The One Minute Case For Advertising

Why defend advertising?

While the abundance of advertising is usually viewed as a sign of the vitality of capitalism, it is nevertheless under a near-universal assault by intellectuals. Because advertising “blatantly and unapologetically appeals to the self-interest of consumers for the blatant and selfish gain of capitalists”1, attacks on advertising are an assault on capitalism and ethical egoism. Arguments against advertising usually take two forms: the argument is that advertising is economically inefficient and the argument that advertising is somehow coercive. 2

The myth of “perfect competition”

Most economic arguments against advertising derive from the theory of “perfect competition, ” which is an ideal state against which markets are to be judged. This state is characterized by homogeneous products, relatively small sellers without monopoly power, prices which approach the cost of goods, consumers who have perfect information about all products and prices, and no entry costs to markets.

Advertising violates all these conditions, mainstream economists argue. Advertising seeks to establish product loyalty, and therefore to make certain brands more valuable than others. This creates barriers to entry by giving companies monopoly privileges, and allows them to price goods above cost. Furthermore, advertising is an imperfect and biased way of communicating product information to consumers. Finally, advertising retards progress by making it more expensive for new producers to enter the market.

In the real world, markets work quite differently: the essential characteristic of capitalism is the entrepreneurs who invest capital in new services, products, technologies, and businesses models. When their predictions are right, they gain a temporary advantage over their competition and turn a profit; when they are wrong, they take a loss. Success in business requires continual insight into which investments will prove profitable.

Rather than being a barrier to entry, advertising makes competition possible. New businesses and products stimulate demand by announcing their benefits to consumers. Expanding demand makes goods cheaper by creating economies of scale. While advertising is often attacked for creating demand for shoddy goods, it is not sufficient to advertise to gain consumer loyalty – only positive customer experience and continued positive goodwill can do that. Advertising is what allows new market entrants to capitalize on consumer dissatisfaction and dislodge established firms, as Japanese auto makers did when they demonstrated the superior value and quality of their cars over American ones.

The perfect competition model assumes that competing companies automatically lower prices to match their competitors. In reality, no business wants to lower prices unless consumers expect them – and it is advertising which performs that role by educating consumers about the competition. Advertising itself is a check on high marketing budgets: as consumers become better educated, competitive pressure creates price wars which force businesses to minimize expenses. 3

Yet another criticism is that advertising is a biased method of consumer education. Yet the continued importance of advertising as an influence on buyers proves that the creator of a good is the party most qualified to communicate the value proposition it offers, whether directly or through an intermediary. While word-of-mouth reports and independent product testing organizations are essential sources of consumer education, competitive pressure through advertising provides the claims whose veracity they evaluate.

Advertising is non-coercive

Opponents of “consumerism” often claim that advertising creates its own demand. But a commercial cannot simply implant a desire in the viewer. Rather, advertising tells consumers how their existing values can be satisfied in a particular concrete form. Some advertisements seek to meet well-defined values: toothpaste for clean teeth. Others educate consumers about products which fill a specific need: sports drinks for athletes, or diet colas for the health-conscious. Some advertising functions much like art, and present a concretization of highly abstract or subconscious values. For example, a sports car commercial may appeals to consumers who seek independence and efficiency, while a luxury sedan commercial might appeal to those who value comfort and elegance. Attacking advertising solely for appealing to emotions is as silly as criticizing a painting or a movie for appealing to the viewers’ emotion rather than presenting a dry, factual account.

Ultimately, advertising is a public appeal to the mutual self-interest of the seller and buyer. Movements to silence or limit advertising seek to regulate the freedom of the individual to voluntarily interact with others, and therefore are an assault on both freedom of speech and the right of association.


  1. Google Books: Jerry Kirkpatrick: In Defense of Advertising: Arguments from Reason, Ethical Egoism, and Laissez-Faire Capitalism.
  2. The Five (Wrongheaded) Complaints against Advertising by Jerry Kirkpatrick
  3. Persistently high advertising budgets are indications of high barriers to entry, usually due to government interference. For example, in the case of drug companies, the FDA forces drug makers to spend up to a billion dollars to deliver a single drug to market. This limits the drug market to all but the largest companies and most profitable medicines. Prescription drugs have large advertising budgets because the legal barriers to entry make it prohibitively expensive to compete on price or quality, or to appeal to smaller markets such as rare diseases.

Further reading:

  • Advertising is Good Medicine by Wayne Dunn
  • A philosophic defense of Advertising by Jerry Kirkpatrick
  • The Concise Guide To Economics: Advertising


Filed under Economics

7 Responses to The One Minute Case For Advertising

  1. John

    I think it’s important to differentiate between what I call advertising, which aims to inform consumers about a company’s product, and what I call marketing, which aims to promote brand loyalty. The first is essential, and the second has dubious benefits for the general public.

    Advertisers often aim to create dissatisfaction, and then present their problem as a solution to this dissatisfaction. Many television commercials primarily aim to create positive associations with the product they are marketing. Unfortunately, more often than not, buying the product that is being marketed will not resolve your dissatisfaction. Nor will it necessarily help you live a happier life.

    One of the worst consequences of marketing is that it contributes to interpersonal economic competition, also known as “keeping up with the Jones’s”. I became a little less of a libertarian yesterday when I read this article in the American Prospect:

    I am not suggesting that we place any kind of restriction on marketing. I am suggesting that we promote general awareness of its dangers, and promote skepticism in the general public.

    “Perhaps the most classic example of granfalloon tactics in the commercial world is the macho designation of being either a “Chevy Man” or a “Ford Man” that the two automotive companies were happy to foster. For decades — and in many parts of the U.S. still — a key aspect of many men’s self-definition was the brand of truck they drove: Ford or Chevy.”

    This is just one example of the manipulative tactics used by marketers. Marketing is a rare example of a free market occupation that does not create any wealth for the general public. Instead, marketers capitalize on stupidity and present false solutions. By teaching people to be wary of the influence of marketing, they will be able to make better decisions for themselves. One more quote from Brian Vaszily:

    “PLEASE remember the First Real Rule of Marketing — the key secret of those who seek to control your beliefs and habits in order to take your money, your votes, your time or whatever else it is they desire from you — is that nobody believes they can be manipulated by marketers all that much. But that’s the key reason why marketers can manipulate them so much.”

  2. Joseph Huang

    What if I argue that advertising is visual/audio/mental pollution? Surely if it is, then it can be dealt with in a similar manner to free-market environmentalism.

  3. Rory

    Quote: “Attacking advertising solely for appealing to emotions is as silly as criticizing a painting or a movie for appealing to the viewers’ emotion rather than presenting a dry, factual account.”

    Wrong. If we don’t like the emotions evoked by a painting or movie, we can usually leave the place where it is shown. Often, we paid to experience the painting or movie in the first place. Advertising, however, is designed to be visible from a place where you have to go, and you cannot choose to leave it. You can look away, but that may be hard if you are looking around in boredom during your activity.

  4. Frank

    Thanks for writing excellent cases.

    We took the liberty to translate this one. Hope you don’t mind.

  5. Phoenix

    The problem with consumerism is an internal one, not external. It is the result of a philosophy that attempts to derive value from material goods.

    The problem with this view is that it attempts to reverse cause and effect. A new widget/gizmo/car/vacation gives you the power to do something with your time that you aren’t capable of (or at least, not as easily) without it. But that object does not impose that ability upon you; it does not compel you to use it, or even to use it properly.

    Only through a conscious expenditure of mental effort focused towards making proper use of that new purchase can you achieve the value that the object was designed to help you achieve.

    This is why many people fall victim to tactics like jonesing or buying anything from the shopping network.

    Don’t blame the advertisers for taking advantage of people who follow an invalid philosophy; advertisers are only trying to give these people what they claim to want. Instead, learn what’s wrong with the prevalent philosophy, and take steps to correct it in yourself, and then persuade others to do the same (dare I call that advertising?).

  6. Pingback: Countering Assaults on Capitalism; 2 Defenses of Advertising | Liberty in a Nutshell

  7. Pingback: The One Minute Case For Advertising - David Veksler -

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