The belief that advertising is designed to sell more of a product, as opposed to selling more of a certain brand of a product, is so widely held that it is almost futile to resist. Whether it is anti-capitalists complaining about people being tricked into buying more ‘stuff’ or single-issue campaigners trying to explain why people consume unhealthy products, advertising gets it in the neck.
The rhetorical zinger that is supposed to end all argument goes along the lines of ‘If advertising doesn’t work, why do companies spend so much money on it?’ The underlying assumption is that industry advertises because it wants to increase overall consumption. If so, the mere fact that advertising exists proves that advertising increases consumption. QED.
This is a circular argument and a basic category error. ‘Industry’ doesn’t advertise products. Companies advertise brands. Individual firms don’t necessarily care whether overall sales rise or fall so long as sales of their own products rise relative to their competitors. There is plenty of advertising even in industries that are in terminal decline.
This flawed logic is very common, however, perhaps because it is superficially plausible. For example, Ireland is currently in the grips of a puritan revival, with a state-funded pressure group called Alcohol Action leading the crusade against booze. In response to drinks companies saying that advertising doesn’t increase overall sales, Alcohol Action’s response is: ‘Alcohol sponsorship of sport works in terms of increasing sales and, as a result, alcohol consumption. If it didn’t, the alcohol industry simply would not spend so much money on it.’
To see how silly this claim is, forget about alcohol for a moment and consider products such as cat food and toilet paper. These products are advertised quite heavily despite there being an obvious ceiling on how much can be consumed. If someone were to say ‘Cat food advertising works in terms of increasing sales and, as a result, cat food consumption. If it didn’t, the pet industry simply would not spend so much money on it’, I hope you would question their sanity. It is quite obvious that Whiskas adverts are designed to lure Felix customers over to their brand. Their commercials could only increase overall consumption if they encouraged people to buy more cats, which is fairly unlikely.
Single-issue campaigners are unwilling or unable to come to terms with this. Giving evidence to a House of Lords committee last year, Gerard Hastings, a fierce critic of advertising, said: ‘All the evidence is that if marketing is encouraging you to consume a particular brand, it is also going to have an impact on category.’ In fact, this is almost exactly the opposite of what the evidence shows. Advertising generally doesn’t increase the size of the market, unless the entire product category is new (for example, an advertisement for a T-model Ford in 1915 might have encouraged more people to buy a motor car, but an advert for a Ford Fiesta today is unlikely to do so).
Earlier this year, a new study confirmed what economists have always understood but single-issue campaigners refuse to believe. Looking at sales of alcoholic beverages in the US over 40 years, it found that ‘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. Therefore, advertising restrictions or bans with the purpose of reducing consumption may not have the desired effect.’
The authors of the study found that the amount of money spent on alcohol advertising in the US has increased by almost 400 per cent since 1971 at a time when ‘per capita alcohol consumption has not changed much’.
In the UK, it is estimated that £800 million is spend on alcohol marketing each year and yet per capita alcohol consumption has dropped by a fifth since 2004. Despite all those beer advertisements, the sharpest decline has been seen in the beer market. Why do these companies keep throwing their money at something that clearly doesn’t ‘work’ from the perspective of their enemies?
There is now an industry-wide campaign called There’s a Beer For That to get wine and spirits drinkers to return to beer. These kinds of initiatives are quite rare. They are often memorable (‘go to work on an egg’, ‘Accrington Stanley, who are they?’ etc.) and they tend to improve the public’s perception of the product, but they don’t generally lead to a surge in sales.
Whatever the fate of There’s a Beer For That, a explicit appeal for people to drink more beer would not be necessary if the likes of Alcohol Action were right. By their logic, the advertising of Heineken, Fosters, Budweiser et al. should be sufficient to increase beer sales – and, indeed, alcohol consumption in general. Instead, beer sales have been falling.
If the aim of advertising is to increase the size of the market, it doesn’t seem to be working for the booze industry. Instead of saying ‘If it didn’t work, why would they spend so much money on it?’, single-issue campaigners should ask themselves the more searching question: ‘Since all this beer advertising obviously isn’t working, so why do they spend so much money on it?’