When i first learnt econo-mics 30 years ago, I was taught to despise advertising. Economics was about the allocation of scarce resources between competing ends. Advertising, which inflamed desires and distorted choices, interfered with this process. Worse still, it interfered with economic models which were based on rational preferences, and perfect information. The case against advertising was put with elegance and wit by John Kenneth Galbraith and with earnestness and research by Nicholas Kaldor. Kaldor even developed a plan for a tax on advertising. He came close to implementing it with his selective employment tax.
Most people in the advertising industry simply laughed all the way to the bank, but occasionally they commissioned rebuttals of this conventional wisdom among economists. They were not, as a rule, well-served. Corrupt academics could occasionally be persuaded to write tracts on behalf of the industry. They attempted to argue that, far from adding to costs, advertising led to lower prices through economies of scale; and that the stimulation of demand through advertising was a precondition of full employment. Identifying the fallacies in these arguments was well within the competence of most economics undergraduates.
At this point, I have to declare an interest. As Winston Fletcher says, the venality of book reviewers is usually inspired by cronyism rather than danegeld. So I must acknowledge that Winston is a friend, that his daughter Amelia is an economist who has worked with me for several years, and that his book contains several laudatory references to an article I wrote called: "Is Advertising Rational?" And if I say that this book is extremely well-written, you must bear these things in mind.
But there are more than these personal reasons why economists and advertising people can now be friends. In the past 20 years, economists have developed models of a world where information is inevitably imperfect and advertising has a constructive role to play. And advertisers have discovered that analysis and quantification can help them get more for their money.
The modern version of this story is a complex one. If advertising is the product of a world of imperfect information, we have to explain why so much advertising appears to contain no information at all. There are, of course, many different kinds of advertising. If you look through the advertisements in Prospect, most of them are informative. They describe, for example, dull lectures in dreary venues. At the other end of the spectrum is the television advertisement. If, like me, you watch television infrequently, you will have to wait until the last few seconds to have any idea what is being advertised. Sometimes you will not know even after you have seen it.
In this vein Fletcher describes a visit to Warsaw to persuade the Poles of the merits of modern western advertising. He showed them a collection of videos: chimpanzees drinking PG Tips; Heineken refreshing the parts other beers cannot reach; and Hovis celebrated to the nostalgic strains of Dvorak's New World symphony. Sadly, he says, the Poles found these offerings difficult to understand. "If the public in Britain already knows about the brands, as you say, why is it necessary to advertise them? Surely it is unnecessary to tell people about brands they already know. It must be very wasteful!"
The Poles seem to be right, and yet the contentlessness of modern advertising is the product of long experience. Advertisements were once full of information. Coca-Cola was healthy, refreshing, the preferred drink of ladies. Today, these assertions have disappeared. Coke is it. It is the real thing. It is hard to invest grammatical sentences with less information.
And Coke is not alone in denuding its advertisements of content. Most brand advertising is like that. The only information they contain is that the advertiser has spent a lot of money. But that is important information. As Fletcher explains, a pint of Guinness costs ?2.32 (less in Oxford, Winston). It is not worth taking a prime time slot to persuade Fletcher to spend ?2.32. But if he buys one a week for 15 years, his spending is ?1,809.60. By advertising, I tell you I intend to stay around for a long time. Otherwise, it would not be worthwhile advertising it. That is all brand advertising does. We have learnt, through experience, that branded products are of good quality and if the advertiser stops supporting the brand we have good reasons to suspend our purchases. It might be better if we relied on Which? But Which? and Prospect readers are, and will remain, a small minority. Sorry about that.
Advertising, Advertising
Winston Fletcher
Profile 1999, ?16.99
