Economic analyses of the concept of advertising and its impact on the market began in the 1930s, roughly three decades after the first modern advertising campaigns, such as those for the cigarette brand ‘Camel’ and the food product ‘Kellogg’s’. These early analyses were highly critical, attacking the role of advertising in driving the market. Economists at the time accused it of being a monopolistic practice, a waste of money, and misleading, with an unfair impact on free competition.
Over the decades, the content and language of advertising evolved, becoming more provocative in appealing to consumer desires, exploiting the individual’s innate tendency to chase promises of happiness or fulfilment, even through the most trivial words. Each ad promises consumers that they are no less than film stars, athletes, or daring adventurers. ‘Be the happiest person in the world’, ‘We are the best’, and countless other slogans are etched into the minds of vulnerable consumers, who have become highly susceptible even to jingles devoid of any substance. This was evident among Egyptians, who for years chanted ‘Mahmoud, what’s this, Mahmoud?’ long after the ad ended in the late 1980s. However, these ads are neither the worst nor the most misleading, compared to the grandiose promises of political campaigns or the disastrous consequences of ads like ‘I want a husband’.
A quick glance at statistics from the international organisation ‘Advertising Age’ reveals that advertising, as an economic activity, has consistently represented around 2% of the USA’s gross national product since the 1940s, a trend mirrored in many other countries. This opens the door to exploring the seemingly direct relationship between advertising expenditure and economic growth rates. If producers increase their spending on ads, growth opportunities rise, and the opposite also appears true. This has bolstered the voices of those who support advertising as a driver of economic activity, as well as a vital source of funding for important media outlets like newspapers, radio, and television, which would struggle to survive without the financial resources provided by advertisers.
However, critics of advertising strongly oppose the commercial logic of media, which naturally tends to appease advertisers for fear of losing this crucial financial lifeline. This compromises the fundamental principle of free media as a tool for enlightenment rather than deception, even if through turning a blind eye. This underscores the important role of regulatory bodies in investigating and monitoring this activity, which has significant implications for societies, consumer behaviour, and even public safety.
In the context of fears over monopolistic practices by large producers capable of funding massive advertising campaigns, the renowned economist Henry Simons expressed concern in the 1940s, summarising it in his statement: ‘Advertising is the main obstacle to real competition and good service to the consumer.’ This perspective grew in subsequent decades, as analysts observed that intensive advertising for specific brands limits, or even makes it very difficult, for other products to enter the market due to consumer loyalty to heavily advertised goods. This led them to argue that consumers may become less price-sensitive, unaware that they are overpaying, as advertising costs are passed on to the product. This highlights the importance of pricing, even in advertising campaigns, to give the misled consumer a chance for real and informed comparison in a market supposedly built on free competition.
This is where the regulatory role of the state comes in, as an active and responsible watchdog protecting ordinary consumers from commercial fraud, misleading monopolistic practices, and unfairness. The state must stand firm against these practices and crack down on unscrupulous individuals who disregard their communities. Countless food and non-food products, harmful to their buyers, have later been discovered to be carcinogenic, for example, despite having obtained all production approvals—‘with a permit from the Ministry of Health, of course’. This often reflects not collusion but a deep weakness in consumer protection research mechanisms. Here also lies the weakness, or perhaps helplessness, of civil society organisations like consumer protection associations, which remain largely ineffective due to the lack of robust official oversight over producers and their advertising campaigns, which drive societal consumption behaviour.
This article is originally published by AlBorsa in Arabic and later AI-translated by South Push.