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Friday Interview: Advertising’s Benefits

John Hood discusses the societal benefits of advertising

Welcome to Carolina Journal Online’s Friday Interview. Today the John Locke Foundation’s Donna Martinez discusses the value of advertising with John Locke Foundation President John Hood. The interview aired on Carolina Journal Radio (click here to find the station near you).

Martinez: Now this is a really interesting subject, your new book about advertising. Of course, you don’t do advertising for a living. You are in the business of analyzing public policy. How did you decide that you wanted to write a book about advertising?

Hood: Well, I am a journalism graduate and have worked in newspapers and magazines, always been interested in advertising. And in a sense, my work at the John Locke Foundation is in the form of marketing. We’re not really advertising goods and services but we’re marketing ideas. And so there is a sales aspect to what I’ve been doing for years. The specific reason — how I got into the advertising issue though — is that I had written a book about business and its social responsibilities. What makes a business moral? What makes a business of net benefit to society? Is it simply because it gives away a lot of money and charity? Is it because it does whatever a government regulator tells it to do?
Well, I argued in a book, which came out about ten years ago, The Heroic Enterprise, that much of business’ social contribution can be found in its day-to-day activities of actually making goods and services and selling them to people. And as I studied that issue, it occurred to me that lots of people appreciate the social benefits of making products or inventing products, or even managing a large organization effectively. But very few people appreciated the virtues of salesmanship. That always seemed to be the low end of the totem pole and got the bum rap. So I decided when I was choosing a book topic, why don’t I write on that subject that always bugged me the first time, which was sales and marketing and advertising. How was that consistent with what we view as heroic enterprise? And my conclusion is that it’s very consistent with what makes businesses valuable to us as individual consumers and workers and shareholders.

Martinez: One of the issues that we talk about pretty frequently on this program is regulation of activities. In your book, you talk about some of the history of advertising and the beginnings of federal regulation of advertising. I believe it was in the early 1900s where this really got started.

Hood: Yes. America was really the birthplace of a lot of things associated with advertising — ad agencies, advertiser supported media, like newspapers and later radio stations, catalogs — all sorts of things came out of the American advertising experience. Well, so did various kinds of regulation. They were also very commonplace in early American life. In particular, when radio was first invented and when stations began to be planted, mostly at educational institutions, at universities around the country, there was a human cry led by, among others, Herbert Hoover, who would soon be President of the United States, saying, “We’ve got to make sure that radio is not consumed in commercial chatter, that advertising has got to stay out of the radio business.” And they tried desperately to figure out some sort of regulatory approach or business model that would preclude advertising, but it was always a doomed effort, because even when there weren’t any radio stations there were companies like AT&T and Westinghouse and others that were thinking about, “How can we make this an advertiser-driven medium?” And that is what they did. And that is why radio, and later television, was so spectacularly successful. Originally when advertising was used in radio, it was kind of an adjunct because radio stations were created in part with the investment capital of the companies that made the radio sets. I mean, they wanted to generate radio programming so people would buy radios. Well, that made sense for a while, but how many radios do you need? Eventually it is not going to pay to have a radio set as the way you collect money from your listener because people have already bought. And so you have got to figure out some other way to collect money, and of course they went back to the idea that had been pioneered 100 years before in newspapers — that the way you are going to sustain yourself as a medium is to pay your bills by advertisers.

Martinez: In your book — it is a really fascinating book — you cover a lot of territory, including history and the relationship between advertising and public policy and regulation. In North Carolina, being a tobacco state, we of course have seen all sorts of attempts and pushes to regulate tobacco. You also get into the issue of alcohol advertising and advertising to kids. Talk about tobacco specifically.

Hood: Well, tobacco advertising in critically important in the history of American advertising. Cigarette companies, including North Carolina’s own American Tobacco, were very instrumental in creating some of the advertising vehicles that we use today for all sorts of goods and services. The cigarette companies were out in the forefront. They weren’t encouraging people to smoke, really, because people already smoked. They were really trying to get them to smoke their brands. Interestingly, in the 1940s and 1950s, when it became obvious that there were significant health consequences from continued smoking, many of the tobacco companies responded with advertisements that were essentially “less bad” messages, like, “My cigarettes are less deadly than your cigarettes.”

Martinez: Wow, what a claim.

Hood: Yes. It was interesting, because that was millions and millions of dollars spent by the tobacco companies telling their customers that cigarettes were dangerous. But the federal government put a stop to it. They said that you couldn’t prove beyond a shadow of a doubt that cigarette brand A was less risky than cigarette brand B, so we are not going to let you make that claim. And eventually they banned all cigarette advertising off of television. But it is not obvious to me that this really changed smoking patterns. Now, it may have helped certain brands that had already been established — protected them from competition from new brands being started — because a lot of the way you create competition in any consumer product is to advertise the new idea, the new brand, the new way of approaching a problem. It probably changed the mix of cigarettes that were sold — to ban these advertisements — but I don’t think it improved the public health. In fact, if we had let that “less bad” claim go on for years and years and years, I think the clear message for most of the consumers would have been, “Oh, you know, cigarettes are dangerous.”

Martinez: I think alcohol advertising is really fascinating. I happen to be a NASCAR fan, and these days if you watch a NASCAR race, you will see that there are beers, and now there are some hard liquors who are sponsoring auto racing. Clearly, in general, drinking and driving a car of any sort do not mix. What has happened with the evolution of alcohol advertising?

Hood: Again, alcohol advertising goes way back. We all remember from the ‘50s, ‘60s, ‘70s, ‘80s, some of the most memorable ads are for beers — during football games, during basketball games, baseball games. But just like any tool, advertising can be abused. Alcohol does not pose a problem in moderation. It poses a problem when it is abused…in fact, of course, some argue that modest amounts of alcohol consumption are good for you. They are good for your health.

Martinez: Every now and then we read those stories.

Hood: Right. So the point here is, advertising isn’t the villain. It is just the way we communicate information. It doesn’t cause us to do things we shouldn’t do. We have to take responsibility for our own decisions and our own actions.
Martinez: The other issue that is pretty controversial, and has been for years, is advertising to children. What is the appropriate point at which it becomes abusive or unsafe? How do we decide those things in society?

Hood: Well, of course…we distinguish between children and adults in many ways, and we should distinguish what they are watching and listening to as well. That is something that parents need to be focused on — is what they are watching. Frankly, the more objectionable material that children watch is not the advertisements. It’s the programs in between the advertisements.

Martinez: That’s right.

Hood: And children — this may surprise people to learn this — but children watch fewer ads today than they did 10 or 20 years ago because they are watching cable TV or they are playing video games. We should worry about what the children are watching or listening to, but advertising is not the main problem.