Economic effects.
Advertising plays a major role in the distribution of goods from manufacturers to consumers. It provides an effective way for sellers to inform buyers about products. Advertising thus helps manufacturers sell their products and benefits consumers by providing them with shopping information.
Advertising also helps the economy grow by stimulating demand for new products. Manufacturers spend much money to develop new products. Through advertising, they can speed up the process of creating a market for a product and so recover their costs more quickly. Fewer new products would be developed if manufacturers could not use advertising to help sell the products.
Some economists believe that a large amount of the money spent on advertising is wasted. They argue that much advertising simply leads consumers to switch from one brand of a product to another brand. Brand-switching may increase the profits of a particular firm but has no positive effect on the overall economy.
Advertisers include the expense of advertising in the sales price of a product. In some cases, advertising raises the price of a product.
In other cases, advertising helps lower prices by creating the mass demand that supports mass production. Successful advertising makes many people want a product. By mass producing a product and developing a large volume of sales, the manufacturer can charge less per unit.
Social effects. Perhaps the most important social contribution of advertising is that it supports the mass communication media.
Advertising pays all the costs of commercial television and radio. It provides viewers with free entertainment and news programs, though viewers are often irritated by commercial interruptions.
Advertising also pays three-fourths of the costs of newspapers and magazines. Without advertising, readers would have to pay a higher price for newspapers and magazines, and many of the publications would go out of business.
Because the mass media depend on advertising to stay in business, many people question whether advertisers control the media. Generally, media do not allow advertisers to influence their programming or editorial content. However, many broadcasters and publishers do not hesitate to run favorable information about their advertisers, and they sometimes refuse to run unfavorable information. Critics of commercial television maintain that dependence on advertising lowers the quality of TV programming. In order to sell advertising time at high prices, TV stations try to attract the largest possible audience. Critics argue that the stations therefore broadcast too many general entertainment programs and not enough informational and cultural programs.
Many critics also charge that advertising persuades people to buy products they do not need or want through the use of psychological techniques. Advertisers reply that they do not have the means to make people buy unwanted products. They argue that adults freely choose what to buy or what not to buy. Most experts agree, however, that advertising is particularly persuasive to young children, who do not have the ability or experience to judge advertising critically. For this reason, the Federal Trade Commission has strict regulations governing advertising aimed at children.
Political effects.
Little attention was paid to political advertising until 1952, when Dwight D. Eisenhower successfully ran for the U.S. presidency. Advertising executives, rather than politicians, directed Eisenhower's presidential campaign. Much of Eisenhower's campaign consisted of a flood of spot announcements on television stations.
Since 1952, advertising executives have played an increasingly important role in political campaigns. In addition, TV spot announcements have become a major feature of campaigns for public offices at the national and state levels. The chief criticism of political advertising concerns the use of such spot announcements, which may concentrate on creating an image of a candidate and tend to oversimplify the issues. Critics object to candidates being "sold" through advertising methods like those used to sell products. Another complaint is that candidates with the most money to spend on advertising have an unfair advantage over their opponents. Because of this complaint, Congress passed a law in 1974 that limits the amount of money candidates may spend in presidential campaigns.
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