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Neo Liberal/Pro Market View

• 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

Neo Liberal cont’d

• 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

Neo Liberal cont’d

• 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

The Reform View

• 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 loyalty: the bigger will win, so oligopolies emerge, reducing market competition

Reform Cont’d

• 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”

The Critical Perspective

• 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, anti- materialism
• 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