Economic and Social Aspects of Advertising

Introduction

Advertising is omnipresent and ever appealing. Hence, it always calls out for an action. Such actions create a change in several factors existing in a country. In this topic, we will understand the economical and social aspect of advertising. In simple words, we will see the impact of advertising on the economy and society.

Impact of advertising on the economy

Economy can be referred as elements which keep a nation in force. Factors such as demand, supply, production, service, money, infrastructure, human resources, etc. come under the term economy. Advertising is an industry which strongly affects many of these factors to a material extent. Let's understand some of the factors getting affected due to advertising.

• Advertising enhance Product Value: Through continuous advertising, a product earns a recognizable recall value in the market. This is because, people start remembering and resonating the product when they continuously watch the advertisement. This builds the value of the product in the market, enhancing its life. When a product attains value in the market, it tends to survive long, thereby spearheading towards growth and achieving other milestones.

• Advertising enhance Profits: With regular advertising, a brand can expect a rise in sales. This because advertising makes the product known and marketable. With more sales, a company can aim for higher profits. At such phase, the company can also save its cost due to high economies of scale and reap the benefits of having an effective cost of production.

• Advertising affects Product Price: Advertising is a cost which cannot be compromised. A company has to spend well on in advertising campaigns based on several factors such media, geographical reach, technology, etc. so as to penetrate most. This is surely going to add up a lot of penny towards marketing and selling the product to the final consumer. Hence, the advertiser is bound to recover this cost from the customers. So, advertising shifts product prices to the higher side. Well, the price factor can be seen from an other angle too especially when a company is engaged in high economies of scale leading to reduction in its production cost. During such scenario, the product price may either remain stable or may even go down. A good example can be the prices of Coca Cola and Big Cola. A 2.5 Litre bottle of Coca Cola costs around Rs. 95 in Indian markets whereas a 3 litre bottle of Big Cola costs Rs. 90/-. One need to remember that Coca Cola is a popular brand and a regular advertiser, but Big Cola isn't.

• Product Life Cycle: Every product has to pass through several stages during its life span. Since inception, primary focus is on survival and growth. This happens only because of timely and appropriate advertising techniques followed by the organization. With regular advertising, there can be stronger penetration in the market and more conversions. This can take the brand to higher levels of product life cycle. However, from another perspective, advertising can also help a falling brand from getting withdrawn from the market after its decline.

• Production and Distribution Cost: Advertising creates a favorable impact on demand, which pushes production and hence, distribution. With high production, a company can optimally utilize its fixed cost, thereby controlling the overall cost. On the other hand, to cater high demands, the company may have to extend its supply. This is where there will be a rise in distribution cost. But to note, this rise in distribution cost compensates the increase in sales.  

• Consumer Demand: Demand is a desire backed by ability and willingness to pay. With continuous advertising, short term as well as long term demand can be created . This is because advertising facilitates mental and physical preparedness for audience, encouraging them to buy the product either now or over a period of time.

• Competition: Advertising is an effective tool for mitigating competition. Brands have to advertise to present themselves to the audience. When many brands from a particular sector advertise, it create strong competition. So as to compete in the market, advertising at regular intervals becomes a necessity. A good example can be ads shown by Nirma, Tide, Arial and Surf Excel. Each of these brands have to advertise to manage competition form their rivals. 

• Market Expansion: Advertising helps a brand to not only survive but also grow. Continuous advertising enables a brand to create and increase demand for itself, which facilitates market expansion. With wide advertising, a brand can enter into more geographical areas, thereby spreading its business circle and customer-ship. 

• Economic Growth: Advertising is a strategic industry providing opportunities and upliftment to many. In simple words, its not only the advertiser who grabs the benefit of advertising, but the society and other supporting enterprises as well. Many job and business opportunities emerge through advertising, which directly and indirectly boosts an economy.

• Standard of Living: Advertising makes viewers aware about the various offerings made in the market by various brands. This enables an easy and smooth purchase for the buyers and facilitates a better standard of living. This involves mainly luxury / premium goods. For example, advertising by Sabhasachi on television channels mainly delivering entertainment programmes has penetrated the idea of fashion and luxury clothing for wedding and other auspicious occasions, thereby sparkling the standard of living index of many individuals.

• Brand Image: Brand image is a very important performance indicator for any brand. With a favorable brand image, a company can derive more sales and consumer trust. This brand image enhances with appropriate and timely advertising. In fact, advertising like advocacy advertising also enables a brand to mitigate crisis, if any. A classic example is of the brand Nike which gained momentum in the early 1990s through their "Just Do It" campaign. Nike made a dramatic route in the US market by focusing more on the endorser than the product itself. Nike believed in valuing sportsmen for their courage and determination towards sports and included personalities like Bo Jackson (former American Professional Baseball player), John McEnroe (former American professional Tennis player) and Micheal Jordan (former American Professional Basketball player) in their advertising campaigns in the US. This helped Nike to gain a strong brand image and marked a market share of whooping 43% from 18% in the US.

• Consumer Choice: Advertising facilitates consumer choice. Consumers can see a variety of options available to them in the market and can take decision upon buying. Advertising by several brands do create a problem of choice for the consumers, but it also extends understanding alternatives and choosing the best product as per consumer wish. 

Advertising and Consumer Demand

Advertising is that tool which acts as a communication manager for an advertiser to effectively communicate his intent to the right audience. By using most appropriate ingredients, an advertisement can be well crafted which can not only serve to achieve consumer objectives but also create a demand in the market. Everything here starts with an act of developing a strong attitude for the product which is going to move consumer focus into the brand and make them to buy it. Let's understand the relationship between advertising and demand.

• Advertising creates demand

• Advertising can increase demand

• Advertising persuades consumers by creating a desire

• Advertising can increase aspiration level by developing a favourabe attitude

• Advertising can stimulate buying

• Advertising can generate off season demand

• Advertising facilitates brand continuity

• Advertising helps break and build brand loyalty (Brand Shift)

Impact of advertising in society and consumer behavior

Advertising is a powerful tool not only for communication but also for persuading the right person to take an action. With an ocean of media, advertising gets scattered and delivered in various eyes in various forms. During this process, several factors existing in a society are considered, which in turn affects consumer behavior. Here, we will discuss the effect of advertising on society and how it develops an attitude in the consumer mind.

• Information: Advertising throws light in the dark. When a product or a service is advertised, it is actually a transmission of information from the seller to the potential buyer. But one need to remember that not every information is a solution. A society marks progress when right information is delivered, which intend people to stay aware and beware.

• Solution: Advertising of certain products stands as a solution for many. Not every products and service is developed with an intent to provide solution for an ultimate buyer. There are products which may be harmful or inappropriate for viewers. But when a problem is resonated to a product, it automatically becomes a solution. For example, soaps do not add beauty, they only clean dirt from the body and adds a temporary fragrance. When a soap is advertised as a product adding glow and beauty to a person's face, it may become inappropriate for the user. The user may buy with an intent of getting beauty on face.

• Creation of realistic / unrealistic desire: Advertisements create desire in the viewer's minds. Such desires can either be true or even an unnecessary one. Realistic desires lead to a genuine purchase. But unnecessary desires lead to flop purchase, which may seem to be exploitative. 

• Altering Consumer Behavior and Attitude: Advertisements have the power to alter people's mind and actions. A good advertisement can surely stuff in positive vibes and thoughts with depiction of message in the most moral way. But ads using inappropriate mediums and messages tend to exploit and manipulate people's mind which can create terrible consequences in the internal and external surrounding. For example, ads showing violence has a tendency to promote violence which can either encourage people to commit violence. Such ads may also trigger people emotionally and mentally.

• Advertising Promotes Materialism: Materialism is a belief that certain consumer goods and services provide the greatest source of satisfaction in life. Advertising helps a product to be placed in such a way that it can promote status symbol, success, achievement, power, etc. which can encourage its demand and consumption. But the same can be harmful to the society as materialism tends to ruin people's relationships, increase anxiety and depression levels and can also create a less satisfactory feel upon using a particular product compared to other. 

• Advertising promotes consumption of unhealthy / questionable products: At times, a product may not be suitable or appropriate for a person. Precisely, it may be beyond a person's affordability or may not be useful or may be harmful or may even confuse buying decision. An advertisement can also affect a person's thought process and may tend tend to influence personal characteristics like selfishness, manipulative, over spending, stereotyping, hatred to a particular person / place / animal / thing, etc. 

• Advertising is deceptive (misleading) and manipulative: At times, certain competitive products can be promoted in an inappropriate way that can adversely impact the thought process of the viewers. Some ads tend to create confusion among the viewers with tall claims or false comparison or unlimited benefits subject to condition (which is of course, never displayed). Such ads mainly aim for instant sales compromising the real needs of the consumers.

Importance of Truthfulness in Advertising

Advertising is very important to convey the right message to the right audience. This becomes successful only there is truthfulness in the advertising message. Let's understand the need and importance of truthfulness in advertising.

• Ad Industry Survival: True advertisements not only add value to the product but also impacts survival and sustainability of  ad industry and players involved in the ad making. 

• Firm's Survival: True message in an advertisement also facilitates survival of the organization. When message is shown in the right way, it develops trust in the minds of the audience. This trust backs firm's survival.

• Corporate Image: True message in an ad also builds corporate image as it develops trust and faith among the audience towards the corporate.

• Improve Customer Loyalty: With correct message, a an advertiser can expect loyalty from customers with respect to retention. Truthfulness in advertising is powerful enough to keep customers loyal for a certain period of time.

• Gain Competitive Advantage: Displaying true message enables a firm to gain advantage over competitors. 

• Brand Image and Equity: A firm can gain brand image and equity by showing the right message to the right audience and through delivery of the right product by creating an appropriate association between the product elements and the people. 

• Business Expansion: A brand can step into more product line and create an extension in the business. This is partially a derivative of true advertising as the truthful element injects the spirit of loyalty and value towards corporate thereby making new product push easier in the market. 

Forms of Untruthful Advertising

At times, advertising can be deceptive or untrue as it may include misleading or inappropriate information or tall and false claims to deceive the audiences to make a move in the favor of the advertiser. Various such tactics followed by advertisers are discussed below: 

Deceptive Pricing: There have been several instances of businesses concealing taxes or surcharges from customers via deception. For example, there is an airline ticket booking service that claims to purchase your flights for as little as Rs. 1,000/-. After reviewing the advertising, you decide to book one. However, once the ticket reaches the final payment step, your bill turns out to be Rs. 2,000. These might be illegal charges on consumers’ bills, which refers to “cramming”. If any such “additional charge” or “hidden costs” arises in the name of different charges, customers have the right to file a complaint with the Consumer Forum.

Deceptive Measurements or Quantities: There may be times when the firm provides a fake quantity. If the brand has given a measurement or amount less or more than the actual one, they are accountable for misleading information.

Deceptive Comparisons: In the market, there is always unavoidable competition between two brands. The rivalry, however, is considered to be fair only if the businesses continue to promote their brand’s features. When a firm chooses to promote itself against its competitors by comparing their characteristics, it becomes a misleading advertisement.

Deceptive Guarantee or Warranty: Different brands and corporations provide guarantees or warranties on their products. They aim to increase the value of their brand by giving such tactics to the public. However, the brand may not always explain the solution and may subsequently reject to assist the client. It is when a customer has the right to sue a brand because of misleading advertising. A brand must respond to the consumer if they misled them about the promise. Contract law needs clarity for a contract to be binding; thus, rules governing misleading and fraudulent advertising must fill the void. 

Bait and Switch: Bait and switch are essential methods marketers use to show one product as bait and then switch it with another. They proceed to market an upgraded product before you after offering a low-cost one. A store advertises a low-cost product that they have no intention of selling. However, when the buyer contacts them about purchasing the product, the vendor compels them not to do so. They instead laud a high-priced product and persuade the buyer to buy the upgraded version.

Misleading Depiction of Product: There are always occasions when corporations provide appealing images of their items to get customers to purchase them. This is unmistakably fraudulent advertising. Some food product businesses show a different image on the package and avoid the legislation by mentioning in the corner that the image is a serving recommendation. Such businesses have made wise decisions. A few fruits that are packaged in packets exhibit a false-color of the items that they are.

Ignorance of vital message: There may be instances where businesses withhold critical information from their customers. For example, while advertising paneer, the advertisement must state that it must be used within five days from opening the packet. These are the details that the audience must be aware to avoid loss. As a result, mentioning them should be an essential element of the company’s advertising strategy.

Misuse of the word "free": Many organisations show the word free in their advertisements especially the ones running in price sensitive markets. In such markets, consumers expect more for less cost and anything coming free of cost is always an attraction. This free element can be an independent product, extra quantity of the same product in the packet subject to conditions. The only thing to be noted here is that the quality of the product should not be compromised for the act of "free-ness". A misleading ad can also include false promises, hidden conditions, deceptive product property, contests and prizes, usage of word "No. 1", etc.

Positive Influence of Advertising

Advertising can have positive influences on a person's mind as well. While it's important to acknowledge the potential negative aspects of advertising, it's equally important to recognize the beneficial aspects. Here are some ways in which advertising can positively influence an individual's mind:

• Information Dissemination: Advertising serves as a source of information about products, services, events, and new innovations. It helps consumers stay informed about available choices, which can lead to better decision-making.

• Product Awareness: Advertising increases awareness about products and services that can genuinely improve people's lives. For example, ads for healthcare services can inform individuals about available medical treatments.

• Economic Benefits: Advertising plays a crucial role in stimulating economic activity by driving demand for products and services. This, in turn, creates jobs and contributes to economic growth.

• Entertainment and Creativity: Many advertisements are creative and entertaining, which can engage and captivate audiences. Well-executed ads can become a form of art and storytelling, enhancing cultural and creative experiences.

• Social Awareness: Advertising campaigns can raise awareness about important social and environmental issues, promoting positive changes in society. For instance, public service announcements can educate the public about health and safety.

• Promoting Diversity and Inclusivity: Some advertising campaigns actively promote diversity and inclusivity by featuring individuals from various backgrounds and identities. This can help challenge stereotypes and promote tolerance and acceptance.

• Inspiration and Aspiration: Inspirational advertising can motivate individuals to strive for personal growth and self-improvement. It can showcase stories of success and achievement, encouraging viewers to set goals and work towards them.

• Community Engagement: Advertising often promotes community events, fundraisers, and charitable initiatives. These campaigns can encourage people to get involved in their communities and contribute to social causes.

• Convenience: Advertising informs consumers about new and convenient ways to access products and services, making their lives more convenient and efficient. For example, ads for online shopping platforms can save consumers time and effort.

• Cultural and Trend Awareness: Advertising reflects and shapes culture by showcasing current trends, fashion, and lifestyle choices. This can help individuals stay connected with the evolving cultural landscape.

• Market Competition: Advertising fosters healthy competition among businesses. Companies strive to innovate and offer better products and services to attract customers, which ultimately benefits consumers through improved choices and quality.

• Education and Learning: Educational advertisements, such as those promoting online courses or educational resources, can help individuals acquire new skills and knowledge.

• Consumer Empowerment: Advertising can empower consumers by providing them with information to make informed choices, compare prices, and find the best deals.

Negative Influence of Advertising on Consumers

Advertising can have both positive as well as negative influences on an individual's mind. Here are some negative effects of advertising:

• Manipulation of Desires: Advertising often portrays products and lifestyles in a way that makes people feel like they need them to be happy or successful. This can lead to the unnecessary accumulation of material possessions and dissatisfaction with one's life.

• Body Image Issues: Many advertisements promote unrealistic beauty standards, which can lead to body image issues, low self-esteem, and even eating disorders, especially among young people.

• Unhealthy Habits: Advertisements for unhealthy foods, alcohol, and tobacco can encourage unhealthy habits and contribute to public health problems like obesity, alcoholism, and smoking-related diseases.

• Deceptive Practices: Some advertisements use deceptive tactics to exaggerate product benefits or downplay potential risks. This can lead consumers to make ill-informed decisions and waste money on products that don't live up to their claims.

• Environmental Impact: Advertising often encourages conspicuous consumption, contributing to overconsumption and environmental degradation. The constant drive for new products and the disposable culture it promotes can lead to resource depletion and increased waste.

• Financial Pressure: Advertising can create financial pressure on individuals by promoting a culture of consumerism. People may feel compelled to spend beyond their means to keep up with the trends and lifestyles depicted in ads.

• Privacy Concerns: Digital advertising, especially targeted ads, raises concerns about invasion of privacy. Advertisers often collect personal data, which can make individuals feel uncomfortable or even violated.

• Stereotyping and Discrimination: Some ads reinforce harmful stereotypes and contribute to discrimination based on gender, race, ethnicity, or other characteristics. This can perpetuate biases and negatively impact social attitudes.

• Impulsive Purchases: Advertising is designed to trigger impulsive buying decisions. People may make purchases they later regret because they were influenced by persuasive ads.

• Distracting Content: Excessive advertising, particularly in digital media, can be distracting and disrupt an individual's focus and attention span.

• Overwhelming Information: The sheer volume of advertising encountered daily can be overwhelming and lead to information overload. This can make it difficult for individuals to filter and process information effectively.

• Fostering Materialism: Advertising often promotes a materialistic worldview, where happiness and success are equated with material possessions. This can undermine the value of relationships, personal growth, and experiences.

• Emotional Manipulation: Advertisers use emotional appeals to influence consumers' decisions. While this can be effective in selling products, it can also manipulate people's emotions and exploit vulnerabilities.

Pro Bono / Social Advertising

Pro bono is a Latin word that refers to professional work undertaken voluntarily for the benefit of the society. Its more of an aggressive advertising approach which creates a strong appeal to the audience. Pro bono contents are designed with a view to create awareness and sensitization among the masses with respect to several issues. Information such as drafting of public interest litigation petition, clean and breathable environment, child labor, LGBTQ+ acceptance and issues, right to information, fighting pandemic, sanitation, agriculture, road safety, breaking stereotypes, gender disparity, equal education, humanity, importance of resources, etc. 

In countries like South Korea, United Kingdom and United States, students pursuing law are required to complete a specific duration of pro bono work per year pertaining to ethical issues. In India, organizations like Pro Bono India undertake a strong socio-legal approach in areas such as legal aid, legal intervention, legal journalism, legal activism, etc. Other organizations contribution towards pro bono work includes the National Service Scheme which involves volunteers from various Indian Universities to create social campaigns and drives to educate and inculcate a sense of knowledge among the underprivileged masses. Let's check out a few pro bono campaigns down here. Video credit and source: Pro Bono India

Deceptive and Misleading Advertisements: Case Study

1. Sensodyne Toothpaste: In India, the Central Consumer Protection Authority noted an absence of relevant study or material indicating worldwide prominence of Sensodyne products. Considering the same, they directed the Sensodyne toothpaste to cease the telecast of its misleading commercial within seven days in which it was claimed that the stated toothpaste is recommended by dentists worldwide and that it is the world's number one sensitivity toothpaste. The Authority also slapped a fine payment of ten lakh rupees as penalty. 

2. Neeraj Clinic, Rishikesh: Despite the Drugs and Magic Remedies (Objectionable Advertisements) Act, which specifically prohibits advertisements pertaining to several diseases including epilepsy, R.K. Gupta advertised with impunity, his clinic and claimed that he was offering a sure cure for epilepsy. Ironically, way back in 2000, the Indian Medical Association had declared him a quack after a committee had found that he was giving his patients toxic drugs in high doses. Yet, he continued to advertise. Again in May 2003, on a complaint from a consumer, the Advertising Standards Council of India (ASCI), a self-regulatory body of the advertising industry, had held that the advertisement was in violation of the Drugs and Magic Remedies (Objectionable Advertisements) Act and the Rajasthan Patrika wherein the advertisement had appeared had informed ASCI that the advertisement department had been advised to withhold further advertisements of the clinic. Yet, R.K. Gupta continued to advertise in other newspapers- in fact on the front pages of major English dailies and also on television channels, wherein he produced “testimonials” from people who, the advertisements claimed, had been cured of epilepsy. In the end, on a complaint from a non-resident Indian, who visited the clinic for the treatment of his son and got suspicious about the medicines that the enforcement agencies finally acted. Following a complaint filed by Mr. Anjon Chowdhury, through the Indian High Commission in Canada, the Drug Controller got the medicines prescribed by the clinic tested and found that it contained drugs which were either banned or controlled under Narcotic Drugs and Psychotropic Substances Act. His clinic was then raided and R.K. Gupta was subsequently arrested under the NDPS Act. He was also booked under the Drugs and Magic Remedies (Objectionable Advertisements) Act.

3. Conybio Health Care: in the year 2003, Consumer Education and Research society, Ahmedabad, had to bring to the notice of the regulatory authority in Gujarat, the sale and promotion of certain health gadgets by Conybio Health Care, in violation of the Drugs and Magic Remedies (Objectionable Advertisements) Act. The company was promoting and distributing sun shade to cure migraine and sun stroke, socks for acidity, pillow covers for spondylitis, palm guards for Parkinson’s disease, eye-shade for sinusitis, T-shirts for high, low blood pressure, short pants that cure gas, acidity, prostate, piles, urinary system problems, ladies briefs for menstrual problems, bed sheets for curing paralysis/ strokes and brassieres for breast cancer!! When the regulator asked the company to produce scientific evidence to support the effect of infrared rays which it claimed was present in the products, the company said it had never undertaken such studies by any recognized Indian institute. Subsequently, the regulator prohibited the sale and promotion of the products.

4. Advertisements pertaining to ‘discount sales’, advertisements on vehicles making misleading or false claims about their petrol consumption, false claims about the purity of gold / jewellery, shampoos that claim to ‘stop hair fall’, face creams that promise ‘wrinkle removal’, toothpastes that claim to prevent tooth decay and cavity and advertisements of educational institutions that make false claims about their recognition or affiliation or about the employment prospects.

5. Horlicks: GSK Consumer Healthcare was once in the dock with authorities for another of its product other than Sensodyne. The authorities had clamped down on the advertisement of Horlicks for claiming that 9 out 10 children’s diet is deficient in essential nutrients. The Advertising Standards Council of India (ASCI) said that the claim was misleading and exaggerated.

6. Byju: Byju’s claim about its learning app that 1 crore students were taking its courses and that 90% of them renew their subscription was touted to be untrue.

7. Apollo Hospitals: Apollo Hospitals in one of its advertisements had claimed, “Achieve freedom from your weight issues,” which can mean a cure for various obesity related diseases such as diabetes, infertility, heart diseases, etc. ASCI called out the ad for being unsubstantiated with research and for being misleading.

8. Dove: Hindustan Unilever Ltd came under scanner of the ASCI for its Dove Hair Fall Rescue Shampoo advertisement, which implied reduction in natural hair fall. ASCI called it misleading.

9. Usha Electronics: Usha International advertisement claim for its Usha Honeywell evaporative air cooler which said 'cools up to 80 square metres', was found inadequately substantiated under test conditions and misleading by exaggeration.

10. Kindle: Amazon Kindle’s advertisement for ‘Unlimited Reading’ was held to be not substantiated as a limit of 10 books was advertised as an ‘unlimited offer’.

11. Patanjali: Patanjali’s Coronil which was claimed to be a cure for Coronavirus. It was found to be misleading and untrue and the same was published by the Board in order to make the public aware of its nature.

Source:

1. www.dailyo.in

2. Global Advertising Lawyer's Alliance

3. www.ijalr.in

Some global campaigns of Pro Bono advertising