Mises Wire

Advertisers Aren’t As Powerful As We Think

With Super Bowl Sunday nearly upon us, we’re once again hearing about all the high-priced television ads scheduled for the event that will amuse and influence us while convincing us to buy the advertisers’ products. For many people, football has even become secondary to the advertisements. 

Many viewers may indeed by amused by the advertisements. There is a problem for the advertisers, though. It’s unclear that the ads will actually do much to convince viewers to buy the featured products. 

There is growing evidence, it seems, that suggests the under-thirty demographic simply doesn’t respond to advertisements, and that brand loyalty is becoming virtually non-existent in an age when consumers rely more and more on third-party evaluators such as Yelp and Amazon to provide insight into whether or not a product is worth one’s time and money. 

Many of these discussions about how ads don’t work anymore, however, continue to rely on what is probably an incorrect assumption — namely that advertisements have worked perfectly well in the past. 

Indeed, the evidence has always been rather sketchy as to how much advertisers can actually influence the public’s thoughts about goods and services, and consumers have never been at the mercy of advertisers as many seem to think. 

Do Tobacco Companies Trick Us Into Smoking? 

Nevertheless, our faith in the power of advertising — and it’s political variant, known as “propaganda” — has long been nearly unshakable.

For example, an often repeated anecdote used to support this view is the one in which we are told that the world opposed female use of cigarettes until some advertisers convinced everyone to abandon their long-held social views and embrace tobacco for all. This version of history often claims that Edward Bernays, the “father of public relations” devised ingenious advertising methods that manipulated people into abandoning their own existing value systems in favor of whatever advertisers put forward. 

But, as Bill Wirtz recently demonstrated, the rise of female smoking also accompanied enormous social changes brought on by the First World War and new physical and economic conditions imposed on women. Rather than revolutionizing social thought, as is often assumed to be the case with Bernays and the tobacco ads, it is also entirely plausible that Bernays simply rode the wave of social change. 

Notably, in the 1940s, Ludwig von Mises was skeptical of the idea that advertisers are able to manipulate people into doing whatever the advertisers want. Mises writes

It is a widespread fallacy that skillful advertising can talk the consumers into buying everything that the advertiser wants them to buy. The consumer is, according to this legend, simply defenseless against “high-pressure” advertising. If this were true, success or failure in business would depend on the mode of advertising only. However, nobody believes that any kind of advertising would have succeeded in making the candle makers hold the field against the electric bulb, the horse drivers against the motorcars, the goose quill against the steel pen and later against the fountain pen. But whoever admits this implies that the quality of the commodity advertised is instrumental in bringing about the success of an advertising campaign. Then there is no reason to maintain that advertising is a method of cheating the gullible public.

In other words, real-world conditions are a key factor in forming people’s ideas and attitudes, and simply telling them things isn’t enough. 

But what about when those tricky advertisers use more subtle methods such as subliminal messaging? Bernays himself was said to use these, and the issue of control through subliminal messages has long been popular. It perhaps peaked in conspiracy-themed popular culture of the 1960s and 70 — as with The Manchurian Candidate and The Parallax View — when characters were controlled by implanted thoughts and subliminal messages. On the other hand, according to Randall Rothenberg

[T]here was — and still is — little proof that these efforts to engineer action through manipulation of the unconscious led to any behavioral changes favorable to specific marketers. As for James Vicary’s experiment in subliminal advertising -- it was a hoax: Vicary later admitted that he hadn’t done what he’d claimed. Several subsequent studies of the effectiveness of embedded messages have shown it to be virtually impossible to use them to produce specific, predictable responses. Still, faith in the power of the media to induce millions of people to act contrary to their better judgment or conscious desires remains profound.

Even outside the realm of ultra-subtle messaging, the evidence has been contradictory. Rothenberg continues: 

Time and again researchers have found it difficult to correlate the content of advertising campaigns with long-term economic effects. Some advertising content, notably price and product information, undeniably moves consumers, but only temporarily and in limited numbers. The ability of advertising to persuade large masses of people to change their attitudes and induce action that permanently alters a company’s fortunes -- no one really knows how that works. In the conclusion to his 1942 study The Economic Effects of Advertising the Harvard professor Neil Borden reached a series of judgments that must have unsettled his industry sponsors. “Does advertising increase demand for individual concerns?” he asked. Sometimes yes, sometimes no. Does it affect production or distribution costs? “Indeterminate.” Does it lead to a concentration of supply and anti-competitive pricing? Sometimes yes, sometimes no. 

This isn’t to say that advertising has no effect. It is fairly clear that it has an effect of some kind. But, those effects are often not what the crafters of the messages intended. Moreover, consumer behavior appears to correlate at least as much with real-world changes in physical and economic conditions as with the efforts of marketing executives. The Institute for Economic affairs reports:

[A]nother study confirmed what economists have always known. Looking at sales of alcoholic beverages in the US over 40 years, it found ‘changes significantly correlated to fluctuations in demography, taxation and income levels – not advertising. Despite other macro-level studies with consistent findings, the perception that advertising increases consumption exists. The findings here indicate that there is either no relationship or a weak one between advertising and aggregate category sales. 

So, did Bernays convince women to go against their own beliefs and start smoking? There’s no reason to look to Bernays’s alleged marketing “genius” any more than we should look to changes in income levels and urbanization rates among women in the 1920s. 

When confronted with the fact that we know so little about whether or not ads work, many will claim that companies wouldn’t spend so much money on advertising it it didn’t work. This theory, however, gives far too much credit to companies which are often just using a process of trial and error. 

In truth, companies expend immense amounts of resources on advertising campaigns only to have them fail miserably if consumers fail to show interest in the product. What’s worse — from an advertiser’s point of view — is the fact that their products are subject to comparison with other, possibly superior products. As Mises notes “the tricks and artifices of advertising are available to the seller of the better product no less than to the seller of the poorer product. But only the former enjoys the advantage derived from the better quality of his product.”

Advertising may work in many cases, but the advertisements are dependent on the consumers concluding that the advertisement is, in fact, correct. 

The immense graveyard of failed companies and failed products is a monument to the fact that, if advertising does indeed “work,” then it is largely due to reasons beyond the control of any single advertiser. 

Moreover, in actual practice, all that is needed for companies to keep spending money on advertising is the belief by the owners that it works, and that the ad campaigns not waste so much money that the enterprise is actually driven out of business immediately. Even if a business fails to provide products consumers want, it may continue to pay millions for ad campaigns, right up until the day it declares bankruptcy.

We’re Not All Helpless in the Face of Propaganda 

Understanding the relative weakness of advertisers in important because it addresses the long-cherished view among many anti-capitalists that consumers are victims of advertisers who “brainwash,” “trick,” or otherwise manipulate consumers into buying their products. 

Private markets are often blamed for a host of social ills from depression to poor health since, it is assumed, consumers are powerless to refuse to buy Big Macs and packs of Marlboros when faced with the power of advertisements. The Guardian for example, also claims that advertisements are making the United Kingdom “poorer, less happy and less kind. It’s time to halt the spread [of advertisements].” 

The truth, however, as illustrated by so much conflicting and inconclusive data on the effects of advertising, is that people don’t do things just because someone on TV tells them to do so. 

Perhaps no recent example shows the shortcomings of this sort of messaging better than the 2016 election, Perhaps at no other time in recent history, have Americans been so continually subjected to a unified barrage of what can only be described as heavy handed advertisements by famous people, powerful people, and professional advertisers. 

There were, of course, the endless professionally-produced political ads telling voters to vote for Hillary or to vote against Donald Trump. On top of that, there were countless celebrity endorsements of Clinton, a multitude of late-night jokes lampooning Trump, and news-media coverage that was overwhelmingly in favor of Clinton

And yet, in the end, Donald Trump won the election, Republicans made gains in multiple statehouses, and the GOP retained control of both the  US House and the US Senate. 

Over the course of the campaign, Clinton outspent Trump 2 to 1, and among so-called outside groups, “Pro-Clinton ads outnumbered pro-Trump ads 3 to 1—a mind-numbing 383,512 ads for Clinton compared to 125,617 supporting Trump.”

But hey, candidates wouldn’t spend money on advertising if it didn’t work, right? The problem is, it only works if people don’t hate your product to begin with.  

Image Source: "Wally Gobetz" https://www.flickr.com/photos/wallyg/
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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