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Advertising. In 1998, $351 billion world wide Source: The Penguin Atlas of Media and Information, Penguin, 2001. Average Expenditure per person: $300 or more in the US ( which has 43% share of world market) Canada ( which has 1.9% share of world ad market) averages between $100 and $199

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Advertising
Advertising

  • In 1998, $351 billion world wide

    • Source: The Penguin Atlas of Media and Information, Penguin, 2001.

  • Average Expenditure per person: $300 or more in the US ( which has 43% share of world market)

  • Canada ( which has 1.9% share of world ad market) averages between $100 and $199

    • Almost equal 6 way split: radio,TV,mags, news, cinema, outdoor

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Learning objectives
Learning Objectives

  • What is advertising?

  • What are its economic characteristics?

  • Three views of advertising

  • Typical Regulation of Advertising

  • What are its effects?

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Definition
Definition

  • Persuasive message to buy, sell or change behavior

  • Biagi: involves payment to place message and identification of sponsor as well as selling of goods and services

  • Also involves the latin meaning of take note or consider– that is the goal is to be noticed

  • Fleras argues there are structural, functional and ideological elements to the definition ( text: 176)

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Definition cont d
Definition Cont’d

  • One element of the 4 Ps of marketing ( production, pricing, promotion, etc)

  • An indirect or third party form of financing the media

  • Used to be the dominant form of media financing– still is in television,mags and newspapers

  • But in 1990 in electronic media direct consumer payment ( subs, pay per view) exceeded ads

  • Central to consumer culture: establishing the codes, cultural norms, expectations of consumption, and market signalling

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Main forms of financing the media
Main Forms of Financing the Media

  • Advertising

  • Direct Subscription ( cable, newspapers, etc)

  • Transaction Revenues

  • Licence Fees ( BBC)

  • Taxes ( CBC/ matched by Ads)

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Role of advertising
Role of Advertising

  • Principal sources of revenue for: newspapers, radio, television, magazines

  • Not books, film, sound recording, or telecommunication

  • Uncertain but growing role in the Internet

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Economic functions of advertising
Economic Functions of Advertising

  • Generating profits by selling products or services

  • Fostering brand name recognition

  • Establishing corporate ‘good will’ or corporate image for social responsibility

  • Supporting the economic status quo

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Social history of advertising
Social History of Advertising

  • Earliest known ad 1000 BC offered a “whole gold coin” for the return of a runaway slave

  • Only began in mass form with the printed press after Gutenberg

  • Associated with the rise of mass production techniques in capitalism especially in 20th century

  • Needed to stimulate mass demand, synchronize or aggregate demand with oversupply

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Economic characteristics
Economic Characteristics

  • A function of the gross domestic product: tied to business cycle

  • Segmented by global/national/local markets

  • Newspapers and Radio: mostly local retail

  • TV mostly national/ international

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Economic paradox
Economic Paradox

  • Just under half of world advertising spending is from US

  • Yet 2/3rds of world population cannot afford the goods the US advertises

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Economic characteristics 2
Economic Characteristics 2

  • Ad rates rise in condition of monopoly/oligopoly

  • Ubiquitous

    • Less than 5% of all TV signals are non commercial

    • Few magazines, news or other sources are without ads

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Economic characteristics 3
Economic Characteristics 3

  • Mainstream, ad supported media exist to make money from advertisers

  • Content and style are often reshaped to comply with demands of ads in a highly segmented market

    • How? Ads laid out first on a newspaper, then text

    • How? Media often reposition to appeal to a better market segment ( eg. Jake)

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Theories of advertising
Theories of Advertising

  • Neo liberal or pro market view

  • Reform Liberal or pro regulation view

  • Critical or anti consumption view

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Neo liberal pro market view
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

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Neo liberal cont d
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

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Neo liberal cont d1
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

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The reform view
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

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Reform cont d
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”

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The critical perspective
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

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The problem of advertising
The ‘Problem’ of Advertising

  • Business pay for ads on shows

  • Shows on TV ( main channels 100% supported by ads) or newspapers ( 80% supported by ads) are not the product

  • The product is ad time or space sold to advertisers

  • What advertisers buy is the access to audiences

  • No direct price signal between consumer and editor or media

  • No direct cues as to likes/dislikes or customer preference

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Fleras argument about advertising being the message
Fleras’ Argument About Advertising being the Message

  • Irony ( Fleras, p. 177): content or programming exists to deliver audiences to advertisers

  • “ Ads cannot be considered interruptions when market values prevail; they are the very foundation for programming in connecting audiences with consumerism”

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The myth of consumer sovereignty in ads
The Myth of Consumer Sovereignty in Ads

  • No direct signal between consumers and media providers

  • In fact, share of conventional TV audiences is declining but ad sales increasing

  • NOT ALL CONSUMERS ARE EQUALLY VALUED: SOME ARE DISCOUNTED, AND SOME ARE PREMIUM

  • Advertisers’s desire to reach the attractive youth consumer segment explains ‘Friends’, recent rise of Reality shows

    • Also explains exclusion of the low spenders: blacks, hispanics or old in the US which are less attractive ad segments

    • Explains exclusion of poor, old and visible minorities in most ad markets in Canada

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The myth of the free ad lunch
The Myth of the Free Ad Lunch

  • Costs of ads passed on to consumers: affect 10-15% of cost of goods.

  • Current estimates of ads in Canada suggest ad spending of about $900 to reach each hhld: this is paid by all, even the poor, whether they want the ads or not

  • Such hidden, indirect payment is not known to consumers

  • Explains why they prefer ad supported, so called ‘free’ media to pay per view or other services on the Internet: they are unaware they are already ‘taxed’ by the manufacturers and distributors of consumer goods

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The canadian small market problem
The Canadian Small Market Problem

  • Canada has half the per capita size of ad spending as the US– tougher market for Canadian cultural industries

    • Overspill of US ads vitiates demand

    • Segments of the industry: ( health, law etc) are either publicly owned, or prevented from advertising

    • Retail sector in Canada has not been as competitive

  • In TV, if US programs are more popular: Canadian businesses prefer advertising on US shows, weakening indigenous production markets ( a vicious circle) thus weakening competition, and leading to increase in market dominance and higher US ad rates

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Policy responses to small market problem
Policy Responses to small market problem

  • Income Tax Act prohibits spending on US media as an allowable business expense in Canada

  • This is intended to protect ‘diversion’ of ad money south of the border

  • Regulations: ( Canadian Radio-television and Telecommunications Commission) create rules like the “ simultaneous substitution rule” which allows Canadian stations who have bought the rights to a program to insert their ads sold against it in the imported US signal

  • Tax money used to subsidize public/non commercial media ( CBC, community TV)

  • As well, tax money increasingly being used to ‘advertise’ in public sector areas

    • Public health issue: allow, like the US pharmaceutical manufacturers to advertise to Canadians?

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Attack under globalization
Attack under Globalization

  • Before 1999, Canada’s Magazine Policy prevented ‘split runs’ ( except for Time Canada and Readers’ Digest)

  • Goal was to prevent US media companies getting around the Income Tax Act by publishing ‘virtual’ editions which could scoop Canadian ad spending without producing Canadian editorial

  • As well, Canadian magazines were allowed to mail free to their customers ( unlike US mags) ( see Stoffman, cited in Fleras, p. 208)

  • US launched a trade protest under the World Trade Organization on the grounds that magazines offended the rules of free trade:

    • National Treatment rule: despite exemption of cultural services from NAFTA

    • Canada lost. Instructed to strike down legislation: had to create new ones, and offer subsidies to Canadian magazine sector

    • FREE TRADE IN AD SERVICES ON US AGENDA

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Classic forms of regulation
Classic Forms of Regulation

  • Truth in advertising: deceptive advertising may be a criminal or civil offense

    • ( but intent must be established as well as proof of harm)

  • Prohibition or strict regs on Ads for hazardous goods ( drugs, tobacco, liquor etc)

  • Policing Ads directed at children

    • Ad free zones promoted for very young children, since children cannot distinguish between an ad and a program

    • Pre airing censorship: to prohibit violence or other anti social contents

  • Other types of ad regulation

    • Gender portrayal etc.

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The terms of the regulation debate
The Terms of the Regulation Debate

  • What is permitted

  • Who is permitted

  • When and Where it is permitted

  • To whom

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Regulation around the world
Regulation Around the World

  • Various levels of constraint around the world

  • Sexual violence against women in ads is banned around the world except Argentina, Paraguay and Thailand

  • Some categories of products/behaviors are deemed offensive and thereby restricted in certain countries:

    • Sanitary products

    • Toilet paper

    • Undergarments

    • Undue attention to breasts or buttocks

    • Physical intercourse: hetero or same sex

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Canadian ad institutions
Canadian Ad Institutions

  • The Canadian Advertising Foundation ( CAF)

  • Advertising Standards Council

  • Receive complaints and preclear ads directed at children

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Issues in advertising
Issues in Advertising

  • Recent ad issue concerns:

    • Historically, ‘patronage’: control of media content through sponsorship ( Disney)

    • Increasingly: ad clutter: more than time allotted ( 18 minutes out of every hour)

    • Sound /noise offense

    • Product placement: eg. American Idol

    • Difficulty in measuring ad impacts

  • Catholic Church in BC protesting VanCity ad representing a gay couple ( as part of a resistance to revision of Canadian marital laws to include same sex couples).

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Marketing surveillance society thesis
Marketing Surveillance Society Thesis

  • Movement to e-commerce on line allows single source, integrated market research intelligence, new levels of custom advertising to markets of one

  • See www.redsherriff.com

  • An internet tracking company which downloads a hidden Javascript on to y our browser when you visit one of their affiliated sites

  • Can track where you visit, how long you stay, what you bought and create a full virtual data shadow

  • Sell it to business who will design a marketing applet to bombard you

  • Consumer mobility– tracking and ad campaign design now central to new forms of market/advertising

    • Privacy, issues of ‘informed consent’ and other concerns

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Rhetorical techniques of ads see fleras 202 203
Rhetorical Techniques of Ads ( see Fleras, 202-203)

  • 1. Shock/Humour/Novelty: to get attention

  • 2. Repetition

  • 3. Visual Style Codes:

  • 4. Ubiquity

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Social psychology of ads
Social Psychology of Ads

  • Maslov’s hierarchy of basic human needs:

  • NOT directly observable:

    • survival, physiological sustenance

    • personal safety

    • social belonging

    • self esteem

    • self actualization

    • aesthetic, expressive needs

  • higher level needs become salient when survival needs are met

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Effects of ads
Effects of Ads

  • Saturation

    • See now more than 500 ads a day/182,000 a day

    • Very low levels of recall

  • Avoidance

    • Use remote control to dodge ads

    • Tape and fast forward

  • Defensive Industry Response: Integration

    • Fool consumer by integrating commercial and content: product placement, seamless infomercials

    • ‘advertorials’

    • Issue of ‘due process’: are consumers aware of what is an appeal and what is not?

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Effects cont d
Effects Cont’d

  • Socio-Cultural

    • Used to identify ‘in’ and ‘out ‘ groups

    • Create ideal role models

    • stereotyping

  • Psychological

    • Behavioral: induce a buy

    • Attitudinal: like the product/associate with attributes—lifestyle appeals

    • Cognitive: recognize, evaluate what is needed

  • Political

    • Political advertising is more often using conventional ad appeals ( celebrity/spectacle positioning )

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Content effects
Content Effects

  • Drive to placate advertisers: indirect economic censorship ( Politically Incorrect case during Attack on America)

  • Interrupt content: in newspapers, articles are blocked around ads: more ads, shorter news holes; drives the pyramid style of presentation…drive format and medium expectations

  • Create high aesthetic standards:4 1.3 million per 15 second ad / Superbowl exceeds even the highest budgets films …shape novelty/innovation/ imitation trends

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Ideological effects
Ideological Effects

  • Advertising defines what is important or desirable

  • Draws attention to certain aspects of reality while ignoring others ( Fleras, 171) it is a discourse about ‘reality’

  • “Manufacture of Discontent” where the only solution is through Buy Buy Buy

  • As a system of persuasion, advertising is propoganda (Fleras, 211)

  • Have we become citizens of shopping malls?

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Recommended sources
Recommended Sources

  • Benjamin Singer (1995) “Advertising” A Sociocultural Force” in Communications in Canadian Society, 4th ed., Toronto: Nelson.pp. 123-138,

    • Richard Jackson Harris (1999), “Advertising” in A Cognitive Psychology of Mass Communication: 3rd ed., Mahwah NJ: Lawrence Erlbaum Associates, pp. 71-95.

    • Leiss, Kline, Jhally: Advertising as Social Communication

    • Frank: Liberation Marketing

    • Klein : No Logo

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