerns
CMNS 130
Rhetorical Techniques of Ads (
see Fleras, 202-203)
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1. Shock/Humour/Novelty: to get
attention
2. Repetition
3. Visual Style Codes:
4. Ubiquity
CMNS 130
Social Psychology of Ads
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Maslov’s hierarchy of basic human
needs:
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NOT directly observable:
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survival, physiological sustenance
personal safety
social belonging
self esteem
self actualization
aesthetic, expressive needs
higher level needs become salient when survival
needs are met
CMNS 130
Effects of Ads
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Saturation
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Avoidance
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See now more than 500 ads a day/182,000 a day
Very low levels of recall
Use remote control to dodge ads
Tape and fast forward
Defensive Industry Response: Integration
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Fool consumer by integrating commercial and content: product
placement, seamless infomercials
‘advertorials’
Issue of ‘due process’: are consumers aware of what is an
appeal and what is not?
CMNS 130
Effects Cont’d
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Socio-Cultural
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Psychological
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Used to identify ‘in’ and ‘out ‘ groups
Create ideal role models
stereotyping
Behavioral: induce a buy
Attitudinal: like the product/associate with attributes—
lifestyle appeals
Cognitive: recognize, evaluate what is needed
Political
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Political advertising is more often using conventional
CMNS 130
ad appeals ( celebrity/spectacle positioning )
Content Effects
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Drive to placate advertisers: indirect economic
censorship ( Politically Incorrect case during Attack on
America)
Interrupt content: in newspapers, articles are blocked
around ads: more ads, shorter news holes; drives the
pyramid style of presentation…drive format and medium
expectations
Create high aesthetic standards:4 1.3 million per 15
second ad / Superbowl exceeds even the highest
budgets films …shape novelty/innovation/ imitation
trends
CMNS 130
Ideological Effects
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Advertising defines what is important or desirable
Draws attention to certain aspects of reality while
ignoring others ( Fleras, 171) it is a discourse about
‘reality’
“Manufacture of Discontent” where the only solution is
through Buy Buy Buy
As a system of persuasion, advertising is propoganda
(Fleras, 211)
Have we become citizens of shopping malls?
CMNS 130
Recommended Sources
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Benjamin Singer (1995) “Advertising” A
Sociocultural Force” in Communications in
Canadian Society, 4th ed., Toronto: Nelson.pp.
123-138,
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Richard Jackson Harris (1999), “Advertising” in A
Cognitive Psychology of Mass Communication: 3rd
ed., Mahwah NJ: Lawrence Erlbaum Associates, pp.
71-95.
Leiss, Kline, Jhally: Advertising as Social
Communication
Frank: Liberation Marketing
Klein : No Logo
CMNS 130