Mass communications and the advertising industry; Reports and

659.1

Mass Communications and the advertising Industry

REPORT§ AND PAPERS ON MASS COMMUNICATION

Request for permission to reproduce the Reports in full or in part should be addressed to Unesco's Office of Publications. The following reports and papers have so far been issued and are obtainable from National Distributors of Unesco Publications or from the Communication Sector, Unesco, Place de Fontenoy, 75700 Pans.

The following titles have been published in English and French. Those titles marked with an asterisk have also been published in Spanish.

Number

21 Current Mass Communication Research I-Bibliography of Books and Articles on Mass Communication published since 1 January 1955, December 1956

25 Adult Education Groups and Audio-visual Techniques, 1958 42 Screen Education. Teaching a critical approach to cinema and

43 The effects of television on children and adolescents, 1964 44 Selected list of catalogues for short films and filmstrips, 1963.

46 Rural mimeo newspapers, 1965 47 Books for the developing countries: Asia, Africa, 1965 48 Radio broadcasting serves rural development, 1965 49 Radio and television in the service of education and development

50 Television and the social education of women, 1967 51 A n african experiment in radio forums for rural development.

52 Book development in Asia. A report on the production and

53 Communication satellites for education, science and culture,

54 8mm film for adult audiencc 55 Television for higher technic;

report on a pilot project in I 56 Book development in AfricE 57 Script writing for short films 58 Removing taxes on knowled; 59 Mass Media in society. The I 60 Broadcasting from space, 19: , 61 Principles of cultural co-operation, 1970 62 Radio and television in literacy, 1971 63 The Mass Media in a violent world, 1971 64 The role of film in development, 1971 65 The practice of mass communication: some lessons from research,

66 A guide to satellite communication, 1972

television, 1964

Edition 1965

in Asia, 1967

Ghana, 1964/1965, 1968

distribution of books in the region, 1967

1967.

1969 ems and perspectives, 1969.

59 af research, 1970

1972

Number

67 Television for higher technical education of workers. Final report

68 Cinematographic institutions, 1973 69 Mass Media in an african context, 1973 *70 Television trafic-a one-way street?, 1974 71 Anatomy of an international year, Book Year, 1972-1974 72 Promoting the reading habit, 1975 73 Training for mass communication, 1975

on a pilot project in Poland, 1973

*74 National communication systems. Some policy issue and options, 1975

75 Technology and access communications media, 1975 *76 Towards realistic communication policies, 1976 *77 Cross-cultural broadcasting, 1976 *78 Planning for satellite broadcasting *79 The economics of book publishing in developing countries, 1977 80 Media studies in education, 1977 *81 External radio broadcasting and international understanding,

'83 National communication policy councils, 1979 *84 Mass Media: The image, role and social condition of women, 1979 *85 New values and principles nf -mss-cultural communication. 1979

1977

1 councils, 1980 Ay, 1980

*X8 Kurd1 journalism in Africa, 1: 8 ' *89 The SACUEXTERN project in Brazil: An analytical case study,

90 Community communications - the role of community media in

91 The S.I.T.E. experience, 1981 92 Transnational communication and cultural industries, 1982.

95 Development of communication in the Arab States: Needs and priorities, 1983

96 In preparation

1981

development, 1981

*94 The right to communicate: A status report, 1982

*97 Mass communications and the advertising industry

Mass Communications and the advertising Industry by Graham Murdock and Noreene Janus

with contributions by N.N. Pillai V.P. Shestakov P.P. de Win

ISBN 92-3-102291-1

French Edition 92-3-202291-5 Spanish Edition 92-3-302291-9

Published in 1985 by the United Nations Educational Scientific and Cultural Organization 7, place de Fontenoy 75700 Paris, France

Composed and printed in the workshops of Unesco

@ Unesco 1984 Printed in France

Preface

Advertising is a central feature of the modern world; although it is most pronounced in marker economies, elements of publicity and information are important in all societies, and very few people today are unaffected by advertising messages. The advertising phenomenon is felt at all levels from the local to the international and transnational, and world expenditures on advertising have been variously estimated at between 35 billion and 122 billion dollars.

It was in this context that Unescols Approved Programme and Budget for 1981-3 included the following paragraph (para.4382) : 'Case studies will be carried out to analyse the impact of advertising, particularly on the content of messages and on the management of national communication media. Special attention will be devoted to the nature of interdependence between the advertising industry and certain communication industries, and to the specific financial circumstances of the media'.

A considerable amount of research work is already in existence on the content of advertising, its messages and message design, the legitimacy of its techniques, its influence on media behaviour in general, and its role in relation to particular audiences, such as women. There is rather less on the role of advertising in contemporary mass communication processes, particularly studies of a comparative nature. This was an area in which Unesco not only had a particular interest, but was also well placed, because of its international character, to encourage research.

This report is a limited introduction to such a programme. It has been compiled by Tarnas Szecsko, Director of the Mass Communication Research Centre in Budapest, from a series of studies commissioned by Unesco on the relationship between mass communica-

tions and the advertising industry. The original studies were of advertising policy and practices in the United Kingdom, Latin America, India and the Soviet Union, together with a fifth study on self-regulation in the industry. Their titles and authors are as follows :

"Advertising and the Communications Media in Latin America : History, Regulation and Social Effects" - Noreene Janus, Instituto Latinoamericano de Estudios Transnacionales, 1982 "A Study on Advertising in India" - N.N. Pillai, Indian Institute of Mass Communication, 1982 "Nature, Scope and Impact of Advertising in the Communication Media of the USSR" - V. Shestakov, Institute of U S A and Canada, Moscow, 1982 "Self-Regulation in the Field of Advertising" - P.P. de Win, Brussels, 1983. As the editor of the report emphasizes, the studies

were not commissioned, or written, according to a tightly defined research framework and their compara- bility is limited. However, they do provide a cross- section of different social and mass communication systems, and they offer both data of considerable current interest, and material for further research and analysis.

The editor has drawn upon the original studies to compile a synthetic report, built around major themes, together with an introduction and a short conclusion offering some recommendations for future action and enquiry. .

The opinions expressed in the report are those of the individual authors and of the editor, and do not necessarily reflect the views of Unesco.

3

CO n t e nts

INTRODUCTION

CHAPTER 1 :

CHAPTER 2 :

CHAPTER 3 :

C H A P T E R 4 :

CHAPTER 5 :

.......................................................... T H E D E V E L O P M E N T O F ADVERTISING ............................ What is advertising ? ......................................... Advertising by other means : the rise of commercial sponsorship .......... Public sector advertising : the case of India ......................... The Americanisation of British advertising ......................... Transnational advertising expansion in Latin America ................. Advertising transnationals in India ................................ ADVERTISING AND THE M A S S MEDIA SYSTEM Trends across the media ....................................... Cinema : more than a “Minor Medium“ ............................. Across the media in the Soviet Union ............................. Trends in the Latin American Region ............................. Press advertising in Great Britain ................................ Press media costs in India

ADVERTISING IN THE NEW MEDIA IN THE UNITED KINGDOM Extending commercial broadcasting .............................. Homevideo ................................................ Videotex .................................................. Commercial cable systems ......................................

Trends in advertising expenditure : Great Britain

Structure and organisation of advertising in the USSR

.....................

.................

.....................

...................................... ..........

Satellite broadcasting ......................................... THE CONTROL OF ADVERTISING ...............................

Laws. codes of conduct : Indian examples Legal controls in Britain ....................................... Self-regulation : the view of the industry The self-regulatory system in practice ”Ad-watchers” suggested .......................................

...........................

........................... .............................

THE SOCIAL IMPACT OF ADVERTISING Economic issues ............................................. The transnationalisation of consumption and culture ................... Political considerations ........................................ Advertising and education ...................................... Re-evaluating advertising’s impact ................................ Advertising and editorial performance : positive and negative interventions ............................... Advertising subsidy and media diversity ............................. Advertising and social consumption ................................ Advertising and popular belief ....................................

...........................

Advertising and editorial policy : hidden pressures .......................

..........................................................

7

9 9 9

1 1 15 17 17 21 25

29 29 32 32 33 39 40

43 43 44 45 45 46

49

49 50 51 52 53

55 55 55 56 57 57

58 59 61 62 63

65 CONCLUSIONS

R E F E R E N C E S .......................................................... 67

5

Introduction

"Transnational products speak from the cowdung plastered walls."

(N.N. Pillai)

Mass communications can no longer be understood without some analysis of the advertising industry. A n American scholar writes: "The mass media are developed and taken over by the business system to deliver a continuous message of consumption. The informational system is transformed into a marketing system." 1

The extent of this transformation certainly differs from country to country, depending on the degree of interpretation between the mechanisms of the mass media and those of the market, but advertisements have established themselves as an integral part of mass media messages even in those societies where a non-market type of economy generally prevails.

Mass communications can no longer be analysed, therefore, without taking into consideration the flow of money between the mass media and the advertising industry. %me of the global figures will be discussed later. It should be enough at this point to quote only two examples to illustrate the magnitude of the amounts involved. In Colombia, in the mid-seventies, transnational corporations spent four times as much on TV-commercials as the national budget of the country could appropriate for T V subsidies. At the same time, transnationals in Kenya spent approximately 12 million shillings on advertising their products and services, while government expenditure on building up a network of rural health stations (in regions where 90 per cent of the population was living) totalled no more than 7.5 million shillings in a five year period 2.

By restructuring consumption habits - one of the primary goals of the commercials - the advertising industry imposes exogenous, partly alien ways of life of the populations of the developing countries. In Jamaica people eat more and more cereals for breakfast instead of their traditional - and more nutritious - diet of fish and bananas. In Mexico, one of the most important exporters of oranges, the consumption of Fanta and Orange Crush soft drinks is soaring, but until 1974, when a government regulation obliged producers to put a 10 per cent minimum of fruit into their drinks, these had no orange content at all. In the Ivory Coast the average consumption of Maggi- cubes is two per day by household, contributing to a dangerous deficiency in animal protein in the population's diet 3. Even in the sale of alcoholic drinks, where most societies try to impose constraints on advertising, commercials are creeping into the media. According to the latest figures, the world market for alcoholic products - more and more dominated by the multinationals - is somewhere in the region of 170 billion dollars, of which more than one per cent (2 billion dollars) is spent on advertising '+.

Besides shaping and transforming everyday life, mass mediated advertisements create a symbolic envi-

ronment for their publics and so reinforce a culture of consumerism. "The advertising agency is the key assembly point of the society's most versatile talent in many of the creative arts - music, photography, writing, film, television and drama. This talent is applied massively and single-mindedly to stimulating consumer demand and, not so incidentally, to systematic ideological reinforcement as well. More recently, it is also enlisted in a variety of other areas of social regulation - e.g., politics, administration, sport and entertainment. Basically, therefore, advertising creates the cultural atmosphere that generates the- consumer mentality that advanced capitalism requires."

Unesco has traditionally dealt very little with the advertising dimension of the social communication system. During recent years, however, with the emergence of the concept of the N e w World Information and Communication Order, more and more demands have been made by its Member States - mostly from the developing world- to consider the basic issue of the relationship between mass communications and the advertising industry. It became an area of controversy even in the deliberations of the MacBride C o m - mission itself. While on the one hand the Commission's report claimed that "effective legal measures should be designed to ... reduce the influence of advertisers upon editorial policy and broadcast programming", the American member of the Commission felt bound to comment that "where it can be shown to exist, the influence of the advertisers upon editorial content or broadcast programming would warrant careful study. But a sweeping demand that such influence be reduced, without pausing to examine or attempting to measure that influence in particular circumstances, is a symp- tom of ideological prejudice."

Conscious of the need for a sober, factual approach, based on a solid, professional analysis, Unesco commissioned five studies in an attempt to clarify the different aspects of the r81e of advertising in contemporary mass communication processes. Graham Murdock, of the University of Leicester, wrote about advertising in Britain ; Noreene Janus, of the lnstituto Latino- americano de Estudios Transnacionales, analysed the situation in Latin America ; studies by N.N. Pillai and V.P. Shestakov discussed the impact of advertising on the Indian and the Soviet systems of mass communication respectively, while a paper by P.P. de Win concentrated on a specific issue - the self-regulation of the advertising industry. This volume has been compiled from these five studies.

The studies themselves are not directly or easily comparable. They consider both developed and developing countries and market- and non-market economies, and while in some of them an abundance of hard statistical data helps the analysis, in others the authors

7

admit their lack of such basic information. For this reason, the editorial work also had to be selective.

The volume is based primarily on the studies by Murdock and Janus, relying on the others only when and where they add new or specific insights to the overall analysis. The editor tried, nevertheless, to keep the sequence of argument of the different authors intact, and as a result the volume is composed of selected blocks of the original studies, indicating the name of the author at each stage. The structure of the volume mostly follows that utilised by Graham Murdock.

The ideas expressed in this report are those of the individual authors. They do not necessarily reflect the views of Unesco; neither are they the outcome of a negotiated agreement between the contributors, but represent an attempt by the editor to present their individual points of view, while still maintaining a continuity of argument.

Tamas Szecsko

NOTES

1. SCHILLER, H.J., Communication Accompanies 3. Idem, pp.159 and 161. Capital Flows (International Commission for the 4. VICHNIAC, I., "Le commercie mondial de l'alcool Study of Communication Problems, no 47) - Unesco, est de plus en plus dornink par les sociktks trans- Paris, 1978, p.3. nationales" - Le Monde, February 15, 1983. et ddveloppement endoghe - Unesco, Paris, 1981, 6. Many Voices, One World - Unesco, Paris, 1980, pp.148 and 158. p.266.

2. REIFFERS, J.L. et al., Socikt6s transnationales 5. SCHILLER, H.J., op. cit., p.4.

8

Chapter 1: The Development of Advertising

This introductory chapter considers the development of advertising in market and non-market economies, in both developed and developing countries. It discusses its functions, constantly increasing expenditure and significant trends for the future, and ends by reviewing the rale and activities of the most powerful advertising agents of our times - the transnational corporations.

The names of the study authors from which the extracts in this chapter (and in subsequent chapters) are taken, are given in brackets after each quotation.

What is advertising ?

In its broadest sense, advertising covers all the ways that individuals and organizations publicize the goods and services that they have to offer, and promote a positive image of themselves. But most commentators prefer a narrower definition which restricts the term to the 'above the line' money spent on advertising in the mass media, including the costs of creating the advertisement themselves and of buying the space or time to display them.

But advertising is not the only way that companies promote themselves or their products. Many also spend a good deal of money 'below the line', on free offers, competitions, point of sale displays , and public relations. These forms of publicity are also important to a full understanding of the present structure of marketing and consumption.

Its a special form, corporate sponsorship has grown rapidly in Britain over the last five years, but it remains difficult to categorize with any precision. Some instan- ces are clearly just another way of securing media exposure, as when the sponsor's name appears on the credits of the television coverage of an event they have helped to finance. While other examples, such as Shell's guide books to the British countryside and wildlife are more properly seen as 'below the line' promotions (Murdock).

The self-definition of the advertising industry itself is more unambiguous, emphasising the service function of advertising. The best definition of advertising today may be

found in the Explanatory Memorandum of the Draft Directive on Misleading and Unfair Advertising proposed by the Commission of the European Economic Communi- ty to the Council of Ministers of the Member States.

"Advertising is an integral part of the system of mass production and distribution, serving the general public. Manufacturers of goods and providers of services need the opportunity to inform and remind the public of what they have to offer. Such a system of information is useful to the economics of production. Consu-

mers need information on goods and services so that they can make their choice between the many alterna- tives."

The Memorandum also qualifies advertising as having the additional effect of stabilizing employment by ensuring the steady disposal of production; it provides the basis for competition in the market place and encourages product development and information and the provision of low-cost goods and services previously regarded as too expensive for the mass market.

In addition, advertising brings a vital contribution towards the cost of the media (de Win).

In a non-market economy, like that of the Soviet Union, the functional definition of advertising has certainly different aspects. What are the aims and functions of advertising

in the USSR ? The main functions of advertising are (a) to regulate the demands for goods and services ; (b) to form rational needs ; (c) to inform the population about new technology, transportation and family life ; (d) to inform in the field of education, culture and art ; (e) to form higher standards of taste.

As can be seen the accent is less on the commercial and marketing aspects than on the information and education fields. This does not mean, of course, that advertising is absolutely free from commerce and marketing. Advertising creates consumer needs, pfo- vokes the interest to buy, forms consumer orientation helping to regulate demand for goods (Shestakov).

Trends in advertising expenditure : Great Britain

The most comprehensive estimates of total expenditure are provided annually by one of the main trade organizations, the Advertising Association, on the basis of returns from manufacturers, agencies and media proprietors. Separate figures are available for the revenues that the major press sectors and the commercial radio and television companies derive from advertising, but being revenue figures, they only cover the costs of buying space and time and exclude the costs of the ads themselves and the monies paid to the agencies. Consequently they are not as comprehensive as the Advertising Association's figures. These provide accurate figures for years since 1938 and rather more tentative estimates going back to 1907. The figures for selected years are shown in Table 1.

These appear to show a clear and consistent upward trend, with advertising expenditure growing by two and a half times in the first three decades of the century, levelling off somewhat during the Depression of the 1930s, picking up fairly slowly in the years after the Second World War, and then accelerating steadily

9

TABLE 1

TOTAL UK ADVERTISING EXPENDITURE IN SELECTED YEARS 1907-1980 (in current prices)

Year Expenditure in f mil lion Year Expenditure in f million

1907 20 1955 176 1924 45 1960 323 1930 50 1965 435 1938 59 1970 554 1948 79 1975 967 1952 123 1980 2562

Sources : Critchley (1972), Table 1 ; Waterson (1981), Table 1.

from the mid 1950s onwards, more than trebling between 1955 and 1965, more than doubling between 1965 and 1975, and more than doubling again between 1975 and 1980. But once the figures for total advertising expenditure are expressed in terms of fixed prices (Table 2), it becomes evident that growth over the last two decades has been rather less spectacular than it appears from the current price figures. Expenditure on display advertising has been particularly sluggish, and was almost at a standstill between 1965 and 1975, reflecting the growing economic problems of British manufacturing industry. Certainly there is evidence that during the recession of the 1970s, manufacturers cut their advertising budgets quite considerably in an effort to reduce their costs. For a fuller picture, however, we need to relate the advertising expenditure figures to the major indicators of general economic activity ; Gross National Product (GNP) and total consumer expenditure.

True, the figures still point to a fairly rapid expansion in the early part of the century when the present mass production-mass consumption system was crystal- lizing, with the ratio of advertising expenditure to both GNP and consumer expenditure more than doubling between 1907 and 1938 reflecting the growing centrality of advertising to the new economic order (see Nevett, 1982:71). But they also show that the Second World War and the period of austerity which followed it had a much more damaging impact on the growth of advertising than the raw expenditure figures in Table 1 suggest. This is not particularly surprising, given that consumption was regulated by rationing until 1954 and that outlets for display advertising were restricted until 1956 by the rationing of newsprint. As a result, it was not until the mid 1950s that advertising re-established the relationship to production and consumption that it had had in 1938. Table 2 also shows up the effects of the deepening recession which followed the consumer boom of the 1960s. By 1975 the ratio of advertising expenditure to GNP had dropped to below its 1956 level of 1.08 per cent, reflecting the general tendency of manufacturers to cut back on advertising in times of recession as a way of reducing costs reinforced by the sharp rises in advertising rates in the major media. Between 1970 and 1975 for example, advertising rates in the national daily newspapers rose by 72 per cent in real terms and television rates increased by 53 per cent. Similar- ly, the 1975 ratio of advertising expenditure to consumer expenditure was only just above its 1956 level of 1.43 per cent, having fallen from a peak of 1.9 per cent during the consumer boom of the early 1960s. Over the last couple of years, however, there has been

something of a recovery, with the overall ratio of advertising expenditure to consumer expenditure climbing back to just above its 1961 level and the ratio of display expenditure and consumer expenditure ap- proaching the level of the 1960s. On the other hand, the 1980 ratio of display expenditure to GNP remains well below its 1960s levels, reflecting the continued profitability and cash problems of many firms, although the evidence suggests that companies are not cutting their advertising budgets as readily as they did in the 1970s, having been persuaded that the short term savings are likely to be offset by long term damage to their market position. On the other hand, British industry's relation to advertising has not remained entirely static. Concealed within the statistics for aggregate levels of expenditure are some important changes in its distribution between sectors.

In the first place, as Table 3 shows, the last two decades have seen a significant shift in the share of .total expenditure going to the two main types of advertising, with display advertising's share dropping from 75 per cent to 70.6 per cent and classified advertising increasing its share from 13.3 per cent to 20 per cent. This figure fell slightly to 18.9 per cent in 1981, reflecting the cut backs in recruitment advertising and the sluggish property market, but overall the relative growth of classified remains significant and has important implications for those media depending on this type of advertising for a significant part of their revenue.

There have been important movements too within the display sector. As we noted earlier, the modern advertising industry grew up around the promotion of branded goods, particularly those which were con- sumed in use and which had to be replaced on a regular basis, such as foodstuffs, confectionery, drinks and tobacco. These products continue to play a key role in the advertising system, and as Table 4 shows, packaged good manufacturers occupy eight out of the top ten places. Some of these are British firms, like Cad- burys, Levers and Players, who established their market position in the late nineteenth century, while others are American owned companies, like Mars and Kelloggs, who have risen to prominence since. However, the list also includes more recent entrants to the ranks of the large advertisers in the shape of the major public utilities of electricity supply and railway services, and two of the leading automobile manufacturers, British Leyland and Ford Motors. Also rising rapidly up the ratings are the major retail chains led by Wool- worth's stores (in 23rd position) and the Roots retail chemists chain (at 26), with Co-operative stores and Tesco supermarkets at 39 and 40 respectively. These

10

T A B L E 2

RELATIVE GROWTH O F UK ADVERTISING EXPENDlTURE 1938-1980

Total Advertising Expenditure Disp 1 ay Advertising Expenditure

Year in f million as a % of as a % of in f million as a % of as a % of at consumers ' Gross National at consumers' Gross National

1970 prices expenditure Product 1970 prices expenditure Product

1938 nla 1948 nla 1952 nla 1956 nla 1961 436 1965 514 1970 554 1975 565 1980 628

1.39 0.96 1.15 1.43 1.90 0.90 1.74 1.50 1.91

1.18 0.78 0.89 1.08 1.40 1.39 1.27 1.03 1.34

n/a nla nla nla 334 1.46 1.07 370 1.37 1.00 373 1.17 0.86 379 1.01 0.69 443 1.35 0.94

Sources : Critchley (1972), Table 3 and Waterson (1981), Tables 1-3.

companies' appearance among the largest advertisers in the economy is relatively recent and points to an important trend in the distribution of advertising expenditure which is illustrated in Table 5.

As Table 5 shows, between 1971 and 1981 the overall share of total advertising expenditure represented by the traditional packaged goods sectors of food, toiletries and medicines, and drinks and tobacco, fell from 26.2 per cent to 20.5 per cent while the retail sector increased its share by 6.6 per cent to become the largest single advertising category. This switch from manufacturers to retailers reflects an important reorganization of distribution, with the large chains increasingly getting manufacturers to produce goods to their specifications and selling them in packages bearing the store's name rather than the maker's. This growth of 'own brands', as they are called, has been particularly marked among the self-service chains such as Sainsbury's, Tesco's and Fine Fare, and the newer discount store chains like Asda. And in both sectors it has been backed by extensive advertising campaigns aimed at transferring customer loyalty from the traditional brand names to the store's own brands. The squeeze on manufacturing brands has been further reinforced by the new scanning systems which optically read an item's product code at the check-out point and transmit the data to the store's computer. This provides a fast and accurate check on which brands are selling, which can be used for assessing the effectiveness of the store's own advertising and for judging other brand's contribution to their profits. This means that brands which sell badly or too slowly can be dropped relatively quickly, which puts pressure on the manufacturers to maintain their own advertising effort, despite the costs involved and the resulting squeeze on profits in a period of recession. As Peter Gittoes of Barclays Bank has recently explained, they "have to compare the cost of advertising with the cost of letting a brand die. You can let a factory run down and forget about it for a while, but with a brand, other things slip in and take its place. It's all a kind of tightrope walk and you can't afford to stop investing in it because no major brand can afford to give anybody a significant opportunity'' (quoted in Chatburn, 1982:38).

Table 5 also shows modest gains in total share by automobile advertising, household and leisure goods, promotion, and in advertisements for the savings schemes and financial services offered by banks and insurance companies. In this last case, however, the figures for measured media expenditure do not tell the whole story, since over the last decade financial organizations have also put an increasing amount of effort into promoting their services through sponsoring sporting and cultural events. And they have been joined in this effort by companies in two other branches of production: oil and tobacco. This 'other' form of advertising is relatively new in Britain in its present form and scale, but it is already making a significant impact on both the advertising industry and the mass media system (Murdock).

Advertising by other means : the rise of commercial sponsorship

Sponsorship needs to be clearly distinguished from patronage. Companies have long acted as patrons donating money to arts organizations' charities without expecting any return even in the form of publicity. Sponsorship on the other hand is a business deal where the company puts money into a particular event in return for publicity which will increase the public's awareness of the corporation and help to induce a favourable image of their products and activities.

Some forms of sponsorship date back to the beginnings of the modern mass marketing system. Following the introduction of compulsory schooling in 1880 for example, a number of firms including Lever Brothers and Beechams began to distribute sponsored books and educational aids (such as maps and wall charts) to schools in an effort to impress the companies' names on the next generation of consumers. Other firms launched sponsored books onto the general market, the best known being the Shell guides to the countryside and wildlife of Britain (aimed at offsetting public fears about the oil industry's spoliation of the environment), and the Guinness Book of Records which rapidly became one of the world's best sellers. The sponsorship of sporting events also has a long history which

11

TABLE 3

PERCENTAGE OF TOTAL ADVERTISING EXPENDITURE DEVOTED TO DISPLAY AND CLASSIFIED ADVERTISING (SELECTED YEARS 1938-1980)

Percentage of the total in : Type of advertising

1938 1948 1956 1960 1972 1975 1980

Display advertising 76.3 65.8 75.6 75.8 67.8 67.1 70.6 Classified advertising 11.9 17.7 13.2 13.3 21.2 22.5 20.0 Other advertising 11.9 16.5 11.2 10.9 11.0 10.3 9.5

Total advertising expenditure in f million 59 79 197 323 708 967 2562 (at current prices) -

is generally reckoned to have begun in 1887, when the French magazine Velocip2de financed the first motor sport event. Motor racing still takes the largest slice of British sponsorship money, followed by the arts, and a series of other sports headed by horse racing, tennis, golf and cricket.

It is difficult to get a precise estimate of the current extent of commercial sponsorship since many firms either refuse to declare the full extent of their promotional budget, or include sponsorship payments along with other forms of 'below the line' expenditure. However, even if we concentrate solely on the money that can be fairly readily attributed to sponsorship deals - so called 'visible' sponsorship - the figures are striking. In 1973 'visible' sponsorship was estimated at around E15 million. By 1977 it had grown to €25 million and by 1981 it was estimated at over E50 million (Simpkins, 1981:12). The reasons for this rapid expansion are not difficult to find. The costs of mounting sporting and artistic events escalated rapidly through the 1970s, and in many cases the increases were well above the general rate of inflation. At the same time, the deepening fiscal crisis of the public sector has led to severe cut-backs in the level of public support for cultural and leisure activities. Moreover, these reductions have accelerated sharply since the election of the present Conservative Government in the spring of 1979, who came to office pledged to roll back the boundaries of the State and encourage private enterprise to take a more active r6le in supporting social and cultural amenities that have traditionally been the preserve of the public sector. It is therefore easy to see why sporting and arts organizations should wish to attract commercial sponsorship money. It is the only way they can begin to make good the shortfall in their finances created by rising costs and reductions in public funds. But why should corporations respond ? What pay-offs does sponsorship offer them ?

For some, sponsorship of arts and sports gives them privileged access to events and facilities (such as private boxes and dining rooms) which can play a useful r81e in entertaining and impressing prospec- tive clients and bankers and provide a congenial environment for discussing business deals. But for many companies 'the ruling motive' for financing arts remains prestige and 'the expenditure is regarded as a public relations activity designed to impress those whose opinions are important' (Carless and Brewster, 1959:57). This is particularly true of the companies in the oil and tobacco industries, both of which are under increas-

ing attack from the environmental and health lobbies. Supporting the arts is a relatively inexpensive way of demonstrating their corporate concern for the 'quality of life' and of increasing goodwill among Blites who may be in a position to take decisions affecting their operations. Research by Imperial Tobacco for example, shows that the promotional notes it includes in the programmes of the Covent Garden operas it sponsors are highly effective in reaching influential City of London decision-makers. Given that Clites are their primary target audience, the companies tend to concentrate their sponsorship on the prestigious London-based arts organizations, plus in the case of the oil companies, the leading organizations in areas where they have refineries. Lately, however, there are indications that companies are becoming more interested in reaching the general public. But, as Table 6 shows, the big money is still going mainly to arts organizations with a distinctly up-market audience profile.

Over the last year or so, however, there have also been signs that the tobacco firms in particular are becoming more concerned with using sponsorship to promote their products as well as to enhance their general image. BAT'S support for the Philharmonia Orchestra, for example, is explicitly tied to the promotion of their D u Maurier brand of cigarettes. Using arts sponsorship to advertise their products has become increasingly important to the tobacco companies for several reasons. Firstly, they are banned from advertising cigarettes on commercial television (although advertisements for pipe tobzcco and cigars are still allowed) and restricted by voluntary agreement with the Government in the amount and type of promotion they can attach to their sponsorship of sporting events. Secondly, they are in the middle of a protracted struggle to maintain the market shares of their brands against a background of steadily falling cigarette sales and the intensified competition sparked off by BAT'S first time entry into the British market in 1978. A similar intensification of competition is also evident in the financial services sector where the banks and insurance companies are struggling to increase their share of people's savings and investments against a background of falling real incomes. However the key to using sponsorship in corporate promotion and brand advertising lies with television exposure. This enables the sponsor's message to reach a much larger audience than those attending the original event and multiplies its potential effectiveness.

From the outset the regulations governing British

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14

TABLE 5

PERCENTAGE DISTRIBUTION OF TOTAL ADVERTISING EXPENDITURE BY PRODUCT GROUP 1971-1981

% increaseldecrease Product group 1971 1981

Classified advertising 20.14 18.94 -1.20 Food 11.84 9.08 -2.76 Industrial * 11.81 10.00 -0.84 Retail 10.66 17.28 t6.62 Household and leisure goods 9.98 10.71 +O. 73 Drink and tobacco 8.46 7.23 -1.23 Toiletries and medicines 5.92 4.22 -1.70 Tourism, entertainment, foreign 4.06 3.79 -0.27 Savings, financial 4.74 5.53 +0.79 Automobiles 3.05 4.89 +1.84 Government 2.70 1.98 -0.72 Nationalized industries 2.36 2.05 -0.31 Clothing 2.03 1.1 -0.73 'Publishing, books 1.86 1.80 -0.06 Charities, education 0.34 0.32 -0.02

Tota 1 expenditure f million (at current prices) 591 2,818

Source : Based on information supplied by the Advertising Association.

Note : * 'Industrial' includes prestige and image advertisements in consumer media, and classified and display advertisements in the trade and technical media.

television have banned direct sponsorship on the classic American model where a manufacturer finances the production of programmes and uses them to promote their products through announcements at the beginning and end of the broadcast and spot advertisements during the programme itself. However, the British system does allow for sponsorship 'at one remove', where the television company covers an event bearing the sponsor's name, although for some time the possibilities of this type of exposure were restricted by the BBC's refusal to mention the sponsor either in broadcasts themselves or in the programme listings in the Radio Times.

These prohibitions have now been abandoned for several reasons. The first was technical. It simply became impossible to avoid photographing the advertisements that papered the sports grounds from which the broadcasts were made, and this made the BBC's refusal to name the sponsor more and more of an empty gesture. The second and decisive reason was economic. Televising sponsored events was to the BBC's advantage since it was able to offer smaller fees to promoters who were receiving a contribution towards their costs from advertisers, and given the Corporation's worsening financial crisis, this provided a useful way of pruning expenses. However, in return for this hidden subsidy, the sponsors asked for and got a reasonable acknowledge- ment both in the broadcasts themselves and in the programme listings, and this is now standard practice.

Although many of the methods associated with present-day sponsorship are new to Britain, they are not hovel in themselves. Along with so many other advertising techniques they were originated and developed in the United States, and their adoption here is simply another example of the growth of American

influence within the advertising industry as a whole (Murdock).

Public sector advertising : the case of India

If the largest share of advertising comes from the manufacturers of products, the largest single source of advertising in India is the public funds. The biggest share in press advertising in India comes from the Central and State Governments, Public Sector Undertakings- and other bodies financed through the public funds. The exact expenditure incurred by them is not known ; the estimates are that it may be a little more than one third of the total expenditure on press advertisements in the country. If the advertisements from all public funds including those of universities, courts, local bodies, etc., are taken into account, the total share may go up considerably.

There are two categories of advertisement released by these sources - classified and display. Tender notices, announcements, job advertisements, etc., belong to the former group, and institutional and pro- ducthervice promotional advertisements to the latter.

The promotional campaigns of the Government are intended to share the mind of the people for certain services and ideas. Massive social marketing campaigns like family planning, national savings, public health programmes, national integration, etc., seek to inculcate new habits, attitudes and values in the people so that they adopt certain practices and take intelligent decisions which would help improve the quality of their life. They have brought a new dimension and relevance to advertising as a catalyst of change.

15

TABLE 6

SELECTED GRANTS TO ARTS ORGANIZATIONS BY OIL AND TOBACCO COMPANIES

Sponsor Recipient Organization G R A N T Total Amount Duration

in f

British American Tobacco Philharmonia Orchestra 600,000 1981-3 1981-8

Imperial Tobacco The National Theatre 240,000 1982-5 Mobil Oil The Scottish Chamber Orchestra 120,000 1982-6

Gulf Oil Corporation Scottish National Orchestra 250,000

Shell Oil London Symphony Orchestra 100,000 Renew ab1 e

Amoco Oil Welsh National Opera 25,000 Renewable annually

annua 1 1 y

When India took to planned economic and social development after Independence and launched the First Five-Year Plan in 1951, it was emphasized that such national tasks as family welfare, adult literacy, stepping-up of agricultural production, eradication of unhealthy social practices, mobilization of savings, slum clearance, etc., should be realized through the involvement and enlightened support of the people. More than 80 per cent of the people lived in the traditional setting of rural areas, little aware of what was happening around them, even ignorant of a better standard of living and therefore incapable of aspiring to anything better in life. To involve them in any endeavour even related to their own betterment needed convincing them that there was something better to work for and achieve. From this need evolved the communication policy of the Government which in- sisted that the programmes and policies of the Govern- ment be brought home to the people, especially the weaker sections, in their own languages and symbols. This responsibility to communicate was entrusted to the media units and information network of the Government Radio, TV and Film Division which produces documentaries and short films that are all under the Central Government and disseminate information about development programmes. Some other departments produce and distribute printed publicity material. Some others arrange the visits of mobile publicity units and performing folk artists to villages with the mixed fare of entertainment and information. To support and reinforce these efforts, the Government wanted planned social marketing campaigns over press and other media to educate and inspire the opinion leaders and the common people.

The advertising part of these promotional campaigns is handled by the Directorate of Advertising and Visual Publicity (DAVP) which is the Advertising Wing of the Central Government. Various ministries, departments and a number of public enterprises are the clients of DAVP.

DAVP has spent about Rs. 2.5 crores on classified advertisements and Rs. 1.2 crores on display in 1980-81. About 50 per cent of the classified advertisements were on job opportunities in Central Government, public sector undertakings and other public-funded bodies. Unlike tender notices and other announcements, job opportunity advertisements are immediately useful to the increasing legion of unemployed educated young people and therefore can be considered as public service advertisements. No information is more meaningful

to the youth of India today than employment news. Employment News, a weekly publication brought out by DAVP in English and a few Indian languages, exclusively devoted to job opportunities in Central and State Governments and Government funded bodies, is the only job-advertisement journal in India.

In quality too, besides quantity, public service and educational campaigns of DAVP have been less significant than its classified advertising service. Rs. 1.2 crores spent on display advertising in 1980-81 was the total for all public service campaigns. Investing much less in national advertising campaigns on issues of supreme importance and urgency than what a soap or baby food or suit case advertiser spends on his seg- mented campaign would serve little purpose. Advertis- ing is like learning: a little is a dangerous thing. It helps neither the advertiser nor the consumer, because it produces results only if it leaves an impact by continuity and uniformity.

Perhaps it may be more true to say that DAVP mounts no campaigns; it only creates and releases some advertisements. No doubt the Government of India and the State Governments are spending much money on publicity programmes for the causes mentioned above. Social marketing campaigns, as distinct from publicity programmes, are purpose-oriented, scientific and effectiveness-measurable communication efforts. A campaign has to be sustained: the DAVP advertising was not.

Within the guidelines prescribed by the Central Government, the States launch their own campaigns on matters of national importance such as family planning and national integration. They have their own programmes for industrialization, agricultural development, etc. A number of State Governments have attracted industries and raised capital from the public through systematic advertising campaigns inside and outside the State. For instance, the Economic Development Corporation of Goa raised from investors Rs. 2,700 lakh through intensive campaigns in 1980. The advertising campaign of Gujarat State Corporation has been SO successful that it changed the image of the State "from a textile and tourist centre to a premium industrial plant location". Kerala State's family planning campaigns have been remarkably effective. Their campaign for the State Electronics Corporation has placed the company's products among the hot favourites in the national market. Behind every such memorable State campaign was a reputed advertising agency.

This, however, does not mean that there has not

16

been wasteful and unimaginative expenditure in State advertising. The expenditure of State Governments on image advertisements, as ORG findings revealed, borders on colossal waste as most of it happens to be full page laudatories of dignitaries in mainline newspapers on the 'auspicious occasions' of foundation stone laying or inauguration of some local projects. Most conspicuous by their absence in the regional press are the advertising campaigns on several issues such as dowry. Harijan problems, communal and political confrontations, etc., which should rouse the conscience of the people are not mere law and order problems. They are the expressions of deep-rooted attitudes which law and order machinery cannot change. Central and State campaigns have yet to make their mark in these sensitive and socially relevant areas.

Another big advertiser is the corporate sector which has gained commanding heights of Indian economy during the last two decades. Several of the public sector undertakings manufacture and supply capital goods and intermediary products which help produce other products. A number of others are service- oriented. Less than 20 per cent of these companies have any sizeable budget for advertisements of a promotional nature including PR. Others have negligible allocations and, therefore, only marginal advertisements. There is no accepted ratio of expenditure on advertising in relation to the turn-over. Air India spent in 1980 about Rs. 120 million out of its turn- over of Rs. 3,750 million. Minerals and Metals Trading Corporation with Rs. 14,000 million turn-over spent hardly Rs. 2.5 million on this account. It is estimated that the total expenditure of public undertakings on advertising and publicity was around Rs. 25 crores in 1980.

The public sector, which has laid the foundation of industrial progress in the country, is still not appre- ciated by the common people -not even by a large section of opinion leaders. They have become the backbone of India's economic stability ; they have started earning profits, in some cases quite substantially. But the impression that has gone round and is repeated on public platforms and newspaper columns is that the public sector is a 'White Elephant'. There had not been any organized effort to tell the public what these companies have been doing. As mentioned before, the advertising and public relations allocations of individual undertakings are not enough to release one advertisement campaign a year. Even the meagre outlays on advertising and publicity are progressively cut. In 1979-1980 and in 1980-1981, the advertising allocations of these undertakings were cut by 25 per cent each time. This means that the advertising expenditure of public sector undertakings has been reduced to half in two years, while the expenses on all media had more than doubled. In fact the public sector undertakings in India are the best examples of how to do 90 per cent good and yet earn a bad name by not doing the 10 per cent of speaking about it. The silence is so total that in certain cases even the public who are immediately connected with the operations of a corporation do not know what great work the organization is doing (Pillai).

Structure and organization of advertising in the USSR

The organization which coordinates all activities in advertising inside the Soviet Union is the Interdepart- mental Council of Advertising. The president of this Council is usually a Deputy-Minister of Trade.

- coordination in the work of all advertising firms and agencies ; - generalization and popularization of accumulated positive experience ;

The functions of this Council are as follows :

- coordination of activities and contact with mass media ; - - support of publication or theoretical research in the field ; - organization of symposia and conferences in co- operation with scientific and training institutions.

The Council has a consultative status. Its decisions are not compulsory, since they are of an advisory character.

The Interdepartmental Council includes representatives of those Ministries which deal with advertising - the Ministry of Trade, Civil Aviation, Health, culture, and besides, representatives from 25 other Ministries which produce consumer goods.

Commercial advertising inside the country is organized by the "Soyuztorgreclama". This agency has existed for 17 years only but its business is growing rapidly. At the beginning, in 1965 the total volume of advertising by this agency amounted to 2 million rubles, but after ten years in 1975 it reached 25 million rubles. Eleven big advertising groups of enterprises and more than 35 workshops are incorporated into 'Soyuztorgreclama" with more than 4,000 specialists working there.

The functions of "Soyuztorgreclama" are as follows : - publication of announcements and advertising in newspapers and magazines ; - - - - - organization of recommendations and programmes of the Interdepartmental Council of Advertising.

Besides "Soyuztorgreclamall which operates at the national level, there are five advertising agencies in national Republics. In the Russian Federation it is "Rostorgreclama", in the Ukraine, Wkrtorgreclama", in the Uzbek Federation, "Uztorgreclama", in Lithuania, "Littorgreclama", in Estonia, "Esttorgreclama".

All these agencies, including Y3oyuztorgreclama" spend an annual sum of more than 100 million rubles on trade advertising. The system of advertising in the USSR is not centralized. There are many advertising agencies with different programmes. There are special departments of advertising in many Ministries, like the Ministry of Health, Ministry of Trade, Ministry of Civil Aviation, Ministry of Marine, State Committee of Cinematography, etc.

There is also a number of advertising companies - I1Orbitaf', "Rassvet", "Radiotechnica" - which advertise radio sets; TV sets, tape recorders ; there is also a firm called the "Ocean" which advertises sea products. All that produces an elastic system of advertising oriented towards special needs and interests of consumers (Shestakov).

elaboration of advice and recommendations ;

distribution of commercials on TV ; production and distribution of advertising films ; production of posters, catalogues, prospects, etc. ; decoration of shop-windows and buildings ;

The Americanization of British advertising

From the beginning of the modern advertising industry, British manufacturers and agencies have looked towards America for inspiration. William Lever, one of the founders of the Lever Brothers soap and detergent empire, for example, followed American techniques slavishly and even went so far as to buy slogans from American copywriters (Tunstall, 1964:34). But until after the Second World War, this influence remained mostly indirect and was confined to the borrowing of persuasive techniques and styles of organization. During this period, American agencies concentrated their activities on the rapidly growing home market and by 1937 only four had ventured abroad to set up overseas subsidiaires. There were exceptions, however. McCann, for example, established an office in London in 1927 at the request of their main client, Standard

17

TABLE 7

TOP TEN LONDON ADVERTISING AGENCIES IN 1962

Rank Order Agency UK bi 1 ling Nationality of in f million parent company

1. 2.

3. 4. 5. 6. 7. 8. 9.

10.

London Press Exchange J. Walter Thompson S.H. Benson Mather and Crowther Erwin, Wasey, Ruthrauff and Ryan Masius and Fergusson Colman, Prentis and Varley Young and Rubicam Lonsda 1 e-Hands Foote, Cone and Belding

16.37 16.30 15.00 11.81 9.44 8.83 7.50 7.20 6.43 6.30

UK USA UK UK USA UK UK USA UK USA

~~ ~ ~

Source : Tunstall, 1964, Table 8, p.271.

Oil of New Jersey, who were expanding their operations in Europe at the time, while J. Walter Thompson opened their London office, before the First World War, and had risen to become a major force in British advertising by the outbreak of the Second. But it was only after the War that the other major American agencies followed suit and made a concerted effort to break into the British market.

The end of the War ushered in the age of the modern transnational corporation spearheaded by the leading American companies. Untouched themselves by bomb- ing or invasion and with their major European and Japanese rivals needing time to recover from the War, US firms were well placed to launch anassaulton world markets. The leading advertising agencies followed them and by 1960, 36 had branches outside the United States and were operating a total of 281 overseas offices (Nevett, 1982:195). Europe was a prime target for American corporate expansion with over a thousand manufacturing concerns opening subsidiaries between 1946 and 1959 (see Janus, 1981:293). Moreover, the convenience of having a base in an English-speaking country meant that a number of leading companies headquartered their European operations in London. As a result, virtually all the major American agencies opened offices in London. Some, like Doyle, Dane, and Bernbach, started from scratch, but most preferred to merge with or buy out existing British agencies. In 1958, for example, Benton and Bowles acquired Lamb and Robinson, while BBDO bought Dolan, Ducker, Whitcomb and Stewart in 1960.

American agencies were well placed to make an impression on the somewhat sluggish British advertising industry at the time. In the first place, rationing had made the 'hard sell' somewhat redundant and most campaigns were devoted to regulating demand by per- suading people to conserve scarce resources or showing them how to make the best use of materials in short supply. Men were encouraged to use certain long- lasting razor blades and help save the nation's steel while housewives were shown how to make cakes without eggs and how to make clothes last longer (see Dyer, 1982:51-2). Consequently, domestic agencies had got out of the habit of stimulating demand and had become more "concerned with filling spaces with something tasteful and amusing" (Nevett, 1982:194). With

the end of rationing in 1954 and the beginning of the second 'retail revolution', however, a more aggressive approach was called for. As the smaller retailers were increasingly displaced by the new self-service supermarkets and chain stores, so the shop assistant's traditional role as the final link in the selling chain disappeared, leaving the product to sell itself. Conse- quently it became more and more important to diffe- rentiate between brands by plugging the 'special feature', real or imagined, which distinguished them from their rivals and linked them to the wants and dreams of potential purchasers. Armed with Rosser Reeve's doctrine of the 'unique selling property' and backed by Ernest Dichter's 'motivation analysis' of consumer desires, American agencies were well versed, in the necessary techniques. And unlike the British agencies, who were "ill-equipped in every way to tackle the situation" (Garnett, 1972:133), they also had experience of the major new advertising medium of the time- commercial television - which began to penetrate into the high population areas in 1955-56. Despite these advantages, however, American agencies had only achieved a limited dominance over the British advertising industry by the early 1960s.

As Table 7 shows, by 1962 only four out of the top ten London agencies were subsidiaries of American parent companies. The remaining six were British firms. They included the market leader, the London Press Exchange, and two of the major firms founded in the late nineteenth century, Benson's and Mather and Crowther. Since that time, however, American firms have markedly increased their stake in the British advertising industry through a combination of natural growth and acquisition. Two of the most significant take-overs occurred in 1969. In May of that year, the London Press Exchange merged with the New York agency of Leo Burnett, while the following month, Sullivan, Stauffer, Colwell and Boyles (SSC and B) bought a 40 per cent stake in Lintas which was unique in being the only British agency owned directly by a major manufacturer (in this case Unilever). SSC and B was itself bought out by the giant Interpublic Group in 1979, although it was not until 1982 that Interpublic acquired the remaining Lintas shares to give them outright control. The other major take-over occurred in 1977 when the U S agency of D'Arcy-MacManus

TABLE 8

THE TOP TEN ADVERTISING AGENCIES W O R L D W I D E 1981

Rank Agency Country of incorporation

Wor Id bi 1 1 ings in millions of

dol 1 ars

1. 2. 3. 4. 5. 6. 7. 8.

9. 10.

Dentsu Young and Rubicam J. Walter Thompson Ogilvy and Mather McCann-Erickson Ted Bates and Co. B B D O International Leo Burnett Co. SSC and B Foote, Cone and Belding

Japan U S A U S A U S A U S A U S A U S A U S A USA U S A

nla 2,355 .O 2 , 212.7 1,933.8 1,927.3 1,578.1 1,400.0 1,336.0 1,168.3 1,153.3

Sources : Financial Times, March 3rd 1983, p.1 ; Advertising Age, March 24th 1982, p.10.

acquired Masius. This had been one of the leading forces in the domestic advertising industry throughout the 1950s and 1960s and one of the few British agencies to try and reverse the flow of influence by moving into the American market. In 1968 they acquired a small US agency, but progress was slow and after five years they opted for a partnership with D'Arcy-MacManus which was looking for opportunities to expand outside the US and was attracted by Masius' European network. As part of the deal, D'Arcy took a minority stake in M a s h which paved the way for a successful take-over bid in 1977.

As Table 8 clearly shows, American agencies now dominate the world advertising industry, taking all but one of the places in the current 'Top Ten', the single exception being Dentsu of Japan. In fact the market power of the largest of these US groupings is even greater than it appears from the list since although several of the leading agencies operate independently on a day-to-day basis, financially they are all subsidiaries of the same holding company : the Interpublic Group. Interpublic currently owns McCann-Brickson (ranked third in the world billings chart), SSC and B (ranked eighth) and Marschalk Campbell-Ewald (ranked fifteenth) making it the largest single force in the international advertising industry. Moreover, as the company told its stockholders in 1980, it has every intention of expanding its international operations still further to take advantage of the expected growth in markets outside the USA, since they estimate that :

"While the next ten years should see sustained growth of advertising expenditures in the United States, more rapid expansion is expected to occur in many other markets. As an industry, advertising abroad is generally in an earlier state of development, and should constitute a steadily increasing percentage of worldwide advertising expenditures... The three advertising agency systems of Interpublic are well established throughout the world. They comprise the world's largest group of advertising agencies under common ownership... they are uniquely situated to take advantage of the expansion of advertising as a worldwide industry."

(Interpublic Group, 1980:6-7)

As w e can see from Table 9, the leading American agencies also dominate the British industry, occupying sixteen out of the top twenty positions in the 1982 billings chart, and seven out of the top ten, headed by J. Walter Thompson, D'Arcy-MacManus and Masius, Ogilvy and Mather, and the leading Interpublic subsidiary, McCann-Erickson. However, the 'Top Twenty' list also features the names of three British owned agencies which have risen to prominence at the same time as the strengthening of American dominance. They are : Collet, Dickenson, Pearce, founded in 1960, Allen Brady Marsh, launched in 1966 and Saatchi and Saatchi, formed in 1970. All three have made rapid gains from being 'hot shops' set up by young executives breaking away from larger agencies, to becoming major agencies in their own right. But Saatchi's rise from almost nothing to Britain's leading agency in just ten years has undoubtedly been the most spectacular.

It began modestly enough when the two brothers, Maurice and Charles Saatchi, started out in 1970 with the aim of creating "a large agency with all the backup that provides for clients but one which at the same time also succeeds in being progressive, youthful and innovative in approach"(Saatchi and Saatchi, 1980:15). They achieved this second aim relatively quickly, projecting an image of youthfulness and even brashness, but for the first five years they remained small. The breakthrough came in 1975. The established agency of Compton UK (in which Compton of N e w York had a minority stake) decided on a merger with a younger agency to brighten up their image, since they had a blue chip portfolio of clients, including Proctor and Gamble and Rowntrees, but a reputation for being somewhat dull. After being turned down by their first choice, Kirkwoods, they approached the Saatchi brothers, who, in a deft reverse take-over, named the new holding company after themselves, took the lion's share of the equity and excluded the Americans. Not content with holding on to Compton's major packaged goods clients, they launched an aggressive and successful drive for new business which brought them, among others, the Conservative Party's advertising account, for the crucial election campaign of 1979 which brought Mrs. Thatcher to power. Since then, Saatchis has continued to expand. In July 1981, they acquired the established Dorlands group in a f5.6 million deal which

19

TABLE 9

BRITAIN'S TOP TWENTY ADVERTISING AGENCIES IN 1982 (ranked by billings)

Rank Order Agency 1982 billings Number of Parent company in f million staff employed incorporated in :

1.

2. 3. 4. 5.

6. 7. 8. 9.

10. 11. 12. 13. 14. 15. 16. 17.

18. 19. 20.

Saatchi and Saatchi J. Walter Thompson D' Arcy-MacManus and Masius Ogilvy and Mather McCann-Erickson Advertising Allen Brady and Marsh Leo Burnett Foote, Cone and Belding Young and Rubicam Dorland Advertising Col lett Dickinson Pearce Ted Bates Boase Massimi Pol litt Geers Gross SSC and B: Lintas Davidson Pearce Grey Advertising Benton and Bowles Doyle, Dane, Bernbach Abbott Mead Vickers SMS

114.00 108.00 90.00 83.00 74.15 65.11 64.70 60.80 58.85 54.00 52.17 48.81 48.10 47.00 40.40 39.00 37.20 37.01 34.00 29.60

555 518 469 298 374 347 245 329 316

270 225 188 175 130 205 170 138 219 174 84

UK U SA USA USA USA UK USA USA USA UK UK USA USA USA USA USA USA USA USA USA

Source : Campaign, 7th January 1983, p.21. 'billings' are the amounts spent by clients through the agencies listed. The table is based on figures provided by the agencies up to the end of November 1982.

brought them the Crawford agency and the main Dor- lands agency itself (currently ranked tenth). As well as strengthening Saatchi's overall position in the British advertising market, this acquisition gave them a firm financial base from which to expand their operations. Some of this money has gone on acquiring stakes in two of the companies in the vanguard of the revolution in European television, Greenwich Cable-vision, which currently holds one of the two licences to provide a pay-TV channel in London, and Satellite Television, which is operating the first transnational satellite service in continental Europe, beaming programming and advertisements into homes in Malta and Finland, via local cable operators.

Cable, satellite and the other new communications technologies are opening up significant new opportunities for advertisers and Saatchis see these acquisitions as a useful way of keeping "ourselves and our clients fully abreast of all developments and opportunities in this area and their implications for pan-European brands" (Koski, 1982:3).

However, most of Saatchi's spare cash has gone on a bid to enter the US advertising market. This came in March 1982 when they acquired Compton Communications for f16.2 million in cash plus a further $27.6 million to be paid to key executives over the next ten years providing Compton achieves average annual post-tax profits of at least $4.07 million. In

1981, Compton was ranked as the fourteenth largest agency in the world with global billings of $812.6 million, and commentators confidently predict that the combined billings of Compton and Saatchis will be sufficient to put the group in the world 'Top Ten' for 1982. Des- pite this spectacular growth, however, Saatchi and Saatchi remains a family firm with the two brothers continuing to hold a controlling interest of around 30 per cent of the equity.

At the present time then, the British advertising industry is dominated by large transnational agencies, the majority of them subsidiaries of the leading US concerns, but with a significant representation of British owned firms led by Saatchis. But these domestic agencies should not be seen as a countervailing force to American influence. On the contrary, their success derives from their adept use of American techniques and organizational styles and from their ability to 'beat the Americans at their own game' in the competition for clients. Most of the large accounts that change hands move between the major agencies. The biggest switch in 1982, for example, occurred when British Airways transferred their business to Saatchis, and the second biggest when Davidson Pearce won the Fiat Auto account. But the continued dominance of the 'Top Twenty' concerns should not be taken as indicating that the industry is entirely static. Clus- tered around the central core of established agencies

20

is a dynamic periphery made up of smaller, newer agencies, the more successful of which may eventually enter the ranks of the majors, in the same way as Collet Dickenson, Allen Brady Marsh and Saatchi and Saatchi.

The last couple of years has seen increased activity in this peripheral sector as a result of two interlinked movements. Firstly, a number of new agencies have been formed by experienced executives who have broken away from the major agencies to set up on their own, taking important clients with them. One of the most publicized examples is Grandfield Rork Collins (GRC) which was launched in September 1979 when three of McCann-Ericksonk senior personnel (including the Chairman, Nigel Grandfield) left the company and successfully wrested the Tesco supermarket account from McCanns. In order to reduce their overheads, however, a number of these 'breakaway' agencies have started up without a media department which has left the way open for the growth of independent 'media shopsf offering a specialized service buying time and space in the major media. Given the recent prolifera- tion of media outlets with the continued expansion of local commercial radio, the imminent launching of the fourth television channel and the rise of new media such as viewdata, video and satellites, media buying is becoming more and more a complex and specialized job, and the 'media shops' argue that since it is their sole function, they are in a position to offer a better and more comprehensive service than the standard full service agency. Certainly they have expanded rapidly, and their newly formed trade body, the Association of Media Independents, recently reported that its members had achieved total billings worth €234 million in 1981, which is more than the combined total for the two major agencies, Saatchi and Saatchi and J. Walter Thompson.

The growth of specialized 'media shops' and Saatchi's decision to invest in cable and satellite companies are indicative of the ways in which the advertising industry is responding to the challenges and opportunities offered by the emerging media based on the new communications technnologies (Murdock).

Transnational advertising expansion in Latin America

Although American advertising agencies began to open overseas branch offices as early as 1890, this expansion during the first half of the twentieth century was limited to a few agencies working in a few countries. The major transnationalization of American advertising agencies took place during the 1960s and early 1970s. A study of fifteen large transnational agencies shows that in the forty-five year period from 1915-1959 a total of fifty offices were opened, while in the twelve year period that followed, 1960 to 1971, they opened or acquired two hundred and ten overseas offices (Weinstein, 1973). According to one estimate, the 1960 billings of American transnational agencies outside the United States and Canada totalled $380 million (Miracle, 1966, p.56). By 1977, gross income from overseas advertising totalled $755.8 million. And during that same year, foreign billings for the ten largest agencies accounted for 49 per cent of their total billings (Fejes, 1982). Today, this drive to expand overseas has recovered strength. Faced with weak currencies and depressed economies at home, American and European agencies have renewed a desperate search for overseas mergers and purchases and Latin America, despite soaring inflation rates and plummeting currencies, is the major advertising growth spot today (Adver- tising Age, April 19, 1982, p.M-8). The importance of Latin America to expanding American advertising agencies reflects its historical importance for American economic investment.

In 1945, American investments in Latin American manufacturing accounted for approximately 14 per cent of North American investment in the region. By 1977, with American investments totalling $i8.7 billion, investments in the manufacturing sector totalled $9.3 billion, or 50 per cent of total American investment in the area (U.S. Department of Commerce, cited in Fejes, 1982). The rise of transnational corporations after the Second World War was a response both to the need for even greater investment opportunities plus the need to produce and market consumer and industrial goods as the major form of economic enterprise.

Although the real value of advertising expenditures is difficult to determine from the available statistics owing to the problem of global inflationary spirals, it can safely be said that the absolute volume of such expenditures has expanded rapidly in all regions of the world and especially in developing countries where the rates of advertising growth and profit are higher than in developed countries. Between 1960 and 1964, for example, advertising volume was up 26 per cent in fourteen major industrial countries, but 50 per cent in eighteen developing countries including Colombia, Costa Rica, Ecuador and Peru (Wells, 1972, p.127). As a result of the rapid advertising expansion in Latin America, three countries in that region are now listed with the United States, Europe and Canada among the twenty largest advertising markets in the world (Table 10).

As may be seen in Table 11, developing countries account for about 8 per cent of world advertising expenditure while Latin America alone accounts for approximately 4 per cent. When the activities of the largest transnational agencies are analysed, however, the true importance of the Latin American advertising market emerges. While most agencies carry out the majority of their business inside the United States, a relatively smaller share of profits are generated there. Of the various regions of the world, Latin Ameri- can advertising markets tend to generate the highest profits relative to billings. This is especially true for International Needham, SSC&B Lintas, and Ogilvy & Mather (Janus, 1980, p.133).

Most major American transnational agencies have offices in one or more Latin American countries. Table 12 presents the Latin American networks of offices of these agencies. This table suggests that the agencies have Ifcarved up" the Latin American advertising markets among themselves according to geographical region : McCann-Erickson virtually controls Central American advertising; while J.Walter Thompson and Kenyon & Eckhardt share the Andean and Southern Cone countries. The Caribbean is divided up between Compton, Kenyon & Eckhardt and McCann-Erickson. The larger markets - Brazil and Mexico - have enough advertising business to support several competing agencies. Using the total number of foreign offices as an indicator of transnational agency presence in Latin America, we find that Brazil and Mexico, and to a lesser extent Argentina, Venezuela and Puerto Rico, experience the most extensive transnational advertising penetration.

The 1960s saw a dramatic increase in the investment and billings of transnational agencies in Latin America. Table 13 based on information from Adver- tising Age's annual survey of foreign advertising agencies, summarizes the increase both in billings and in the number of offices established by American transnational advertising agencies in Latin American countries (only the first office opened in each country is counted). In 1960, there were eighteen offices of transnational agencies with total billings of approximately $19 million. These figures for the most part represent the presence of the J. Walter Thompson and McCann-Erickson agencies, both of which had

21

TABLE 10

THE WORLD'S TWENTY LARGEST ADVERTISING MARKETS

Country 1981 Gross advertising 1980 Gross Percent increase 1981 Inflation income (millions $ US) advertising income

United States Japan Britain West Germany France Australia Brazi 1 Canada Italy Net her lands S. Africa Sweden Mexico Spain Belgium Switzerland Argentina Fin 1 and Norway Denmark

$5, 189.5 1 ) 020.2

521.0 323.6 286.3 206.6 205.2 137.1 94.2 91.2 19.9 72.2 65.1 56.3 55.0 54.1 52.1 48.9 35.4 24.7

$4,670.0 948.5 449.3 316.4 244.0 168.4 86.4

114.4 71.6 88.8 59.6 66.1 46.2 43.1 51.3 48.8 21.0 42.0 31.3 23.2

11.0% 7.6

16.0 2.2

17.0 23.0

137.7 19.8 31.5 2.7

34.0 9.0

42.0 31.0 7.3

10.7 148.5 16.4 13.0 7.3

8.9% 4.3 12.0 14.0 12.0 11.3

100.7 12.1 17.9 7.2 13.9 9.2 28.7 14.4 8.1 6.6

131.3 12.0 11.9 12.2

* Source for inflation rates : Morgan Guarantee Trust Co., New York. 1980 gross income figures have been restated at current exchange rates. Yearly totals fluctuate depending on the number of agencies reporting.

Source : Advertising Age, April 19, 1982.

TABLE 11

ADVERTISING EXPENDITURE B Y GEOGRAPHICAL REGION, 1979

Region Total 1979 Per capita expenditure Per cent of world advertising expenditure in reporting countries expenditure made

(in $US million) in each region

United States and Canada 52,612.3 Europe 26,740.5 Japan 8,851.0 Asia (except Japan) 1,674.3 Latin America 4,154.7 Australia and New Zealand 1,925.7 Middle East and Africa 1,531.9

214.48 76.60 76.37 1.45 12.14

110.04 3.12

54 27 9 2 4 2 2

TOTAL WO R L D * 97,490.4 37.20 100

Source : Adapted from World Advertising Expenditures, prepared annually by Starch, INRA, Hooper and the International Advertising Association, 1980 Edition, New York.

* Eighty-six countries reporting.

22

TABLE 12

GEOGRAPHICAL DISTRIBUTION OF INTERNATIONAL OFFICES OF MAJOR U.S. AGENCIES IN LATIN AMERICA (1977)

Mexico Guatemala Honduras El Salvador Costa Rica Nicaragua Panama Colombia Venezuela Ecuador Peru Brad 1 Paraguay Chile Argentina Uruguay Puerto Rico Dominican Republic

Trinidad Jamaica Barbados Bermuda

x x x x x x X X

X X

X

X X

x x X

x x x x x X

X X x x x x x x X X

X X x x x X X

x x x x

X

X X

X

x x x x X x x

X

X

X

X X

X

X

x x

X

x x X

X X

X

X

x x x x x X X

X

X

X

X

13 2 1 1 1 1 1 4 8 1 3

x 12 3 2 8 2 8

TOTAL 1 0 5 1 9 6 4 3 0 4 1 3 2 1 2 7 1 0 1 0 4 2 0 0 1 8 5

Source : Standard Directory of Advertising Agencies (The Agency Redbook), June 1978.

Note : Includes all types of affiliate or ownership relations appearing in above source.

established offices in Latin America before the Second World War. By 1970, there were a total of sixty-nine transnational agency offices with total billings of approximately $257.5 million, more than thirteen times the 1960 amount. By 1977, total transnational agency billings had increased to $462.7 million, an increase of approximately 80 per cent over 1970, while the number of offices had declined to fifty-six, thus representing the continual growth of agency billings and the process of consolidation occuring in some agencies. Although transnational agencies were active in every country of Latin America except Paraguay, the bulk of their business was concentrated in Brazil, Venezuela, Mexico and Argentina, the combined total billings of these four countries comprising approximately 90 per cent of the total Latin American transnational billings in 1977. Furthermore, among transnational agencies the bulk of the billings was concentrated in the larger agencies. Although there were fifteen transnational agencies operating in Latin America in 1977, the five largest - J. Walter Thompson, McCann-Erickson, Kenyon

and Eckhardt, Leo Burnett and Grey Advertising- accounted for 66 per cent of the total billings and 64 per cent of the total income of transnational agencies. The two largest agencies, J. Walter Thompson and McCann-Erickson, together accounted for 40 per cent of the total billings and 39 per cent of the total income of Latin American transnational agencies (Fejes, 1982).

The billings of individual countries sometimes have experienced periods of decline which is often due to devaluations of the local currency (such as in Mexico in 1976), which reduce the dollar amount of the reported billings. It is important to stress, however, that while the overall growth of transnational advertising in Latin America has been continual, there are important differences between specific countries. Taking each specific case, transnational advertising penetration has not always been one of steady uninterrupted growth, but rather one which reflects the changing political and economic conditions of the particular country. While these histories vary considerably, an analysis

23

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of the various countries indicates that the significant period of transnational advertising growth accompanies the period of greatest manufacturing growth with increased transnationalization of the economy. Brazil and Chile represent two types of transnational advertising histories.

Portales (1981) indicates that there were three significant periods in the transnational advertising penetration of Chile : (1) the import-substitution period of the 1960s ; (2) the period of the Popular Unity government from 1971-1973 ; and (3) the neo-liberal open economy model from 1974 to the present.

During the first period, advertising represented about 0.5 per cent of the GNP, a figure much lower than the major industrial countries and other Latin American countries as well. During these years, advertising grew steadily with the economy but was subject to contradictory factors. Those factors promoting its growth included increased production of consumer durables (automobiles, electronics, household appliances, etc.), under state protectionist policies, and the growth of television. The factors which limited advertising growth in that period were the slow rate of industrial growth and state policies limiting the use of the mass media for advertising.

During the Allende period, the rapid expansion of the money supply, the redistributive policies of the government, and the greater availability of all types of consumer goods made advertising superfluous and it declined rapidly as a percentage of GNP. By 1975, while the advertising industry still reflected the impact of the Allende years, advertising as a percentage of GNP had decreased to 0.26 per cent (Portales, 1981). This low figure also reflects the fact that during the Allende government many transnational agencies abandoned Chile due to what they considered 'unfavour- able political and economic climate'.

The development of the advertising industry was, however, much different after 1975. Between 1975 and 1980, advertising increased from 0.26 to 1.31 per cent of the GNP, placing Chile among the leading countries of the world in terms of advertising as a percentage of GNP (Portales, 1981). The major factors responsible for this phenomenal growth are the commercial opening of the economy, the development of industrial sectors which produce goods and services, the rate of growth and internal competition, and the supply and demand for advertising time and space in the mass media. During this period, one result of the government's economic policies is that the import of non-essential consumer goods increased by 469 per cent over 1970 figures (Portales, 1981). The increase was especially apparent in those categories where earlier protectionist policies had prevented all imports - perfume, television sets and alcoholic beverages principally. Advertising is the principal tool in the promotion of these products. And at the same time the government increased significantly its role as advertiser, purchasing time on the national mass media to advertise new government services in health, education, housing, as well as to promote the positive image of the government as being superior to the Allende government. It is during this third, most recent period of Chile's economic and political history that transnational advertising agencies have been flourishing.

The history of advertising in Brazil shows a different pattern of development. Mattos (1982) suggests that there have been three major stages in the development of Brazilian advertising : (1) the "professional" stage from 1914 to 1950 ; (2) the ''industrial" phase from 1950 to 1964; and (3) the present stage from 1964 to the present.

During the first period, two of the first American agencies to transnationalize, J. Walter Thompson and McCann-Erickson, opened offices in Brazil to serve

their major clients. At that time, international advertising consisted mainly of the translation of advertising copy sent from the American offices. This was a period of rapid urban growth and industrialization as part of an intense modernization programme. President Vargas' import substitution policies from 1937 to 1945 promoted local consumer goods industries which gave advertising an important stimulus. The rapid growth of radio as a national advertising medium also contributed to this stimulus.

During the second period, which was also one of intense industrialization, foreign investment was encouraged in most sectors of Brazilian industry. The urban markets grew rapidly, facilitating the consumption of expanded industrial production and attracting foreign investors. By this time, the largest agencies and advertisers were virtually all transnational. The local Bra- zilian agencies began to take off during this period but were patterned closely after the techniques and organization of the American giants. This was also the period of mass penetration of television into Bra- zilian homes.

The third stage in Brazilian advertising reflects the nationalist period in which the military governments have undertaken to make Brazil an advanced capitalist country by promoting Brazilian capital in major sectors of the economy including advertising and the mass media. Brazilian firms are included in the list of largest advertisers and Brazilian advertising agencies have become the largest and most dynamic in the country since the government ruled that all government advertising must be handled by local agencies. The transnational agencies continue to expand in the largest Latin American market but, unlike the second period, they no longer operate freely and are no longer the dominant force in Brazilian advertising.

In Argentina, political and economic changes have also affected the growth of advertising. Trans- national advertising agency billings in Argentina declined precipitously from $14.7 million in 1970 to $12.6 million in 1975. This decline was due to a number of factors such as the high rate of inflation in Argentina during those years, a series of currency devaluations, an unstable climate for foreign investment and legislation passed during the brief Campora government limiting the amount of ownership a transnational advertising agency could hold in agencies in Argentina. However, March 1976 brought into power a government committed to taking strong measures to improve the economic climate for foreign investment (Business Week, 1976). By 1977, transnational agency billing had climbed to $44.6 million (Fejes, 1982). As occurred in Chile, the Argentine government engaged Burson Marsteller, the public relations unit of the large transnational advertising agency Marsteller Inc., to undertake a worldwide campaign to improve the image of the government (Jacobson, 1978).

Thus, advertising has become a rapidly growing sector of many Latin American countries' economies ; several of the region's countries do as much advertising business as countries in the developed areas of the world. Latin America represents a lucrative investment for the major transnational agencies which have expanded their networks and which now dominate advertising in every country of the region except Brazil (Janus).

Advertising transnationals in India

In India, nine out of seventeen companies whose expenditure on advertising exceeded Rs.1 crore were transnational companies. These companies contribute substantially to advertising on a11 media for their products varying from consumer softs and durables

25

to intermediaries and engineering goods. A considerable portion of their press advertisements are institutional campaigns intended to build up favourable images about their service to the people and the country. Perhaps they are the best examples of effective institutional advertisements, most professionally conceived and skillfully designed. To understand the need and purpose of TNCs in doing institutional campaigns, it is necessary to know the background of these companies in India.

Foreign companies began to operate in India effcc- tively with the East India Company which paved the way for British rule. At the time of Independence in 1947, numerous foreign companies, mostly British, had been functioning in the country through their branches. The debate which had begun long before the country's freedom on the r6le of foreign companies in our economy intensified. Political sensitivity to high profits made and taken away by TNCs and the government's attitude towards foreign capital kept them uncomfortable. More and more branches began to convert themselves into Indian rupee companies. The process of Indianization of foreign company branches was speeded up with the enactment of the Foreign Exchange Regulation Act (FERA) of 1973. FERA made it obligatory on the part of foreign branches engaged in economic activity in India to convert themselves into Indian rupee companies. The FERA also envisaged detention of foreign equity holdings in subsidiaries of foreign companies. The purpose of FERA was not to drive away foreign capital from the Indian market but to utilize existing and new foreign capital in what are called the priority areas. The foreign capital, however, was not interested in priorities. What they wanted was the freedom and opportunity to invest in any area that would give more profits, in India or elsewhere. They were not enthusiastic about bringing in fresh capital or new technology from abroad. Fresh capital from abroad constituted hardly 5.3 per cent of the investment that went into the growth of foreign undertakings between 1956 and 1975. The rest came from domestic resources. Even the foreign exchange cost of their expansion programmes was not covered by fresh capital from abroad. They were net spenders on foreign exchange even while expanding their business in the Indian market. To remove the stalemate caused by the insistence on priority areas, the government modified the FERA rules so that the dilution of foreign equity was in itself considered ade- quate for expansion. This brought the immediate response. The foreign companies flocked into high profitability, not priority areas such as hotels, detergents, pharmaceuticals, food processing, etc. The TNCs thus took full advantage of the opportunity - without bringing in fresh capital or new technology from abroad. Accumulated reserves garnered in India have been ploughed back into fertile areas. Such haphazard investments go against the country's planning process which seeks to ensure the utilization of resources in response to the social and economic needs of the country on a priority basis. The pharmaceutical companies especially have earned much ire from the critics for 'having brought about an explosion in the number of brand name variations of generic drugs in their effort to capture a bigger piece of the market for the given pharmaceutical product'. Of over 20,000 formulations on the market, an estimated 93 per cent are in the hands of transnationals and only 6 per cent with the public sector pharmaceutical industry ! 15,000 brand name drugs are sold on the market in lndia as against 14,000 in the United States ! A Government Commission which studied the pharmaceutical industry in India estimated that a mere 115 would do for the country's basic health need. Most of these drugs are promoted through direct mailing and other sales promotion efforts concentrating on medical practitioners and druggists.

Heavily advertised, and successfully too, are the over- the-counter drugs like Vicks Vaporub, Coldarin, Halls, Vocacil, Aspro, Rubex, etc. It is estimated that the per capita consumption of drugs in India is around Rs.18 per annum. 60 per cent of these drugs are sold to 20 per cent of the population living in urban areas, most vulnerable and easily reached by advertisements over any media.

The opposition to TNCs is irrespective of political party affiliations - not only the proclaimed leftists but several others accuse them of being anti-national forces, engaged in producing goods which would 'cater to the needs of the top economic 6lite' and distorting the planned socio-economic development of the country. Here is a telling commentary on the nature of the industrial activity undertaken by TNCs which reveals what their opponents think of them. The writer describes the place of TNCs in the daily life of an individual belonging to the upper and middle classes of India :

!'The moment he gets up in the morning, he takes out his Colgate tooth brush over which he spreads Colgate tooth paste (both products of Colgate-Palmolive, India, Ltd., subsidiary of a U S company of the same name) for his morning brushing-of-the-teeth ceremony, which is preceded or followed by a cup of tea packaged and distributed by Lipton (Unilever-controlled) or Brooke Bond (a subsidiary of a UK company). The tea would have been made on a stove lighted by a match box manufactured by Swedish-owned WIMCO. After this, for his morning shave he uses Palmolive lather shaving cream and after-shave lotion of the same company. The blade he uses is either Erasmic (of Hindustan Lever, a Unilever affiliate) made under foreign collaboration, or from stain- less steel supplied by the foreign collaborator. Proceeding to his bath, he uses Lux or Rexona (Hindustan Lever) soap. He uses for his hair vase- line hair tonic (product of Ponds). For his breakfast, he takes toasted Britannia bread (a product of Britannia Biscuit Company, a subsidiary of UK company), which is washed down with his favoured 'Nescafe' cup of coffee from Nestle of Switzerland. To go to his factory or office, he dresses himself in a terylene suit of a mixed fabric dress consisting certainly of 'Terene' manufactured by Chemicals and Fibres India Ltd., a subsidiary of ICI. He has to catch a Leyland bus, or in the alternative a Tata-Mercedes Benz fitted with tyres manufactured by Goodyear, Dunlop or Firestone. In the office, he does a good deal of writing with Parker Quink or its variant Chel- park and refreshes himself with Coca Cola. In the office, he gets his facts and figures through a machine hired from IBM, ICL and he gets his material typed on a Remington typewriter. In the evening when he returns home, he has a cup of Bournvita (Cadbury's product). He takes his children for a walk and they demand Cadbury's chocolate or Amul Chocolate (which is manufactured under a licence from a foreign company). He smokes cigarettes manufactured by the India Tobacco Company (a subsidiary of British-American Tobacco Company). But a friend advises him to take Charminar of Vazir Sultan, which has special links with India Tobacco. On important occasions, he goes for a lunch arranged by his friends in one of the India Tobacco Company's hotels (Chola or Maurya) or to the Oberoi-Sheraton. At night his wife spreads a table for dinner with cutlery manufactured under foreign collaboration and serves him with pooris fried in Dalda of Hindustan Lever. He retires to bed on a Dunlopillo (product of Dunlop) after taking, if he is on the wrong side of 45, Digene of Boots or in the alternative Celucil of Warner Hindustan. If he does not sleep,

26

he takes 'Valium' of Roche. For his wife, he, of course, gets the best kit of cosmetics consisting of Ponds cold cream (manufactured by Chesse- brough Ponds Inc. UDA) and face powder manufactured by the same firm and lipstick of Max Factor. His wife cooks food in "Hawkins" or "Killickst7 cookers (manufactured under foreign licence). When he is away, his wife sews some cloth pieces with a Singer sewing machine or knits his pull- over or cardigan with a Singer knitting machine (even though these machines are made by Merrit, they are marketed by Singer). When tired or bored, she turns on the radioITV manufactured by the PhilipsIMurphylGEC. For washing, of course, 'Surf' of Hindustan Lever or Rin of the same company is used by her. When his wife goes out for shopping she does not forget to get "Bata" shoes or chappals for her husband and children. If she has a headache (she often has one) Roche's Saridon is the answer, or if the doctor advised differently, Crocin is the substitute" (Goyal, S.K.). Coca Cola and ICM have since left India, displeased

with the government policy. Several others have further diversified their activities in the industries of the nature described above.

The institutional advertisements of T N C s have to be seen against this background to appreciate what they say.

The thrust of the theme of all ads is the contribution of T N C s to the development of India. Invariably they identify themselves as 'Indian companies', wholly committed to the service of the Indian economy. Colgate Palmolive, India Tobacco Company, Brooke Bond; General Electric Company, Siemens, Peico Electronics and Electricals, International Computers Indian Manufacture Ltd., etc. have highlighted these claims in their institutional campaigns during the last two years. Some of them have Indian saints in their advertisements to add credibility to their identity and relate their products to traditional Indian wisdom. They quote Hindu scriptures to prove the efficacy of Indian herbs which they use in their toothpaste. The emphasis on Indianness would appear too frivolous to the skeptics but most convincing to the credulous. And the advertisements do not seek to convert the skeptics, anyway. Being conscious of the growing resentment of a section of intellectuals against them, the T N C s adopt ingenious techniques in their advertisements to gain public acceptability. They serve their purpose indeed. The goodwill enjoyed by these companies among the 6lites as eviden- ced by the over-subscription of their issues can reasonably be attributed partly to the public acceptability brought by their advertisements. The intellectuals are not the investors. Neither are they large in number (pillai).

27

Chapter 2: Advertising and the Mass Media System

The relative share of print media, electronic media and cinema in the advertising market may differ from country to country, but there is one common denomina- tor : in all cases, advertisers are in search of the largest potential audience, and they select their media accord- ingly. In periods of prosperity, advertisers need more space or time in the media; at times of recession, the media need more advertising, but the end-result is identical : increasingly, the advertisements become the media message.

Trends across the media

In the case of Great Britain, let us take the minor advertising media first. Table 14 shows a sharp drop in the percentage of total advertising expenditure going to the cinema, reflecting the dramatic fall in attendance. During and just after the War, cinema was a major entertainment medium and going to the movies was a weekly event for many couples and families. In 1945, annual admissions stood at 1585 million and by 1964 they had been more than halved again to 343 million. They have continued to drop ever since and in mid 1982, admissions dipped below one million a week for the first time ever. A lot of this decline is attributable to the rapid growth of commercial television after 1955, which offered a cheaper more convenient source of general entertainment to the working-class audiences who had previously been regular film goers. This loss of general audience led to a re- orientation around the emerging teenage market which market researchers had pin-pointed as a high-spending growth sector, and the cinema remains an important medium for advertisers wanting to reach the youth audience with high impact visual campaigns released from some of the restrictions governing television advertising, such as the ban on cigarette promotion.

In contrast to the decline of the cinema, Table 14 shows a modest gain in the share of advertising revenue going to radio. Commercial radio reached Britain in the 1930s when stations based in Continental Europe began to beam signals across the Channel to challenge the BBC's official monopoly of broadcasting. Radio Luxembourg, which could be picked up across a wide area of the South of England, including the prime market of London, was particularly successful, and by the end of the decade was attracting a sizeable audience, particularly on Sunday when the BBC shut down its entertainment programming in deference to the religious lobby. Just before the outbreak of War, the Continental stations were attracting 3 per cent of the available advertising expenditure which was as much as the cinema industry. The stations took a little time to get back into their stride after

the War, and by the time they did, they were hit, like the cinema, by the impact of television. And like the cinema, they adapted by re-orienting themselves the new 'teenage consumer'. On Radio Luxembourg, the old family-oriented shows like the 'Ovaltineys' (sponsored by Ovaltine, the night-time drink company) disappeared to be replaced by American-style disc- jockey shows like the 'Teen and Twenty Disc Club', geared to the new youth market led by the burgeoning rock and roll industry. In the mid 1960s, the Continen- tal stations were joined by offshore stations like Radio Caroline, operating from boats and disused forts around the coast and pumping out round-the-clock pop music to take advantage of the boom in teenage leisure spending sparked off by the Beatles and the Rolling Stones. These 'pirate' stations were declared illegal in 1968, but they paved the way for the introduction of an official network of local commercial radio stations, regulated by the Independent Broadcasting Authority (IBA) which also oversees the commercial television system.

The network began in 1973 with the opening of the two London stations, Capital and LBC and at the present time there are forty stations on the air with more planned, so that by the end of the decade the system will cover all the large and medium-sized population centres in the country. Franchises for each local area are awarded on the basis of an open competition and are for a fixed term. Franchises confer sole rights to broadcast and sell advertising time within the contract area, so that each area has only one local commercial station in competition with the BBC's network and local services. The amount and content of the advertising allowed, however, is carefully controlled. Advertising time is restricted to a maximum of six minutes an hour averaged over the day's programmes and the scripts of intended advertisements are submitted for IBA approval prior to transmission, to ensure that they comply with the Authority's Code of Advertising Standards and Practice. Directly sponsored programmes on the classic American model are prohibited on all stations operating within the British Isles, with the single exception of Manx Radio, which broadcasts from the Isle of Man and falls outside the IBA's jurisdiction. Despite these restrictions, however, local commercial radio has become a significant minor advertising medium with expenditure on it growing rapidly during the 1970s from 3 million a year to 54 million (at 1980 constant prices), which is 2 per cent of total expenditure (and almost three times the proportion going to the cinema).

Finally, among the minor advertising media, Table 14 shows a substantial decline in the proportion of total advertising expenditure going to the outdoor media of posters and transport since the mid 1950s.

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TABLE 15

DISTRIBUTION O F R E V E N U E F R O M DISPLAY ADVERTISING IN THE M A J O R MEDIA B Y P R O D U C T GROUP(1980)

Product group

Food and household

Toiletries, pharma-

Alcoholic drink Publishing, entertainment,

stores

ceuticals and clothing

Government, charity and educational

Leisure equipment Retail Motoring Financial, industrial,

institutional and office equipment

Household appliances Holidays, travel, transport Household equipment,

horticulture and agriculture

Tobacco products Direct response mail order

Total expenditure in f million (at current prices)

(percentages in brackets)

Display advertising revenue in f million for :

Commercial television

Newspapers General weekly Women's magazines and magazines

colour supple m en ts

598 272 109 80

Source : Advertising Association.

Before this, however, the sector experienced something of a boom as hoardings were hastily erected to cover the dereliction of the bomb sites in major cities and newsprint rationing continued to restrict the scope for display advertising in the press. As a result, outdoor advertising was taking 14 per cent of the available advertising expenditure in 1948, which was more than the general magazine sector and equal to the proportion going on national newspapers. Altogether, 21 per cent of all display expenditure went on posters and transport that year, almost double the pre-War level.

Once newsprint rationing was lifted and commercial television came in the second half of the 1950s, however, outdoor advertising rapidly lost ground and by 1960 its share of display advertising expenditure had dropped by two-thirds to 7 per cent,'and it has kept at around this level ever since. Even so, it remains an important backup to television campaigns. Since both television time and space on hoardings and transport can be bought on a regional basis, posters using the same full colour images as the television ads can provide a useful supplement and follow-up, complement- ing the spot exposure of the television campaign with

the longer term and repeated exposures provided by outdoor sites.

Despite the increasing importance of television, however, Table 14 clearly demonstrates that the press remains the single most important advertising medium, with national and regional newspapers taking 42 per cent of total advertising expenditure in 1980 and magazines taking a further 16 per cent, as against television's 27 per cent. Even if w e exclude all classified advertising and concentrate solely on display expenditure, the press remains the leading sector taking 52 per cent of the total to television's 38 per cent. More- over, as Table 15 shows, although television has more or less taken over the promotion of traditional packaged goods such as food, household stores, and toiletries and medicines, newspapers still dominate the two fastest growing display sectors - retailing and financial and industrial services - and continue to take the lion's share of tobacco advertising.

Commercial television generated some of the extra expenditure itself since its expansion coincided with the restoration of mass consumption after the end of rationing. "The 1956-60 period were boom

31

years for the production and marketing of mass consumer goods" (Masson, 1970:156) and for the growth of the Independent Television (ITV) system. In 1956, only 9 per cent of the households with television could receive ITV. By 1960, the proportion had climbed to 78 per cent (Flach, 1982:12). Companies making products such as foodstuffs, toothpaste and cleaning goods were particularly enthusiastic about using this new medium to beam high-impact ads directly to where purchasing decisions were actually made - in the heart of the family. Consequently, by the mid 1960s, marly of the major agencies (especially those which were American owned) had transferred the bulk of their clients' spending in these areas from the press to commercial television. According to some commentators though, the impact on press revenues was not as damaging as it looks at first sight. They maintain that most of the advertising that ITV attracted was new money (as indexed by the increase in the proportion of GNP being spent on advertising) rather than money taken away from the press. However, as James Curran rightly points out, this argument relies on the figures for total advertising which include expenditure on classified ads and financial notices, which television does not compete for, and the expansion of which disguises its full impact. More relevant are the figures for display advertising expenditure and in this area there is no doubt that ITV did take a significant slice of custom that would otherwise have gone to the press (Curran, 1981:48).

At the same time, under the terms of The Broad- casting Act, the use of this important new medium was hedged around by a series of restrictions backed by the force of law. Advertisements were limited to an average of six minutes per hour; they could only appear in blocks at the beginning and end of programmes and during the so-called 'natural breaks' in the middle ; their content was carefully controlled to minimize anti-social effects ; arid direct programme sponsorship was banned. Nevertheless, the arrival of commercial television undoubtedly did have a significant impact on several areas of the press.

The first sector to be hit was the popular weekly magazines which relied on photo-journalism to present news and documentary features for a mass audience. As television's own news and current affairs techniques improved, however, much of this function was pre- empted and between 1957 and 1959 three of the leading photo-weeklies - Picture Post, Illustrated and Every- body's - went out of business. Similarly, the success of ITV programmes among women provided competition for the weekly women's magazines, traditionally one of the strongest press sectors, and their aggregate circulation dropped from 10.18 million in 1958 to 7.93 million in 1961. By 1967, only four titles had circulations of over half a million as against seven in 1958. At the same time as the general magazine market was contracting, however, the market for specialized publications was expanding rapidly, helped by the growing sophistication of market research (see Curran, 1981:52-3). National surveys which classified readers by age, sex and social class started to appear in 1947 and were well established by the mid 1950s enabling researchers to pinpoint groups which commercial television, with its mass audience orientation, did not cater for very adequately. One of the first groups to be 'discovered' in this way were tennagers, whom Mark Abrams identified as a key growth market in his much quoted report of 1959, The Teenage Con- sumer, which was sponsored by the London Press Ex- change, the leading British agency of the time. This prompted a rash of magazines devoted to the new teenage music and fashion industries or aimed specifically at adolescent girls. By the late 1960s, research had developed still further and surveys were regularly supplying detailed profiles of life-style groupings,

and these have helped to stimulate a new wave of magazines aimed at people with particular hobbies and leisure interests.

The popular daily newspapers, with largely working class audiences were also hit by the rise of commercial television, and by the increases in cover prices forced on them by rising costs. As a result, more and more people dropped the habit of buying more than one paper a day and circulations fell. In contrast, the 'quality' or up-market papers (like the Times and the Guardian) were relatively unaffected by ITV% mass appeal programming and actually increased their sales by 14 per cent between 1961 and 1975 (Murdock and Golding, 1978:132). As this example makes clear, trends within the press are more complex than the simple aggregate figures indicated, and consequently it is worth looking at developments in this sector in a little more detail (Murdock).

Cinema : more than a "Minor Medium"

In India, next to the press, the cinema is the most widely used national medium reaching even towns with population levels of below 5,000.

Respondents in a survey conducted by Tata Eco- nomic Consultancy Services in the twin cities of Hyderabad and Secunderabad rated the cinema as the second most influential advertising medium, next only to the press. The press got 46 per cent, radio 29 per cent, cinema 33 per cent and outdoor 3 per cent. Other studies have also established the importance of the cinema as an advertising medium. As the cinema attracts both the literate and illiterate populations, it is very suitable for social marketing campaigns as much as for product promotion.

Out of the 10,813 permanent and temporary/ touring theatres in India, only the permanent ones, about 6,000, are used regularly for display advertisements. Because of the problems of reaching the prints and the inadequate facilities of some theatres to project advertising films, only a small number among the temporary ones are used - and that too infre- quently.

It is estimated that on an average 120 lakh people see films every day in India. Total cinema tickets sold in the theatres all over India in 1981 came to 300 crores as against 200 crores in 1971.

Over 300 advertising films are made in India every year. Some of the top art film makers in India are active in the advertising field, which accounts for the excellent quality of some of the films.

The average number of commercials per week for all service theatres in India was about 36,000 in 1981. Supply of commercials has grown by 20-25 per cent during the last few years.

Advertisers' demand in the more than one lakh population towns is much beyond the time available. Leading consumer advertisers like Hindustan Lever, Brooke Bond, and ITC, who have widespread sales networks, use the cinemas of even smaller towns. Hindustan Lever, which at one time spent about 50 per cent of the advertising budget on newspapers, is now allocating about the same percentage of their Rs.3.2 crore advertising budget only to films. Accord- ing to the PR Chief of Hindustan Lever, films were found much cheaper "and we will be using print media just to keep up our corporate image'' (Pillai).

Across the media in the Soviet Union

There are 690 newspapers in the USSR with a circulation of 102 million copies. Some of the newspapers like Sovetskaya torgovlja (Soviet Trade) specialize in advertising and information only, others have special

32

TABLE 16

DYNAMICS OF ALLOCATIONS ON DIFFERENT TYPES OF ADVERTlSlNG IN 1976-1980 (percentaFe)

Type of advertising 1976 1977 1978 1979 1980

1. 2. 3.

4. 5.

6.

Magazines and newspapers 10.4 10.8 12.1 12.1 12.0 Other print advertising 9.7 9.7 11.2 11.4 10.9 TV and radio advertising 3.8 4.1 5.8 6.1 6.1 Decoration of shop-windows 8.6 9.1 11.2 8.5 8.0

Flash lights 30.9 30.0 28.9 28.5 29.8 Exhibit advertising 6.4 5.3 6.3 6.6 7.2

of goods 30.2 31.0 25.3 26.8 26.0

supplements dealing predominantly with advertising and announcements.

There are 73 weekly advertising supplements to newspapers in the USSR. Their circulation varies from '6,000 to 235,000 copies. The most popular is an advertising supplement to the newspaper Vechemaja Moskwa (Evening Moscow), with 78 issues a year.

Magazines are also major print media. Compared with newspapers they have a selective audience and the quality of advertising is usually higher.

In the USSR advertising is published regularly by 60 magazines. Some of them contain only advertising and announcements. Among these are "New Tools", Boviet Export", "Trade Herald", "Soviet Filmsft, Y3oviet Theatre", "Stankoimport Review", "Cars from the USSR" and "Autoexport Advertise". The other magazines use flaps, illustrations and reproductions for advertising covers.

There are 137 million radio sets in the USSR including the household sets, portable and car radios. In 1971, radio advertising arranged by the trade agency Y30yuztorgreclamaT1 used only 60 hours of the whole year, in 1972, EO hours, in 1973, 85 hours, in 1974, 120 hours, in 1976, 220 hours and in 1979, 660 hours.

Television is the most powerful advertising media because it combines sight, sound and movement and delivers its messages to large audiences. According to Unesco's Statistical Yearbook (1980) data, there are 75 million television sets in the USSR. Advertising programme time is constantly increasing. In 1971, lfSoyuztorgreclamalf had only 120 hours a year for TV advertising, in 1979 it went up to 260 hours.

There is a special programme on national television (channel 2) called llReclamatf. It is broadcast two or three times a week for 15 minutes, and usually consists of seven to eight advertising items, each two minutes long, supplying brief information. This advertising programme uses dramatization, dialogues, anima- tion, music and songs. Advertising of goods is usually balanced with the advertising of services.

Advertising is also included in other television programmes : 'ITV news", llHealthtf, "Physical Culture and Sports", "Sputnik of cinemagoers", "Kinopanorarna" and others.

Outdoor advertising is considered as "out of home" medium. It includes signs, billboards, posters on buildings or along the roadside, transit advertising, flash lights, etc. Outdoor advertising includes also the decoration of streets, squares, shop windows. Today this kind of advertising accounts for more than 30 per cent of all advertising expenses.

As compared with countries having a market- economy, allocations on advertising in the USSR are

relatively small. But these allocations are also constantly growing. Thus allocations of six major advertising trade agencies - 9oyuztorgreclama", "Rostorgreclama", llUkrtorgreclamalt, "Uztorgreclama", "Littorgreclama" and "Esttorgreclama" - increased in 1976-1980 from 69.6 million rubles to 85.4 million, i.e. by 22.7 per cent.

The financial resources for trade advertising are accumulated on the basis of assignments - 0.05 per cent of the wholesale price of goods orientated for public needs. These deductions create a special advertising fund of shops, supermarkets and enterprises.

Besides that, advertising is financed by voluntary allocations from Ministries both central and local. In 1976, these Ministries allocated for Y3oyuztorgre- clama" 1.1 million rubles and 1.6 million in 1979. The total sum assigned by industrial Ministries in 1979 was three times more than in 1971.

During the last decade there have been visible changes in the financing of different types of advertising. This is clearly seen in Table 16.

This table shows that the largest allocations are shared by two types of advertising - flash lights and design and packaging of goods. In 1980 they took respectively 29.8 and 26.0 per cent of all allocations. The third place was taken by magazines and newspapers - 12.0 per cent, followed by print advertising, 10.9 per cent, decoration of shop-windows, 8.0 per cent and exhibit advertising - only 6.2 per cent.

But changes of allocations from year to year show that flash lights and the design of goods have a tendency to decline while the allocation on TV and radio advertising gradually increase from 3.8 per cent in 1976 to 6.1 per cent in 1980. There are also some changes between advertising of goods and advertising of services. The development of advertising practice shows the increase of allocations on advertising of services and corresponding decrease in advertising of goods. In 1980 the portion of advertising of services increased by 41.9 per cent as compared with 1976 (Shestakov).

Trends in the Latin American region

The mass media of the region as a whole contain more advertising than any other region of the world (Janus, 1980). In a 1977 study of 22 major Latin American newspapers, it was found that the average newspaper contains more than 50 per cent advertising when classified ads are included, and more than 30 per cent when the classified ads are excluded. The results, presented in Table 17, indicate that, apart from two

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34

TABLE 18

ADVERTISING TIME AS A P E R C E N T A G E OF T O T A L MEXICAN DAILY TELEVISION TIME (1974 TO 1977)

Channel 1974 1975 1976 1977

2 4 5 8 11 13

10.0 6.5 9.0 8.6 1.7 4.1

7.3 7.9 7.3 8.3 1.8 2.8

8.5 8.9 6.7

11.1 1.7

3.7

11.8 12.0 8.9

15.9 4.1 8.5

Source : Magdalena Brockmann, "Algunos Elementos para el Andlisis de la Publicidad y 10s Medios Masivos en Mbxico", Mexico : ILET, 1978.

of these newspapers which are government subsidized (El Nacional of Mexico and La Crdnica of Peru), there are few exceptions to the general rule. Several of these papers contain more than 60 per cent advertising posing the question whether the major newspaper in Latin America is a means of keeping citizens informed or rather an advertising channel.

The newspapers analysed here are, however, daily editions ; the Sunday editions often contain more advertising. The Sunday editions of Brazilian newspapers, for example, contain as much as 70 per cent advertising (Bechtos, 1973:35). And in Peru, Sunday editions of the major newspapers carry from 10 to 20 per cent more advertising than weekday editions (Investigacih de Medios, 1981).

The major Latin American consumer magazines contain a similar ratio of advertising to editorial material. In a study of women's magazines with the largest circulation, 15 of the 25 magazines in the sample contain more than 30 per cent advertising with an average for all magazines in the sample of 32.6 per cent. The data reveal, however, that there is considerable variation in the amount of advertising in the magazines. It ranges from 9.9 per cent (Activa of Mexico) to 52.7 per cent (Claudia of Mexico).

Unlike the relationship between advertising and the print media, the relationship between advertising and broadcast is conditioned by the fact of scarcity of spectrum space. Given this scarcity, most countries limit the amount of broadcast transmission time that may be sold to advertisers. This limit is 18 per cent of the total broadcast time in Mexico, and 6 and 10 minutes per hour in Chile and Argentina respectively. Television advertising data from Mexico and Peru suggest that the commercial channels in Mexico generally transmit about 10 per cent advertising while Peruvian television carries as much as 20 per cent. As may be seen in Table 18, the Mexican channel subsidized by the Government (13) and the university channel (11) carry less advertising as a part of total transmission time.

Unlike the print media, however, the advertising time is not evenly distributed across time; most television advertising is transmitted during what is called "prime time" between roughly 7.30 p m and midnight. Table 18 indicates that on the day studied, 53.8 per cent of Mexican advertising was transmitted during these hours although they represent only 19 per cent of total transmission time. This tendency may also be observed on the government-subsidized channel.

There seems to be a tendency for the relative share of advertising as a part of total television trans-

mission time to increase over the years. The data are tentative in the case of the Mexican commercial channels. As may be seen in Table 18, three of the four major commercial channels increased their advertising time considerably between 1974 and 1977. Since the figures do not show regular increases every year, however, other factors may explain this growth. In the case of channel 13, however, the expansion of television advertising time between 1974 and 1977 reflects specific policy changes made in 1977 when it was decided that the channel would seek more advertising in order to become self-supporting. Thus, since that time, the channel has accepted tobacco and alcoholic beverage advertising (Noriega and Leach, 1978:54).

The pressure that advertising and their clients maintain over the mass media depends on many factors. Generally speaking, the greater the share of total media revenues provided by advertising, the greater the possibility of control by advertisers over the form and contents of the medium. While data are extremely difficult to obtain, it is generally known that the average newspaper receives from 70 to 80 per cent of its revenue from advertising and the remaining 20 to 30 per cent from newstand sales of the paper itself. The study of 25 Latin American women's magazines mentioned above indicates that these magazines receive from approximately 30 per cent (Buenhogar) to more than 60 per cent (Claudia) of their revenue from advertising, the rest being derived from the sale of the magazine itself. In the case of broadcasting, except for university and government subsidized channels, Latin American broadcasting media tend to receive virtually all their revenue from advertising.

One might hypothesize that television, which depends 100 per cent on advertising - and the majority of its advertisers are transnational firms collectively organized - that advertisers exert the strongest influence over this medium. It is important to stress that this power of advertisers over television is conditioned by two important factors.

First, the advertisers' power is limited to the extent that the media "supply" of advertising time/space is limited and that control over this time/space is concentrated. Television time is extremely scarce and control is limited to a near monopoly in many Latin American countries. Televisa in Mexico and Rede Globo in Brazil, television consortia that virtually control commercial television in their respective countries, have considerable power vis-&-vis the advertisers.

Second, television is the most important advertising medium in Latin America. Thus, although the media

35

TABLE 19

TELEVISION EXPENDITURE AS A PERCENTAGE OF TOTAL ADVERTISING BY REGION, 1979

Total 1977 television Total 197 7 television

(in millions $ US) of total advertising Region expenditure expenditure as a percentage

United States and Canada Europe Asia Latin America Australia, New Zealand Middle East, Africa

$10,645.3 3,162.2 3,565.6 1,602.7

566.8 159.0

20 12 34 39 29 10

TOTAL WORLD * 19,701.6 20

* Fifty-nine countries Source : World Advertising Expenditures, prepared by Starch, INRA, Hooper and the International

Advertising Association, New York, 1980 edition.

TABLE 20

RADIO EXPENDITURE AS A PERCENTAGE OF TOTAL ADVERTISING BY REGION, 1979

Total 1977 radio Total 1977 radio Region expenditure expenditure as a percentage

(in millions $ Us) of total advertising expenditures

United States and Canada Europe Asia Latin America Australia, New Zealand Middle East, Africa TOTAL WORLD *

$3,685.9 927.7 601.1 671.6 177.5 88.6

6,152.4

7 3 6

16 9 6 6

* Fifty-nine countries Source : World Advertising Expenditures, prepared by Starch, INRA, Hooper and the International

Advertising Association, New York, 1980 edition.

depend on advertising for their survival, as Mander (1978:152) explains :

"The corollary is also true. Without such a single monolithic instrument as television, the effective power and control of these huge corporations could not be harnessed as it presently is. Monolithic economic enterprise needs monolithic media to purvey its philosophy and to influence rapid change in consumption patterns. Without an instrument like television capable of reaching everyone in the country at the same time and narrowing human needs to match the redesigned environment, the corporations, themselves, could not exist." Television itself has been called "a breakthrough

in international advertising" and Ifthe greatest selling tool ever devised, now available on the global scene" (Coyle, 1964:9).

The special advertising advantage of television (and radio) is that it allows advertisers to penetrate the large illiterate sectors of the Third World. Wells (1972:87) found that while literacy is highly predictive

of newspaper circulation, it is the weakest predictor of radio and television set ownership. Television allows advertisers to resolve problems of illiteracy (and the multiplicity of languages) because the commercials depend heavily on internationally recognized visual . symbols to get their message across.

For these reasons television has become the leading advertising channel in Latin America. On a global scale, when total advertising expenditures in individual countries are broken down by medium, a striking pattern emerges.

In 1979, as seen in Table 19, Latin America places a relatively higher portion of its advertising in television than any other area of the world. The same holds true for radio as may be seen in Table 20.

When both television and radio are included in the analysis, as presented in Table 21, Latin American countries emerge as the major broadcast advertisers of the world. Not only does the region include most of the commercially organized broadcast systems (Katz and Wedell, 1977) but those commercial broadcast

36

TABLE 21

ADVERTISING EXPENDITURE A L L O C A T E D TO B R O A D C A S T I N G B Y COUNTRY, 1979

Country % advertising % advertising

expenditure allocated expenditure allocated to television (1) to radio (2)

Total advertising expenditure allocated to

broadcasting (1+2)

Mexico Colombia Peru Brazil Venezuela Japan Chile Ireland Argentina United States Australia Canada Austria Italy United Kingdom

60.5 54.2 58.9* 43.3 40.0 46.3 39.1 33.1 31.3 30.7 30.3 20.5 23.3 21.4 20.4

23.3 17.3 15.4* 21.0 17.9 6.5

11.0 9.4 10.7 10.2 8.8

13.7 8.9 797 2.5

83.8 71.5 64.3* 64.3 57.9 52.8 50.1 42.5 42.0 40.9 39.1 34.2 33.2 29.1 22.9

* 1976 data. ** Percentages calculated from "Measured Media" expenditures (print, outdoor and transportation, cinema,

Source : Compiled from World Advertising Expenditures, prepared by Starch, INRA, Hooper and the radio, television).

International Advertising Association, N e w York, 1978 and 1980 editions.

systems are relatively much more important as advertising channels than in other countries or regions of the world.

Tunstall (197756) describes the three major ways in which the expansion of transnational advertising affects the mass media in host countries :

"The appearance on a substantial scale of American advertising agencies has three major consequences. First, the total size of the media industry (in terms of revenue and of audience time) is increased. Secondly, the advertising agencies play a major part in switching revenues towards - and hence expanding the output of - commercial broadcasting. Thirdly, these agencies play a decisive part in swinging entire national media systems towards commercial, and away from traditional political, patterns. This has occurred in most countries of Western Europe, Latin America and Asia." These shifts may be observed in most Latin

American countries although research and industry statistics are difficult to obtain.

First, the total size of the media industry has ' increased. In the case of consumer magazines in Mexico, for example, advertising has been directly responsible for increasing the number of Hearst Group magazines. Since the Hearst Group has fixed a policy regarding the ratio of advertising to editorial content, the increase in advertising pages over the past decade has led both to an increase in the total number of pages of each magazine (the number of editorial pages increases with the number of advertising pages) and to an increase in the number of magazines. To accommodate the rapid increase in advertising demand, the Hearst Group expanded from 4 magazines in 1974 to 11 magazines in 1978 (Janus, 1980). This information is consistent with data suggesting that between 1959 and 1979 the number of consumer magazines listed in Mexico's annual media directory increased from 69 to 105 (Janus, 1980:158).

Furthermore, to the extent that government-

subsidized and university or religious broadcasting channels either terminate their transmission or increasingly turn to advertising as a source of revenue, the whole national broadcasting system becomes more commercial. With the shift of the Mexican government- subsidized television channel 13 toward self-support through increased sale of advertising time, the Mexican broadcasting system as a whole moves significantly closer to being 100 per cent commercial. Similarly, in Chile, the rapid growth of advertising since 1975 has been responsible for the financial growth and expansion of commercial television. In the five years since the government ruled that the broadcast media should be self-financed, the four television channels have increased their advertising billings from 7.1 million dollars (1975) to 127.5 million dollars (1980) (El Mer- curio, 19 July 1981). Certainly there are many other such shifts occurring in other Latin American countries.

But there are other important areas in which advertising has had an impact on Latin American mass media :

Advertising may be responsible for either promoting increased dependence on foreign-produced television contents, or for the development of high-quality national contents. A n executive of channel 13 in Santiago, Chile, explains that since only 6 minutes of advertising per hour is allocated by law, to obtain enough revenue from advertising to survive, it is necessary to transmit 13 hours per day. Since local production of 13 hours is too difficult and costly, they are forced to rely on imported programming to fill a large part of this transmission time (El Mercurio, 19 July 1981).

In Brazil, the reverse is true : increased concentration of ownership of the mass media has allowed the formation of a handful of networks, the most powerful of which, Rede Globo, virtually controls television in Brazil. This increased power and government nationalist policies favouring the development of national advertising agencies and national media production, has led to an increasingly Brazilian television system financed by the dramatic increase in television advertising revenue during that period (Mattos, 1982).

37

TABLE 22

DISTRIBUTION O F CLASSIFIED ADVERTISING EXPENDITURE B Y MEDIA (SELECTED Y E A R S 1960-1980)

Media 1960 Percentage of the total : 1972 1975 1980

Regional newspapers 79 National newspapers 19 Directories (including Yellow Pages) 0

Magazines and periodicals 2

71 19 7 3

73 17 6

3

70 16 12 2

Total expenditure in f million (at current prices) 43 150 218 511

Source : Waterson (1981), Table 10.

TABLE 23

DISTRIBUTION OF NE W S P A P E R ADVERTISING EXPENDITURE B Y T Y P E OF PUBLICATION (SELECTED Y E A R S 1968-1980)

Percentage of the total : Type of publication 1968 1970 1972 1975 1978 1980

National newspapers Daily 29.1 28.3 27.0 24.3 25.3 25.9 Sunday 15.9 14.8 13.8 12.1 12.6 14.1

Regional newspapers

Weekly 19.0 20.3 20.1 20.0 19.3 16.7 Daily 35.5 35.9 37.4 39.6 38.3 35.5

Free Sheets 0.5 0.8 1.6 4.04 4.5 7.9

Total expenditure in f million (at current prices) 220 251 318 445 778 1066

Source : Waterson (1981), Tables 12 and 13.

Perhaps the most important impact of advertising on the media, however, is on "freedom of the press1'. It is here that the power of advertising takes on special significance in democratic systems.

In Latin America there are numerous cases where this power has been used to punish major newspapers. In both Caracas and Lima advertisers removed their advertising from El Nacional and El Comercio, respectively, and placed it in competing papers.

In Brazil, advertising has been used to persuade the mass media to support political and economic interests since the Second World War. Foreign advertising agencies and American corporations operating in Brazil exert pressure on the Brazilian mass media by discriminating against the print media that did not publish anti-Nazi propaganda. (Mattos, 1982)

In the 1950s and 1960s, for example, J. Walter Thompson and McCann-Erickson, the two largest transnational advertising agencies operating in Brazil, pres- sured the media to adopt editorial positions in accord with the interests of their clients. As a consequence

of these pressures, some magazines and newspapers disappeared for lack of advertising support and others thrived. For example, the Sao Paulo Chamber of C o m - merce and American transnational firms withdrew all their advertising support from the newspaper Anhembi because its editorial line was considered "excessively independent" regarding the foreign policy of the United States (Rabelo cited in Mattos, 1982). And in 1953, Standard Oil Company withdrew all its advertising from the newspaper Diario de Noticias which had published an editorial denouncing the fact that national and foreign political and economic groups were pressuring the press to encourage the government to grant a national oil concession to Standard Oil (Rabelo cited in Mattos, 1982).

This type of action is especially effective when relatively few advertisers account for a large percentage of the medium's advertising revenue.

However, the use of advertising to control media content politically is not limited to those sporadic cases in which advertisers remove or threaten to remove

38

TABLE 24

DISTRIBUTION O F N E W S P A P E R CLASSIFIED ADVERTISING BY T Y P E (SELECTED YEARS 1970-1980)

Percentage of total : Type 1970 1972 1974 1976 1978 1980

~

Recruitment 44 38 52 38 44 35

Property 18 18 15 16 14 18

Automotive 12 18 14 21 20 21

Other * 26 26 19 25 22 26

Total expenditure in million (at current prices) 106 133 198 210 339 409

Source : Waterson (1981), Table 14.

Note : * this category includes miscellaneous sales and personal ads such as births, deaths, marriages and 'lonely hearts'.

their advertising. Other forms of control are often exercised in more subtle ways on a daily basis.

Catalan (1981) analysed a broad sample of Chilean news magazines during the Pinochet rggime. After classifying them as pro-government or oppositional, he found that there was no correlation between a magazine's circulation and its advertising revenue. The oppositional magazines, even those with similar high- income readership, received less advertising revenue. Specifically, the banks, financial institutions, and insurance companies, all firms backed by important economic groups in the country, gave most of their support to the pro-government magazines. They advertised in oppositional magazines only when they employed a strategy to advertise in all news magazines of the country. (Janus)

Press advertising in Great Britain

Despite the inroads made by commercial television and radio in the United Kingdom, the press remains the single most important advertising medium accoun- ting for 52 per cent of the money spent on display advertising in 1980 and 88 per cent of the money spent on classified advertising (see Table 22).

However, as Table 23 shows, there have been some important shifts within the newspaper press as a whole since 1968. The proportion of total advertising expenditure going to national newspapers has declined from 45 per cent to 40 per cent, with the dailies showing the sharpest drop. In contrast, the percentage going to regional dailies has remained steady at 35.5 per cent. This stability is due to two main factors : the relative buoyancy of classified advertising and the growth in retail advertising brought about by the expansion of supermarket and hypermarket chains throughout the 1970s. Local weeklies have also benefitted from these trends, but as Table 23 shows, their share of total expenditure has actually slipped, from 19 to 16.7 per cent. This decline is almost entirely due to the competition from 'free sheets' which offer advertisers saturation coverage of a particular area by giving the paper away free to every household. This sector has grown rapidly over the last decade and there are now an estimated 500 'free sheets' operating in Britain with an aggregate weekly circulation

of around 15 million copies, which is 3 million more than the paid-for weeklies. They have also been very successful in attracting advertising with expenditure on them rising rapidly from €1 million in 1968 to f53 million in 1979 (Curran, 1981:52). A n average provincial newspaper needs to attract roughly 1.5 columns of advertising to support every column of editorial matter, so not surprisingly, this new source of competition has put the economic viability of a number of titles at risk.

The other important press advertising media to have emerged over the last decade are the specialized directories of particular industries and of local tradesmen and businesses, particularly the so-called 'yellow pages'. These are classified listings of local business and tradesmen, printed on yellow paper and issued as special supplements to the local telephone directories with advertisements interspersed among the entries. These media have grown rapidly in the last five years or so and now account for 3 per cent of display expenditure and 12 per cent of total expenditure on classified advertising.

From Table 24 w e can see that overall, the largest single category of classified advertising remains job recruitment, although its share has dropped significantly since 1970 (from 44 per cent to 35 per cent) reflecting the deepening recession and the cut-backs in employment. Advertisements for cars, on the other hand, have increased their share (from 12 to 21 per cent) reflecting the relatively buoyant second-hand market. Meanwhile, property advertising has remained stable at 18 per cent, although it did dip sharply in the mid 1970s as a result of the jump in house prices and the difficulties of obtaining loans and mortgages.

Patterns of expenditure can also be looked at from the other side, in terms of the revenue they provide for magazines and newspapers, and the relative importance of advertising income to the economic viability of different press sectors.

As Table 25 shows, between 1960 and 1975 all four sectors of the national newspaper market experienced a significant drop in the proportion of their revenue from advertising, reflecting the growing competition from commercial television, radio and other media. The resulting revenue gap has sparked off a revival of the circulation wars of the 1930s as papers battle to attract and hold on to readers. The fiercest

39

TABLE 25

P E R C E N T A G E O F T O T A L R E V E N U E DERIVED F R O M ADVERTISING IN THE M A J O R PRESS S E C T O R S 1937-1975

Type of publication 1937 1960 1975 % change 1960-1975

Nationa 1 newspapers 'Quality' dailies ' Popular dailies 'Quality' Sundays ' Popular' Sundays

74 50 - -

73 45 79 46

59 - 14 27 - 18 65 - 14 31 - 15

Provincial newspapers Morning papers Evening papers Weekly papers

55 58 -

58 62 79

58 ? O 63 + 1 85 + 6

Magazines and periodicals General and leisure interests Trade and technical

46 78

37 - 9 62 - 16

Sources : Royal Commission on The Press (1961-2), Table D, p. 23. Nicholas Hartley et a1 (19771, Table 5.1, p. 17. Royal Commission on The Press (19771, Table 5.1, p. 32. (Murdock)

competition has been among the 'popular' dailies where the loss of advertising revenue has been most marked. Led by Rupert Murdochk brash tabloid, The Sun, the leading titles have launched a sustained promotion drive backed by television advertising campaigns, bingo games with large cash prizes, and a style of journalism which combines the tried and tested formulae of sex, sports, sensation and gossip about the stars.

The 'quality' national newspapers have also experienced a fall in the percentage of their revenue coming from advertising, and have responded by offering advertisers new opportunities for publishing their products. Both the dailies and Sundays have increased the amount of advertising-linked copy they carry where the editorial items cover the same product or service as the display advertisements on the same or facing page, and the Sunday titles have all launched full colour magazine supplements which are given away free with the main paper and provide scope for high-impact imagery.

In contrast to these drops in the proportion of revenue derived from advertising among the nationals, the percentage of provincial dailies has remained more or less constant, while the weeklies have actually increased their share by 6 per cent.

Press media costs in India

Press advertisement rates increased between 1972 and 1982 by 240 per cent. 82 per cent was the increase in the rates of English and regional language dailies between 1977 and 1980, when circulation rose by 31 per cent. Escalation in the cost of advertising and the increase in circulation of English and Indian language dailies in 1980-81 as a percentage increase over 1979-80 will bring the picture into sharper focus ("Impact ... 'I) :

Percentage increase in 1980-81 over 1979-80 Circulation cost

English 1.1 Regional languages 1.9

23.0 24.0

Before looking into the reasons for the slow growth of circulation, let us examine why this fast escalation of advertising rate occurred.

The increase in the press advertisement tariff has to be seen alongside the increase in the input cost in the production of newspapers (idem).

Percentage increase in input cost

1979 Vs. 1981 Newsprint 45 Inks 65 Packing and other storedmaterial 135 News service charges 160 Salaries 150

Almost every other input cost has also escalated between 60 and 200 per cent. The increase in expenditure has to be met by income. The main sources of revenue of newspapers are the sale of copies and advertisements. The First Press Commission had recorded that the main sources of revenue of newspapers in 1951 were : Circulation Advertisements

55 per cent 45 per cent

Material cost component of expenditure on newspaper was 32 per cent of the total costs in the case of English language papers and 45 per cent in the case of Indian language papers.

Taking these and other factors of newspaper econo-

40

mics into consideration, the Commission recommended that advertisements should not exceed 40 per cent of newspaper space and 60 per cent should be left for news.

The phenomenal increase in the cost of production of newspapers during the last decade has totally altered the situation. Material cost has gone up from 32 per cent of total expenditure in 1951 to more than 58 per cent in 1981. The increased expenditure had to be met by increasing the revenue- the income from circulation and advertising.

Circulation revenue which had once met a large share of newspaper expenditure became just enough to pay the newsprint bill in the second stage and then too small even to meet half the newsprint cost.

The Second Press Commission has noted that the number of newspapers whose net circulation revenue is less than the newsprint cost is increasing. Adver- tising at present brings in roughly as much revenue to a newspaper undertaking as the amount earned by the sale of newspaper copies. The financial stability of a newspaper depends, to a large extent, on its ability to attract advertisements. This is as true of medium and small newspapers as of the big ones.

Take for instance a leading English daily, The Hindustan Times. The gap between the circulation revenue and newsprint cost of The Hindustan Times increased from about Rs.10 lakhs in 1975 to over Rs.215 lakhs in 1980. The filling had to come from advertisements. The story of other papers is not much different.

In the struggle for survival in the face of escalating cost, the newspapers resorted to increasing the rates as well as space for advertisements.

For instant reference, here is the rate revision sequences of The Hindustan Times.

Advertisement rate

Since 01.04.72 01.07.75 01.08.76 01.04.77 01.01.79 01.01.80 01.05.80 01.01.82

A half page advertisement which would cost Rs.4,752 in June 1975 was billed for Rs.15,120 in June 1982.

Compared with the 23 per cent rate increase of English dailies between 1979 and 1980, the average escalation of rates in regional language dailies was higher : 24 per cent.

The selling price of newspapers has undergone upward revision seven times in ten years. Big, medium and small newspapers had to do this, though they were aware of readership resentment and even the possible fall in circulation. Big newspapers anyway did not want to increase circulation as it would be uneconomi- cal. For an idea of the price hike, take the price story of The Hindustan Times over a period of ten years.

Since 01.02.72 07.12.73

01.05.74

23.09.74 02.09.76

03.12.79 22.09.80

14.10.81

20 paise 25 week days 28 Sunday 30 week days 35 Sunday 35 all days 35 week days 40 Sunday 40 all days 50 week days 60 Sunday 60 all days

300 per cent increase in eight years, 71 per cent increase in two years, between 14 October 1979 and 14 October 1981. This explains why the circulation increase was just marginal in spite of the growth of population and increase in the number of educated people.

As for an increase of newspaper space for advertising, it has a history which the Parliament and the Supreme Court of India have made memorable.

The first Press Commission when noticing the tendency of newspapers to increase the space for advertisements at the cost of news in dailies, warned against advertisements exceeding 40 per cent of the total area. The question of restricting advertisements in relation to the space occupied by news has, since then, been engaging the Government's attention. In 1956, Parliament adopted the Newspaper (Price and Page) Act which empowered the Government to fix the number of pages than can be offered at a given price and to regulate the allocation of space to advertisements. When the Government enforced the scheme through the Daily Newspaper (Price and Page) Order, it was struck down by the Supreme Court of India in 1961 along with the Act itself, as infringing the freedom of expression. The Enquiry Committee on Small Newspapers recommended in 1965 that the Consti- tution should be amended to make possible the enactment of a Newspaper (Price and Page) Act and that not more than 40 per cent of the space in newspapers should be occupied by advertisements.

There has not been any move since then to restrict advertisement space in newspapers and advertisements continued to displace news in different proportions in different categories of papers.

According to the Report of the Second Press C o m - mission, these papers, the small and the medium, which contributed 50 per cent of the total newspaper advertising space, received only a quarter of the total advertising money in 1980. Three-quarters went to the other 50 per cent space sold by the big newspapers (having 1 lakh and above circulation). For the same amount of space, big papers received three times more money, because these big papers circulate mostly in the metropolitan cities and Class I town markets where the majority of the consumers who buy 60- 65 per cent of most branded consumer products in the country live. What about the increasingly affluent rural market ? These big papers go to a section of such consumers too. The medium and small papers in fact do not enjoy any preserves unhaunted by the big brothers unless the market is too barren.

Apart from the size, the language of the paper is another important criterion. Over 50 per cent of the total press advertising money went to English newspapers for 35 per cent of the total advertising space. Though the number and circulation of Indian language newspapers have been growing steadily and Hindi has surpassed English in both respects, their income has been lagging far behind. All the Hindi publications together contributed 20 per cent of the total advertising space for 15 per cent of advertising money.

Still worse is the position of small papers (circulation less than 15,000) which received hardly 5 per cent of the advertising money in return for 17 per cent of the total advertising space. And this income forms 50 per cent of the total revenue of the small papers (Pillai).

41

Chapter 3: Advertising and the new Media in Great Britain

This case study offers a glimpse into the near future of one highly developed society : Great Britain. New ventures into commercial broadcasting, cable television and direct broadcasting by satellite are not dealt with in this chapter in simplistic technological terms - possibly this is why the forecast is more clouded. However, the future for the advertising industry appears to be brighter than ever.

Extending commercial broadcasting

In the last round of franchise hearings, the Independent Broadcasting Authority decided for the first time to offer a contract for a nationwide breakfast television service to run alongside the existing network of regional stations. After a fierce competition, the franchise went to the TV-AM consortium headed by Peter Jay, Britain's ex-ambassador to Washington and an experienced current affairs presenter, and the station began broadcasting on 1 February 1983. In many ways this innovation in the television system is the least radical since it simply extends the available number of advertising slots. It does not give access to new kinds of audiences or stimulate the development of new kinds of advertisements and relations to the consumers. However, breakfast-time transmission does offer one potential advantage, particularly to retailers and manufacturers of foodstuffs and household stores. Since it reaches people at the beginning of the day when they are most likely to be planning their shopping, it may reduce the time- lag between exposure to an ad and the decision to consume, and lead to increased sales.

Against this, however, breakfast-time advertising suffers from two important disadvantages. In the first place, it is in competition with BBC's own breakfast-time television service which was launched on 17 January 1983, two weeks before TV-AM, though the channel does have a clear run on Saturdays and Sundays since the B B C has decided not to transmit at the weekends.

In addition, many observers are doubtful that breakfast broadcasting (on either channel) can actually reach the audience it is aiming at. Ideally, most pros- pective advertisers would like their messages to reach people as they are preparing for work, putting on make- up, eating breakfast or washing up, to establish an immediate link between their products and these daily activities. But surveys show that in most households the television set is still in the main living room rather than the kitchen, dining room or bedroom, so that people have to make a point of viewing rather than watching while doing other things. O n the other hand, enthusiasts of the new service point to the rapid spread

of second set ownership and the imminent launch of miniature flat screen sets which can be held in the hand or set into a car dashboard, arguing that these developments will do for commercial television what the advent of the cheap transistor radio did for commercial radio, by solving the problem of fixed viewing locations and giving advertising access to a mass domestic and commuter audience. However, many commentators, both inside and outside the advertising industry, remain unconvinced and continue to see the introduction of breakfast-time broadcasting as a much less significant innovation than the launch of Channel Four on 2 November 1982.

This is a national service which reaches 87 per cent of the population and is intended to complement ITV 1, with both channels promoting each other's programmes and providing common hourly junction points until 9 p.m. so that viewers can switch easily between the two. The new Channel Four Company is a wholly owned subsidiary of the IBA, and unlike the existing programme companies it does not sell its own advertising airtime or produce its own programming. It is financed by annual subscriptions levied on the ITV companies, in return for which they have the exclusive right to sell airtime on the new channel within the regions for which they hold the franchise. However, this money is not used to make programmes. Channel Four's r81e is rather to buy or commission material from the ITV companies, independent producers and foreign sources and to mould it into a distinctive service that caters for groups and interests that are inadequately covered by mainstream commercial programming. In particular, Channel Four is charged with appealing to young people aged 16-30, portraying Britain as a multiracial society, offering more varied educational programming and providing a broader news service with greater emphasis on background and explanation. This stress on minority interests and new kinds of programming is expected to attract audience groups who do not normally watch much commercial television, and it is hoped that over the course of an average week around 10 per cent of the available audience will watch at some time or another, though three months after the launch date, the figure stood at only 3 per cent, rather less than had been hoped for.

In addition to its potential for delivering different kinds of audiences to advertisers, the Channel also has the advantage of being relatively cheap. At the present time, for example, the maximum rate for a peak hour weekend slot in the London area is f3,900, which is just over a quarter (27.5 per cent) of the cost of buying the equivalent space on ITV 1. Channel Four spots in some other regions are relatively more expensive, but none is more than 40 per cent of the price of the comparable ITV 1 slot. There is little

43

doubt that the Channel offers several potential advantages to advertisers.

In the first place, it gives small and medium sized companies who could previously only afford to buy air time on ITV 1 in off-peak slots in the early afternoon and late evening a chance to reach mid-evening audiences on Channel Four for the same outlay (see Flach, 1982:14). Secondly, it offers major advertisers more flexibility in their media planning. U p until now the high rates charged by the ITV 1 companies meant that firms had to put more or less all their resources into prime-time exposure in order to mount a meaningful television campaign. But the reduced rates on the new channel now offer the possibility of launching mixed-media campaigns in which low level television exposure would be backed up by poster and press advertising (see Young and Rubicam, 1982:26). And, thirdly, the special emphasis on 'minority' interests gives all advertisers the chance to reach specific target audiences, such as women or young people, at a reasonable capital cost. In addition, because the Channel depends mainly on programmes finance'd and made by other organizations, the IBA has revised its rules to allow a corporation to be mentioned at the beginning and end of all the programmes they have supported, thereby considerably increasing the publicity value of sponsorship. However, wherever a sponsor is given a screen credit, they are forbidden to advertise either during the programme or directly before or after it (Murdock).

Home video

The present generation of home video equipment does for visual entertainment in the home what the introduction of compact hi-fi facilities did for audio. Both systems are based upon discs and tapes of pre-recorded material which can be played back at the consumer's convenience, with blank tapes offering the additional opportunity to record broadcast programmes off-air. However, whereas the hi-fi revolution was based on discs with cassette tapes coming later, the present boom in home video has been led by tapes with disc formats only now coming into commercial mass production.

Although Video Cassette Recorders (VCRs) have been available since 1972, sales have only really taken off in the last three years. Four hundred thousand machines were sold in 1980. A year later the figure had more than doubled to one million. At the end of 1982, an estimated 12-14 per cent of households had a V C R and by 1985 around a quarter of all families are expected to have one in the house. This rapid growth is due largely to the rental system. Most people in Britain already rent their major television set from a dealer for a monthly fee, and for an extra payment they have been able to add a VCR. In addition, most rental shops (along with a number of retail stores and local newsagents) hold libraries of pre-recorded tapes, which customers can borrow for the evening or the weekend for a small fee. As a result, video in Britain is no longer an expensive luxury for the privileged few but a rapidly growing mass medium, and not surprisingly consumer goods manufacturers have begun to look for ways of using pre-recorded tapes for advertising.

Many of these experiments simply adapt formats developed in the press and cinema. In November 1982, for example, Catalyst Video Publishing launched a video magazine called Movie Video Magazine as a visual version of the popular film magazines, with clips from over thirty films available on video. This material runs for an hour and carries ten minutes of advertising divided into 30 second spots. The tape sells for f16.95, which is only slightly more than the normal cost of a blank tape, or it can be rented from

a dealer for around 75 pence a night. Rather more ambitious is the recent arrangement between Guild H o m e Video Advertising, to sell advertising spots on Guiid's major releases, using the format already established in cinema programming, where the previews of other recent releases are followed by an advertising break before the start of the main feature. In addition, Euro-American Video has an agreement with the video retailers' trade association to pay hire shops a fee for inserting extra commercials onto tapes before they sell or rent them. The distributors, however, are threatening legal action to prevent the dealers from tampering with their releases, and a lengthy battle for control of video advertising seems likely.

Advertising on video cassettes will undoubtedly expand but a number of commentators see it as having less potential than sponsored tapes, on the grounds that spot advertising needs to be constantly updated in line with new campaigns while sponsorship offers steady returns over a number of years (Chittock, 1982:ll). As a recent report from J W T put it, 'the sponsorship area is wide open' (J. Walter Thompson, 1981a:28). The first moves to capitalize on this potential were made in May 1981 when the petfood company, Pedigree Petfoods, sponsored a tape called All You Need to Know about Dogs, which featured their name on the cassette cover and displayed their products throughout the programme with the aim of establishing a direct link between their petfoods and the proper care of one's dog. To attract consumers, the tape sells for f13, which is roughly half the price of a normal pre-recorded cassette. Other leading advertisers have followed suit, including Ford Motors who recently issued a 43-minute tape titled Car Maintenance at Home, in association with the Automobile Association. Some firms, however, have opted for the 'softer', less direct approach developed within the general sponsorship field, and have linked their company name with popular sports and sporting events. Courvoisier, the brandy-makers, for example, have recently released an instructional tape for golf fans called Tips from the Masters. Other companies again are experimenting with even more oblique ways of typing video viewing to selling. Anyone buying a copy of Linked Bing's new spy thriller Tangier, for instance, gets a €50 voucher which can be cashed in when booking holidays through a variety of leading travel agents.

As well as offering a new advertising medium, however, the current video boom also alters the relationship between advertising and commercial television. Research shows that most V C R owners use their machines predominantly as a 'time-shift' device, to record television programmes they want to see again or which they missed the first time because they were out of the house or because it clashed with something else they wanted to watch. According to the latest survey, 86 per cent of all material viewed on VCRs is taken off the air, with feature films by far the most recorded category of programme (Douglas, 1982:ll). However, opinions are divided on the implications of this for television advertising. Some commentators argue that since video recording increases the number of times viewers are expposed to an advertisement and lengthens the time over which it is effective, the television companies would be justified in charging higher rates for advertising slots on the most heavily recorded types of programme. But others see the spread of time-shift recording as a serious threat to television advertising since the fast forward facilities on most VCRs enable viewers to skip over the ads during play back, while the new generation of machines can actually edit out the ads during recording. These arguments must remain speculative for now since w e do not have enough studies of V C R to establish stable patterns of use, but by the time the evidence is available, network television may already be facing

44

concerted challenges to its revenue from the expanding videotex and cable industries (Murdock).

Videotex

Videotex is the generic term for systems which use the domestic television screen to display frames or 'pages' of information from a central computer store. These systems are of two main types. Teletext services use the redundant interval or 'blanking periods' in broadcast television signals to transmit a continuous one-way flow of information to the viewer. Users can select a particular frame for display from the master list but they cannot send instructions or responses back along the line. Two-way facilities are available, however, on viewdata systems which use the telephone network to link users to central data store. Both systems are currently operating in Britain and both carry advertising.

British Telecom's Prestel system was launched in 1979 as the world's first public viewdata service with a projected three million subscribers by 1983. So far, however, take-up has been much slower than originally predicted and by the Spring of 1982, there were only 17,000 subscribers, most of whom were business users (Post Office Engineering Union, 1982:28). The main problem for domestic consumers is cost. As well as buying of renting the special receiving equipment, Prestel users have to pay for each call to the central data store, for the time they are connected to the computer, and for each 'page' of information they consume, and these expenses have put the system out of the reach of most families on low or average incomes. As a result, British Telecom have concentrated on building up their business custom (Murdock, 1983), though 1983 has seen a shift in this policy with a new drive to attract domestic users. To this end, B T are offering a limited 'electronic banking' service, in collaboration with the Nottingham Building Society, and making the Prestel database available to home computer users at the weekends for an annual subscription of €50. For the present, though, Prestel is of limited significance as a general advertising medium, though enthusiasts continue to stress its future potential, particularly in the field of classified advertising where it has clear advantages over newspapers and magazines.

Firstly, the speed and flexibility of the new generation of computers make it much easier for advertisers to update their copy and to place new ads at short notice to take advantage of unforeseen fluctuations in markets. Secondly, because modern main-frame computers offer almost limitless data storage facilities, they provide advertisers with much more space than newspapers or magazines and can keep the ads on, file for longer without charging extra for printing them a second or third time. Finally, and perhaps most importantly of all, the interactive nature of viewdata systems makes it possible for advertisers to monitor responses to their ads more accurately, since the computer automatically records how many people have called up a particular ad, for how long they have looked at it, and whether they have returned to it again. These possibilities have alarmed a number of newspaper companies, particularly the regional chains which (as we saw earlier) get the lion's share of their advertising revenue from classified ads. And in response, major concerns, like the Birmingham Post and Mail, have moved into viewdata to protect their future income. They have now abandoned their early defensive posture and begun to explore the positive potential of viewdata, and along with another large provincial press chain, Eastern Counties Newspapers, they have successfully established themselves among

Prestel's top five information providers (Williams, 1981).

Viewdata's breakthrough into the mass market lies in the future however. For the moment the more immediate impact is being made by the teletext services offered by the two main broadcasting organizations : the BBC's Ceefax and ITV's Oracle. Unlike Prestel's pay-as-you-use system, both these are available free to anyone with the necessary receiving equip- pent, and this has led to a relatively rapid take-up among domestic consumers.

A recent survey suggests that there were around half a million households in Britain with teletext T V sets by mid 1982, producing a potential user population of one and a half million people (Large, 1982:15). Advertising is prohibited on the BBC's Ceefax system but has been allowed on ITV's Oracle since August 1981, where it appears in three forms: full page ads; 'factional' ads which may occupy up to 15 per cent of any editorial page ; and slogans at the bottom of pages. In line with the general rules governing television advertising, however, the IBA insists that all the ads be clearly labelled and separated from the surrounding editorial matter, and that the number of advertising pages never exceed 15 per cent of the total pages on the system at any one time. Despite these restrictions, the sizeable and growing audience for teletext in Britain makes Oracle a potentially quite important advertising medium, but its future expansion depends largely on how well it stands up to competition from the other 'new' television industries, most notably cable (Murdock).

Commercial cable systems

Although Britain has had a cable network since 1928, it has been used mainly to relay conventional broadcast signals to areas where over-air reception was problema- tic or prohibited on environmental grounds. At the present time, around 14 per cent of all households in the country receive their television over the cable and a further 10 per cent could be connected relatively cheaply. There have been two attempts to develop alternative uses: a pilot scheme for pay-TV in the 1960s and a series of experiments with community cable services in the 1970s, but both were relatively short-lived. In the last two years, however, the situation has begun to change substantially.

In March 1981, the Government gave the go-ahead for the existing cable operators to add a subscription entertainment channel to their relay services, offering viewers a choice of recent feature films for a monthly payment of between €7 and f10. For the moment though, these experiments are limited in two important ways. The channels are forbidden to take advertising and the present franchises expire in 1983. These restrictions are likely to be lifted in the near future, however, since the Government is actively exploring the feasibi- lity of launching a greatly extended network of commercial cable services. In July 1981, they commissioned their Information Technology Advisory Panel to investigate the potential for future growth, and the resulting report came down heavily in favour of a fully comrner- cia1 system (ITAP, 1982). This conclusion was enthusias- tically endorsed by leading ministers and a committee of enquiry, under the chairmanship of Lord Hunt, was asked to look into ways of organizing such a system. They reported in October 1982, backing the cable industry's demand for a rapid expansion of commercial services, financed out of viewer subscriptions and advertising, and recommended that while the content of cable advertising should conform to the same code of conduct that governs advertising on ITV, the present rules restricting the maximum amount of advertising

45

per hour should be lifted to allow cable companies to carry more advertising than conventional commercial television (Home Office, 1982:15).

Cable systems can provide services at three main levels. The most basic consists of general entertainment programming for a mass audience along the lines of the present experiments. The next level up involves what is usually called 'narrowcasting', that is, providing specialist channels for particular interest groups, as opposed to broadcasting to a heterogeneous mass audience. Beyond that, advanced cable systems also provide scope for the development of interactive facilities such as 'electronic' banking and shopping. Each of these levels offers opportunities to advertisers.

Mass entertainment channels provide another means of reaching general audiences in key urban areas at rates that will almost certainly be lower than those charged by the ITV companies. So, not surprisingly, Hunt's proposals have run into strong opposition from the established commercial television organizations which see them as a threat to their revenue. The ITV companies have called for a full examination of "the amount and form of advertising to be permitted on cable and the likely impact on other services funded by advertising" (ITCA, 1982:4).

The IBA has gone even further and urged that cable services be financed entirely from viewers' subscriptions to prevent 'unfair' competition for advertising revenue (IBA, 1982~7). It remains to be seen how this conflict of interests will be resolved when the Government gives its final decision on the future of cable. But even if advertising were restricted on the general channels, advertisers could still benefit substantially from the other aspects of cable expansion.

Most people within the advertising industry agree with the Advertising Association's view that, although general entertainment services will provide the initial impetus for cable expansion, the long-term future lies with the other levels of the system. There is already a strong movement within the industry to try and identify the potential consumers for products more precisely, and to this end market researchers have been developing more sophisticated ways of map- ping the audiences for particular media. These go beyond the standard hand-counts and demographic descriptions (in terms of age, gender and occupation) and describe audiences in terms of their interests and life-styles. The aim is to avoid the wastage involved in mass campaigns, where many of the people reached are not in the market for the product, by identifying media that attract audiences whose interests make the product salient and attractive to them. And since 'narrowcast' cabling sets out specifically to serve specialized interest groups, it is an ideal medium for this kind of targeted marketing.

In addition, both harrowcast' and general cabling provide advertisers with opportunities to develop alternative forms of advertising to the standard thirty second spot. In fact, Britain has already seen one significant experiment in this area with the advertising magazines or 'admags' which were developed during the early years of ITV. These were short programmes, normally fifteen minutes, in which well-known personalities displayed and demonstrated products, and manufacturers paid for the amount of time their goods were on the screen. The most successful of these 'admags' was Jim's Inn, which was set in a fictional public house run by the popular comedian, Jimmy Handley, and where the plugs for the products were built into the conversation and activities of the bar's regular customers, many of whom became firm favourites with viewers. Despite their popular success, however, these shows were eventually banned as a violation of the ruling that television advertising should be clearly separated from programming (Gable, 1980). O n the American cable system where the rules are more

relaxed, however, experiments with blurring the line between programming and advertising have been vi- gorously revived in the form of 'informercials' and 'advertainment' (Hargreaves, 1981:8). A typical 'in- formercial', for example, begins by interviewing the local bookstore owner about the new titles he would recommend to readers and ends with an ad inviting viewers to order the books just talked about (Winklein, 1979:37). A more elaborate version is the H o m e Shop- ping Show in which promoters pay to appear as guests on what looks like a regular talk show so that the plugs for their products gain legitimacy from the familiarity of the format (Hartley and Moore, 1981:26). More elaborate still are the plans to have manufacturers sponsor a thirty-minute programme on, say, automobile repair or pet care in which their own products would be exclusively featured. These kinds of innovations were generally endorsed by the Hunt Committee on the grounds that longer commercials would help consumers to make more informed product choices (Home Office, 1982:15), and if the Government is prepared to back this recommendation, these formats could become a standard part of British cable output.

Beyond this potential for more flexible forms of advertising, however, cable systems also offer opportunities for developing new kinds of relationship between producers and consumers by allowing viewers to respond immediately to the ads they have just seen. Using the interactive facilities, they can order goods directly and arrange for the cost to be debited from their bank or credit card account. Although the technology involved in this 'electronic shopping' system is new, the principles of direct response selling which lie behind it are not. They have always been central to the selling strategies developed by the mail-order houses, and they were applied to broadcast television by record companies like K-Tel and Ronco in the mid 1970s, using the postal system as a response channel. The future potential of direct selling by television is also being explored by some of the leading advertising agencies, including Ogilvy and Mather who have substantial interests in the direct mail business. Whether or not these initiatives succeed in the short term, there is little doubt that in the long run, the spread of interactive cable systems will greatly extend the scope and potential of buying by remote control and that this could have a significant impact on the existing structure of retailing.

Satellite broadcasting

If current proposals go according to plan, Britain will have a fully operational satellite broadcasting system by the middle of the decade, offering two new television channels run by the BBC. This service has several main characteristics. Firstly, it is intended to serve the British Isles and extend the present capacity of the national broadcasting network. Consequently, although the 'footprint' of the satellite beam will spill over into Continental Europe, there are no plans to attract this potential audience (and the extra revenue it might bring) by developing programming with a transnational appeal. Secondly, both channels are forbidden to take advertising and must rely entirely on extra payment from viewers for their finance, although the Government has been careful to stress that advertisers will not be excluded from future channels. Under the present arrangements, however, the national satellite television system will not carry advertising in the immediate future. But this does not mean that satellite technology provides no opportunities for British advertisers, since w e are also seeing the emergence of a tmnsnational system financed largely by advertising.

The first moves in this direction came in April

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1.982 when the British consortium, Satellite Television Ltd., successfully launched Europe's first transnational commercial television service using the European Space Agency's experimental Orbital Test Satellite to carry an English language channel to some 20,000 homes in Finland, Norway, Switzerland and Malta. Strictly speaking, this operation is not a direct broadcasting system since cable operators in the receiving countries are collecting the satellite signal and passing it on to subscribers over the cable network, rather than viewers getting the signal direct via a hame receiving dish attached to their television set.

Although this 'two-step flow' system was developed to meet the practical problem of getting the service off the ground without having to wait for people tc buy receiving dishes, it does have certain advantages. It gives the cable operators another range of channels to add to the basic service they offer subscribers, and it saves viewers the expense of buying their own dish. Moreover, since cable companies can afford to erect larger and more versatile dishes than most domestic consumers, they can provide people with many more satellite channels than they could pick up for themselves. The future relations between the satellite and cable industries in Britain is still a matter of active debate, but however the question of reception is resolved there is little doubt that commercial satellite television services will develop in Europe over

the next decade and provide a range of new advertising opportunities.

Satellite channels which reach across national boundaries have several distinct advantages for advertisers. Firstly, they offer instant access to international audiences and penetrate markets where national broadcast advertising is strictly controlled, thereby increasing the total amount of television air-time available (D'Arcy-MacManus and Masius, 1980:8/7). Secondly, they offer firms the chance to make considerable cost savings by designing a single standardized campaign for use throughout Europe (Mitchell, 1980:7). And finally, because under present arrangements, advertisements only have to be cleared with the country transmitting the signal and not with the countries receiving it, satellites enable manufacturers to circum- vent the local rules governing advertising content. At the moment though, only a handful of British companies are in a position to take advantage. of these opportunities. Only fifteen of the fifty most heavily advertised brands or services in the country are currently marketed throughout Europe under the same brand name, and none of them employs standardized packaging or advertising. The leading companies recognize this as a problem, however, and they are now searching for creative themes and images that can be used on a pan-European basis (Murdock).

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Chapter 4: The control of Advertising

There are eighty laws and regulations relating to advertising in the United Kingdom; some twenty in India, without counting the various codes of conduct and conventions. Are these effective enough to exercise some kind of social control over the content and deli- very of advertisements ? The evidence suggests that they are not - even when they are complemented by self-regulatory measures in the advertising industry. Possibly this is because the growth of advertising is more rapid than each society's consciousness of the problem, or readiness to deal with it. Or perhaps the forces behind the advertising industry are too powerful to be constrained by legal measures ?

Legal controls in Britain

At the present time, there are some eighty law orders governing commerce and communications which touch upon advertising. A number of these continue to worry away at the concern expressed by the early critics of modern advertising. The Obscene Publications Acts of 1958 and 1964, for example, strengthen the curb on morally offensive publicity initiated by the Indecent Advertisements Act of 1889. Similarly, concern about the promotion of patent medicines evident in the Venereal Diseases Act of 1917 (which controls the advertising of VD treatments) and the Cancer Act of 1939 (which forbids the promotion of cancer 'cures') are also central to the 1968 Medicines Act which penalizes misleading advertisements in all areas of medicine. Alongside these continuing concerns, however, the last two decades have also seen new movements leading to new legal curbs.

The first of these - the consumer rights movement - was launched by the Consumer Protection Act of 1961 and followed by a series of acts aimed at strengthening the position of ordinary purchasers. The most important is the Fair Trading Act of 1973 which provides for the appointment of a Director General of Fair Trading to monitor the impact of current trading and commercial practices on consumers' interests, and to recommend government action where necessary. This remit includes a watching brief on the conduct of advertising, and in November 1978 the Office of Fair Trading published a highly critical report on the present system of self-regulation and called for new legal sanctions (Office of Fair Trading, 1978). This might well have resulted in tougher measures had it not been for the change of government in the Spring of 1979. As well as tightening up the official monitoring of advertising performance, the consumer protection movement has also led to new regulations on advertising content.

The Consumer Credit Act of 1974, for example, imposes strict controls on the content of ads for loans,

while the Mail Order Transactions (Information) Order of 1976 requires all mail order ads to display the name and address of the firm making the offer, to prevent companies soliciting money under false pretences. More generally, the Trades Descriptions Acts of 1968 and 1972 rule that any publicity which purports to be an objective description of a product or service is liable to prosecution if the facts or claims it employs can be shown to be false.

The other major lobbies that have led to new legal controls on advertising are the movements for equal rights for women and ethnic minorities. These resulted in the 1975 Sex Discrimination Act and the 1976 Race Relations Acts which prohibit advertisements from indicating an intention to discriminate on the grounds of sex or race, so that ads for jobs or rented accommodation for example can no longer state that 'men' or 'whites.only need apply'.

These general legal curbs apply across the whole range of media, but advertising on commercial television and radio is also subject to a unique set of extra- statutory regulations administered by the Independent Broadcasting Authority (IBA).

Under the terms of the Independent Broadcasting Authority Act, the IBA is required to control the amount and content of advertising on commercial television and radio, to regulate when and where it appears, and to ensure that it is clearly separated from programming.

The Act does not specify the precise amount of advertising that may be permitted, it simply says that the time allowed "shall not be so great as to detract from the value of the programmes as a medium of information, education and entertainment". Since the beginning of television transmissions in 1955, however, the Authority has interpreted this as allowing a maximum of six minutes of spot advertising an hour, averaged over the whole day's programmes, with an absolute limit of seven minutes in any particular 'clock- hour'. However, in the case of programmes such as relays of classical music concerts, that do not lend themselves easily to advertising breaks, they are prepared to allow the unused advertising time to be carried over into the next 'clock-hour', providing it does not interfere with normal programme presentation. To avoid this, the Act stipulates that advertising must be restricted to the beginning and ends of programmes and to the so-called 'natural breaks' within them, such as the gaps between rounds in a quiz game or the spaces between scenes in a drama. For some categories of programme, however, internal advertising is banned altogether. These include all programmes lasting less than 20 minutes, some half-hour programmes, selected documentary and current affairs programmes, and all religious programmes, Parliamentary broad-

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casts and relays of Royal occasions and ceremonies. In addition, two provisions in the IBA Act require

a total distinction between advertising and programming. Firstly, the IBA must see that advertisements are "clearly distinguishable as such and recognizably separate from the programmes". As well as grouping ads in clearly demarcated 'breaks', this means forbid- ding the use of the term 'news flash' and of situations or performances which are reminiscent of popular shows and which might help to blur the distinction between programmes and advertisements. Secondly, the IBA must ensure that programmes contain nothing "which states, suggests or implies" that any part "has been supplied or suggested by any advertiser". This rules out sponsorship on the classic American model where advertisers actually produce programmes, but the revised guidelines published at the beginning of 1982 do allow screen credits to companies or organizations which have funded documentary programmes or relays of live sporting or cultural events.

In addition to regulating the amount, distribution and forms of advertisement, the IBA also maintains a tight control over their content. Indeed, the Inde- pendent Broadcasting Authority Act is among the most powerful Acts of Parliament in the areas of fair trade and consumer protection. Whereas the general laws governing other forms of advertising are restricted to prosecution after the event, the IBA has the power to vet all advertisements before transmission and to exclude any it finds misleading or in breach of its Code of Advertising Standards and Practice. This is prepared and periodically revised in consultation with an Advertising Advisory Committee, composed of members representing the advertising industry and consumers' interests, and an expert Medical Panel who advise on the advertisement of patent medicines and surgical treatments and appliances.

Under the terms of the Code, all broadcast advertising must be legal, decent, honest and truthful. That is, it should comply with the law ; should not offend against generally prevailing standards of taste and decency ; should not abuse the trust of consumers or exploit their lack of experience or knowledge ; and should only contain facts which can be substantia- ted. As w e shall see presently, these general principles also underpin the voluntary code which governs advertising in the other media. But "because of its greater intimacy within the home", broadcast advertising is seen as posing special problems which require additional controls (IBA, 1981:3). As a result, a number of products and services are banned from advertising on radio and television altogether. They include cigarettes, betting services, marriage bureaux, private investigators, fortune tellers, religious organizations, contraceptives, pregnancy testing services, and political parties or groups. In addition, in line with the general requirements of balance and impartiality in the presentation of political and economic conflict imposed by the Act, the IBA does not allow advertisements relating to industrial disputes or controversies over public policy. Hence it is not possible for an employer to broadcast an appeal to strikers to return to work, or for a trade organization to issue an advertisement opposing Government plans to nationalize the banks.

Broadcasting's privileged entry into the home has also led to a series of special restrictions on advertising to children and young people to prevent them being harmed "physically, mentally or morally" (IBA, 1981:9). To this end advertisements for alcoholic drinks, cigars, tobacco, matches and liqueur choco- lates may not be shown during children's programmes or immediately before or after them, while ads for medicines specially formulated for children can only be shown after nine o'clock at night (when it is assumed that most young children will be in bed). In addition,

adverts for liquor must not show anyone under the age of 25 or feature any personality who commands the loyalty of young people. Further, ads should not encourage persistent sweet eating throughout the day or feature children in potentially dangerous situations such as lcaning out of windows, climbing dangerous cliffs, playing in the road, and using matches, petrol or electrical appliances. Finally, all children in advertisements are required to be reasonably well-mannered and well-behaved.

To make sure that these various provisions of the Code are strictly adhered to, the IBA vets all television advertisements before they are transmitted. In the period between the end of March 1980 and the end of March 1981, for example, the Authority's staff looked at 7,092 scripts for projected television ads. As a double check on compliance with the Code, the Authority also views the finished film or .videotape versions of ads to make sure that the addition of the visuals and the soundtrack have not introduced elements that were not evident from the original script. In the twelve months up to March 1981, they viewed 5,150 completed ads. The vetting system for radio ads, though stringent, is less centralized. The IBA staff in London only look at campaigns that are going to get national coverage which in 1980-81 amounted to 1,003 scripts. The rest of the ads on commercial radio are local, and these are screened by the station concerned which consults with the IBA staff if they are in any doubt (Murdock).

Advertising laws, codes of conduct : Indian examples

As advertising is a significant aspect of the social process and comprehensively concerns an individual's life, affecting his opinions, attitudes and decisions, it has to be appropriately disciplined, adequately res- trained and suitably made to promote decent and honest promotion of commodities and ideas. Indecency and dishonesty may arise as promotion is a highly competitive enterprise and the parties involved are engaged in sharp conflict of interests. The advertiser wants to sell his brand and beat his competitors through marketing weapons including advertising. The advertising agency has to establish its professional superio- rity in selling the products and ideas through advertising. The owner of the media needs revenue to stay in business by channelling the advertising message. Trial of strength among the competitors belonging to each of these three parties may lead to practices that may not always be fair. Legal provisions are therefore provided to prevent the parties from indulging in such practice and to ensure the redress of grievances.

The following are the important enactments which govern advertising in India : the Law of Contract, the Law of Torts, the Law of Copyright, the Law of Trade and Merchandise Marks, the Law of Drugs and Magic Remedies, the Law of Obscenity, the Indian Penal Code, the Criminal Procedure Code, the Emblems and Names (Prevention of Improper Use) Act, the Essential Commodities Act, the Defense of India Act, the Legal Tender (Inscribed Notes) Act, the Prevention of Insults to National Honour Act, the Prevention of Food Adulteration Act, the Patents Act, the Preven- tion of Publication of Objectionable Matters Act, the Indian Post Office Act, the Contempt of Courts Act, the Prize Competition Act, the Young Persons (Harmful Publications) Act.

Even if the scope of an Act is exhaustive, when it comes to taking remedial action it would cause inordinate delay because of endless interpretation and procedure. Obscene advertising is punishable under the Indian Penal Code, but people would prefer to put up with their grievances than go through cumbersome procedure and inconvenience.

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Another impediment is that most people do not know about the statutes applicable in the case of various types of dishonesty and mischief in advertising. The law on the subject is scattered.

The Advertising Council of India, formed in 1959 following a recommendation by the Press Commission (1954), took upon itself the responsibility of "protecting" the interests of the consumer vis-h-vis the manufacturer and the advertiser. The rules it framed said that advertising should be so designed as to conform not only to the laws but also to the moral, aesthetic and religious sentiments of the people. The Code of Ethics approved and accepted by its constituent associations, namely Indian and Eastern Newspaper Society, Indian Society of Advertising, Indian Language Newspapers Association, Association of Advertising Agencies of India and the All-India Federation of Manufacturers, is now being redrafted. The Council is at present inoperative.

The Indian and Eastern Newspaper Society (IENS) laid down in 1967 for its member newspapers a code of standards patterned on the principles of the Inter- national Council of Advertising Practice. The code promises that the member newspapers will accept only legally sound, clean, honest and truthful advertisements. Being only recommendatory, the IENS code cannot be considered effective in maintaining any standard or ethics in advertising.

The Indian Society of Advertisers, the forum of leading advertisers, had not only adopted as its objective the promotion of sound ethical standards but also pledged to 'expose' fraudulent and wasteful advertising practices. The membership of the Society, however, is too small and the non-members who are not bound by its rules are too many.

In practice there exists no meaningful Code of Conduct in Press Advertising, and there is no effective machinery for the enforcement of whatever is prescribed. Without the enforcement machinery, no code can serve any useful ri3e.

Radio and TV, controlled by the Government, have been following a Code of Commercial Broadcasting which stipulates that advertising should be so designed as to conform to the laws of the country and should not offend against morality, decency and the religious susceptibilities of the people. Occasions have been numerous when radio and T V have refused advertisements on the above grounds and even suspended broadcast of certain commercials which by error of judgment went on the air. Understandably, government media have to be responsive while private media can afford to be indifferent (Pillai).

Self-regulation : the view of the industry

As said earlier, advertising is a business instrument : if consumers are to be protected against any abuse of this instrument (misleading advertisements), so are the advertisers (unfair competition through advertising techniques), so is the instrument itself, in order that it should not be misused.

Self-regulation is a means to cover these different kinds of protection situated somewhere between two extremes: no regulation at all and total state (legal) control.

But self-regulation may have various senses. The term "codes of practice" issued to define or to maintain common standards within the advertising field may itself lead to confusion between different meanings.

In the non-legislative definition of codes, one has to distinguish between true self-regulation, negotiated codes and agreements or conventions.

Another distinction has to be made when talking about negotiated codes (or agreements or conventions) :

this is the participation of consumer organizations and/or the public authorities in negotiating with industry.

Self-regulation :

- a universally applicable code of practice, drawn up on a co-operative basis by the industry it is designed to control, and expressed in clear, unambiguous terms ; - wide publicity for the code to the business concerned and to its customers and potential customers ; - an efficient and consistent monitoring, complaints handling and arbitration procedure which can be followed to investigate and adjudicate apparent breaches of the code and which is provided by the industry concerned; - effective sanctions should the code be infringed.

It applies to all creators, users and publishers of advertisements, whether they are in membership of a trade association or not, and the sanctions include withholding of advertising space or commercial airtime from offenders (except where forbidden by antitrust legislation).

National self-regulation codes have a common base in the International Chamber of Commerce's Code of Advertising Practice, but are extended to deal with the particular circumstances, concerns and trading practices of individual countries, and to complement national law.

Some self-regulatory codes in the marketing field may be more limited in their application, because they apply only to those companies in membership of the sponsoring trade association.

Self-discipline describes individual self-imposed restraints. Self-regulation is a broader concept : enforcement (and, if necessary, the imposition of sanctions) by the individual's peers of agreed rules of conduct.

Systems in which the ground rules are laid down by, or may be changed at the instance of, an outside supervisory body are not self-regulatory.

Negotiated codes of practice :

These codes are drafted in collaboration between a sector of the industry and consumer organization(s) andfor the public authorities. They set out common standards for members of a particular trade association, often in areas where legislation would be inappropriate or too cumbersome.

Examples are the twenty sectoral codes negotiated by the United Kingdom Office of Fair Trading with trade associations on such diverse subjects as shoe repairs and funerals.

Day to day implementation is the responsibility of the trade association, but monitoring of the Code takes place from time to time by the official negotiating industry. The regulations are clear, unambiguous and practicable to implement. The official body can be very useful in publicizing new provisions in the codes and ensuring their wide dissemination, and may subsi- dize or pay for appropriate educational literature.

Agreements or conventions :

Both of these types of code of practice are limited to a specific product or business area and have widespread support before publication. Both have adjudication procedures as an integral part of the code. Agree- ments imposed upon business from an outside source are quite different. Because they are not drafted by manufacturers or practitioners, they raise substantial problems of definition, ambiguity and difficulty of interpretation which generate dissatisfaction for

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business and consumers alike. The scope of an agreement may go beyond what is reasonable (or even desirable) for industry to control. Publication of such an agreement or convention may precede any consideration of the monitoring and adjudication procedures. For example, the scope of the World Health Organization "Code" for the marketing of breastmilk substitutes is ambiguously drafted. It covers the behaviour not only of manufacturers and of retailers, but of health professionals too, over whom business cannot surely be expected to exercise control. The monitoring and adjudication procedures are not clearly defined, although the widely differing interpretations which can be placed on the text lay a heavy burden on those who have to implement it .

Agreements or conventions of this kind should be clearly defined and expressed, and the responsibilities of different sectors of the community separated and defined. Very clear monitoring procedures should be laid down as part of such agreements, so that business and consumers alike know where to take complaints and who will arbitrate on potential breaches, using what criteria. Such codes should be called "agreements" or "conventions", to avoid confusion with sectoral codes of practice or with self-regulation. Whether nationally or internationally agreed upon, they are regulation, not self-regulation (de Win).

The self-regulatory system in practice

The first moves towards more effective self-policing in Britain came in 1961 when the Advertising Association launched The British Code of Advertising Practice at its annual conference, and established a standing committee, the Code of Advertising Practice Commit- tee, to ensure that it is kept up to date. The Code imposes many of the same restrictions as the IBA's rules. It requires that any advertisement be clearly separated from surrounding matter so "that anyone who looks at it can see that it is an advertisement, without having to study it closely" (Advertising Stan- dards Authority, 1979:19). It insists that all ads should be legal, decent, honest and truthful. And it shows a similar special concern with advertising to children and with medical advertising. But unlike the IBA, it stops short of banning advertisements for 'contentious' products such as cigarettes, marriage bureaux and pregnancy testing services.

This is scarcely surprising since the C A P Commit- tee that compiles the Code is composed solely of representatives from the three main interest groups involved in advertising - the agencies, the advertisers, and the media organizations - and is mainly concerned with demonstrating its social responsibility without unduly damaging the business of selling products and expanding the advertising industry. As a result, 'The basic philosophy as to what should be controlled is the industry's own" and stretches only as far as its interests allow (Department of Trade, 1980:29). Al- though the C A P Committee draws up the Code, it is not responsible for making sure that it is adhered to or for investigating public complaints about particular advertisements. These tasks are the province of the Advertising Standards Authority (ASA), which was set up a year after the Code was launched to head off doubts about the industry's ability to enforce its provisions properly. The ASA is a limited company with a full time staff financed by the advertising industry but headed by a chairperson who is independent of the major advertising interests. Even so, in its early days the ASA was more concerned with publicizing the Code within the industry than with representing the interests of consumers, and this led to mounting criticism and renewed calls for legislation. In response,

in 1974 the industry introduced a surcharge of 0.1 per cent on the costs that advertisers paid for their display ads and this money was used to expand the ASA by hiring more staff and to provide more funds to publicize the complaints procedure among the general public.

Unlike the IBA, the Advertising Standards Authority does not vet advertisements prior to publication, except in a few selected areas such as pregnancy testing. Advertisers operating in other contentious areas are encouraged to submit their material but they are not required to do so. But even if they were, the A S A lacks the staff to operate anything like a comprehensive pre-vetting system. It has been estimated that in the course of an average year newspapers and magazines carry over 25 million advertisements, and even allowing for a good deal of duplication this is many times more than the seven thousand scripts looked at by the IBA. As a result, the system relies on advertisers, agencies and publishers conducting their own checks to see that the ads they produce and handle conform to the Code. Inevitably, however, this self- vetting system is not as comprehensive or consistent as it could be, and ads which break the Code regularly slip through the net. The ASA responds to this leakage in two ways. It conducts its own monitoring exercise to check whether the ads printed in magazines and newspapers comply with the Code, and it invites and investigates public complaints.

Monitoring takes place on several levels. Firstly, a rotating sample of newspapers and magazines is continually scanned for prima-facie breaches of the Code, and where necessary the offences are investi- gated and sanctions applied. Secondly, comprehensive studies are regularly made of advertisements for particular products, ranging from film processing services to cosmetics. And finally, a subsample of ads from the general scan are checked to see whether the advertisers can substantiate the claims they are making. The aim of these monitoring exercises is to keep the advertisers on their toes by initiating checks on their performance without waiting for complaints from consumers. But inevitably, given the staff and resources available, these initiatives can only cover a fraction of the ads in circulation at any one time, and so the ASA has to rely heavily on the public to fill in the gaps-

U p until recently, however, the A D A made little effort to publicize its complaints procedure with the result that relatively few members of the general public wrote in to protest about the content of ads or the behaviour of advertisers. Then, in 1980, they decided to launch an advertising campaign to improve their visibility and encourage more people to complain.

Complaints are not pursued for a variety of reasons, Some concern advertising on radio and television and are passed on to the IBA, others relate to ads that the A S A is already investigating and others again cannot be followed up because the complainer has not given sufficient details. But the largest group are not pursued because the Authority deems there is 'no case to investigate' since the advertisement in question has not broken the Code.

Three main criticisms have been levelled against the present system of self-censorship : that it is not comprehensive enough ; that it operates too slowly to be effective ; and that its sanctions lack force.

Although the British Code of Advertising Practice sets out to regulate all non-broadcast commercial advertising, a number of advertisers and publishers do not belong to the trade associations which are represented on the C A P Committee which draws up the Code, and therefore they do not feel bound by it. The most obvious example are the publishers of "girlieft magazines which rely heavily on advertisements for

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sexual aids and 'soft' porn, and as critics point out, it is in these areas that many of the more blatant breaches of the Code take place.

But even if advertisers and publishers do subscribe to the Code, critics argue, too much time is allowed to elapse "between the start of a harmful campaign, its detection and evaluation by the control system, and action to stop it'' (OFT, 1978:40). According to the Office of Fair Trading's research, the complaints procedure is particularly cumbersome, with delays of over three months between receipt and action in half the cases, by which time any damage the offending ads might have done has already been done (OFT, 1978: 33). It is a case of trying to bolt thestable door long after the horse has bolted. Nor are critics happy with the available sanctions at the ASA's disposal.

The major penalty for an ad that breaks the Code is non-publication by the media. Once the A S A is satisfied that an ad is unacceptable, it circulates a stop notice to the major publishers' organizations represented on the C A P Committee and they send confidential memoranda to all their members asking them not to print the offending ad. This system works reasonably efficiently for daily newspapers since it is usually possible to withdraw the ad from the next day's editions. But in the case of magazines, where advertising content is finalized well in advance of publication, it is often difficult to make last minute changes to the page lay-out or to substitute another advertisement and the only alternative is to leave a blank space and forgo the revenue from the ad. Understandably some publishers are unwilling to do this and so the stop notice is delayed until the next issue, which might be up to a month later. There are similar difficulties with amending posters once they have been erected and once again A S A directives are often not acted on until the poster is due to be replaced.

The most radical suggestion is to turn the A S A into a statutory body with statutory powers along the lines of the IBA. But this was rejected by both recent enquiries on the grounds that since the volume of non-broadcast advertising made effective pre-vetting impossible, such a body would still have to rely on post-publication sanctions and there was no guarantee that a statutory body would be any more efficient than a voluntary one. Similarly calls for corrective ads on the American model, making it clear to consumers that statements in earlier ads were misleading, were also rejected as ineffective since the people who read the original ads may never get to see the corrections. However, both enquiries did throw their weight behind demands for new legal sanctions as a back-up to the present voluntary system. These would take the form of a court injunction, issued by the Director-General of Fair Trading, to restrain the publication of unacceptable advertisements. A new law would be passed placing a general duty on the advertising industry not to publish an ad which was likely to deceive or mislead with regard to any material fact. The Director-General would then be empowered to seek an injunction against any ad which breached this duty. Failure to obey an order would constitute contempt of court and would be punishable as such, the most likely penalty being a fine. The aim of the proposal is to speed up the regulatory process and to extend control of publishers and advertisers who currently do not subscribe to the voluntary system. Despite the influential backing of two 'official enquiries, however, this proposal has not yet been imple- mented and the present Government seem disinclined to act on it. But even if they did, it would not satisfy the critics whose target is the form and content of certain kinds of advertising and the media material it supports. The major attacks along these lines have come from two vocal and well-publicized lobbies : the 'moral crusaders' who are concerned about the

portrayal of violence and sex in the media, and the health lobby who are campaigning for tougher curbs on the promotion of cigarettes and alcohol (Murdock).

"Ad-wa tchers" suggested

In India, the advertising agency is primarily concerned in using its skill in promoting the sales of a product as briefed by the advertiser. The newspaper and other media men usually have no independent means to check the truthfulness of the claim either. They insert an ad as it comes provided it does not infringe the law and does not look suspicious.

There is, therefore, an urgent need to evolve a machinery to protect the interests of the consumer, the advertiser and the media. If no self-restraint is adopted, it would cost the media and the advertisers the credibility which they build up. The buyers, of course, are losers in any case. The Director of the Consumer Council of India and some of the prominant economists have suggested the formation of an advertising council at both the national and state levels, consisting of representatives of the Government, the manufacturers, the advertisers and the consumers, not only to lay down the guidelines to stop immoral advertising but to act as an effective machinery to scrutinize the advertisements before they are addressed to the audience. And to be meaningful, they argue, it should have statutory sanction.

Another school of thought is stoutly opposed to a self-regulatory body enjoying statutory sanctions. It is in favour of an unofficial body like the Adverti- sing Standards Authority in the United Kingdom which claims that "if an advertisement is wrong, w e are here to put it right".

In a vast country like India, where the literacy rate is not as high as in other advanced countries, a judicious mixture of both appears to be desirable. But there is an understandable fear in the industry that if a Government representative were included in the regulatory body, it might lose its voluntary character and independence. The Government, for its part, is hesitating to come forward as it does not want to be taken as dictating to the industry and indirectly trying to affect its freedam of expression.

In most countries, the impetus towards the regulation of advertising has originated with the advertising industry. In India also, the A A A I has been trying to evolve a code of self-regulation. A group of advertising practitioners nominated by the A A A I have been working on it for quite some time. The draft code says that advertising bears a growing social responsibility, particularly to the consumer, which it must learn to accept seriously. This in turn calls for unre- lenting vigilance, beyond official and legal parameters. The code being framecl by the A A A I has suggested a vigilance system. Given below is a rough outline of the main features of the code at the draft stage as given by Zackar in the Economic Times : a. The appointment of a Committee for Self-Regula-

tory Controls. This Committee (SRC) should represent advertising agencies, marketing and manufacturing companies and the chief advertising media. A countrywide team of ad watchers, not necessarily all drawn from the advertising profession, to be selected by the C.S.R.C. both for English and for Indian languages. This team should send in, every month or quarter, what they have spotted as unfair or unethical advertising. This should cover press, radio, cinema, television and outdoor media.

c. Clear and simply-worded guidelines to be worked out by the C.S.R.C. to aid them in their task.

b.

53

d.

e.

f.

g-

h.

A monthly or quarterly meeting at which the C.S.R.C. should sift the advertisements received and weed out those that may not fall into the unfair or unethical category.

community, through professional associations' committees, a final list of advertisements that fail to conform to the Code. Along with the above list, the C.S.R.C. should

This assessment should avoid being non-committal, lukewarm or uninvolved. A change every two years of the vigilance squares to ensure that fresh minds are brought to bear on the subject and rigidity does not set in.

Circulating amongst the advertising and market 1.

circulate their official assessment of these ads. j.

of consumer interests. This should be a low-key campaign and is merely to reassure the consumer, keep him in the picture and sharpen his response to advertising. A gradual building-up of case histories, precedents, summaries and overviews. This can thus form the basis for regular dissemination of information on the Code and its application in the C.S.R.C. This will help keep the Code alive and active. The publication of an annual journal which would be a platform for the expression of informed and other related fields. This journal should aim at becoming an influential opinion-former which by virtue of its quality cannot easily be brushed aside.

~~

As the advertising agencies have been taking up the matter seriously, it is possible that w e may soon have an Advertising Standard Authority which would fulfil a long felt need in India (Pillai).

A n annual institutional campaign by the C.S.R.C. informing and educating the consumer about the work done by the C.S.R.C. for the protection

54

Chapter 5: The social impact of Advertising

If w e analyse the impacts of advertising - economic, cultural, political and educational - taking concrete experiences as our starting point, w e inevitably end up with more abstract and generalized arguments. Conversely, if w e begin at the level of macro-processes, w e eventually perceive micro-relations that were previously unnoticed. The basic theme of this final chapter is that advertising, as a social process, should be placed in a broader frame of analysis and interpretation, both historic and systematic, if its real nature is to be understood.

Economic issues

Advertising has fulfilled several important functions in conditions of monopoly capitalism : 1. it has allowed competition to take place at the level of marketing rather than at the level of production ; 2. it has helped to increase the turnover time for capital, yielding higher profits ; 3. it artificially stimulates demand, enabling the system as a whole to avoid crises of rea- lization.

In this sense, the growth and development of advertising performs two major economic functions within the process of transnationalization of Third World economies : 1. the consumption of light consumer goods which tend to be those associated with high levels of advertising and high profit levels ; and 2. the raising of barriers to entry in many industries which obstructs competition and promotes concentration.

While, theoretically, advertising informs the population about a broad range of goods and services, a closer look reveals that only certain specific types of product are advertised. This narrow range of product types is even more limited in the case of television where even fewer firms are represented.

In virtually all parts of the non-socialist world, those products most widely advertised tend to be soaps, detergents, tobacco, over-the-counter drugs and remedies, perfumes, deodorants, toothpaste, prepared foods, beer and soft drinks. The striking fact is that this range of products varies little in Panama, Trinidad, South Korea, Austria or the United States.

These products are not randomly scattered throughout the vast range of products produced in capitalist economies. They are, rather, products with many characteristics in common.

The industries represented tend to show high profit margins and high advertising-to-sales ratios. These conditions allow them to raise barriers to entry per- petuating monopoly conditions. Comanor and Wilson (1974) studied 41 industries in the United States and found that six of these (perfvmes, cereals, drugs, soaps, beer and soft drinks) had advertising-to-sales ratios

in excess of 6 per cent and an average profit rate of 11.9 per cent (which is 65% greater than the average return for the other remaining industries) and that the 41 industries, when considered as a whole, had high barriers to market entry.

In the Third World countries, these products tend to be those with the heaviest penetration of transnational capital. In Mexico, the industrial sectors with the highest average advertising expenditure are, in most cases, those with the greatest share of transnational capital (Janus, 19130).

Advertising can also act to promote monopoly. It sets levels of advertising expenditures high so that only the most successful firms can afford to compete. Mueller and H a m m (1974) found that in the United States, advertising expenses were associated with increases in concentration in manufacturing. They attribute this to the influence of television advertising which is apparently a powerful force in the promotion of consumer goods and systematically favours those large firms that can afford expensive television advertising time.

This relationship may also be observed in peripheral countries; Conner and Mueller (1977) found that advertising had a strong influence on subsidiary profitability in Brazil and Mexico. This was also found to be the case in Colombia, Malaysia and India (La11 and Streeten, 1977 ; Gan and Tham, 1977).

Advertising therefore helps many firms to sell products with higher than average rates of profit and to prevent other smaller, often national firms from entering the market. The ultimate result is greater transnational penetration of the economy as a whole (Janus).

The transnationalization of consumption habits and culture

The patterns of production determine, to a significant degree, the patterns of consumption. Since production is increasingly determined by transnational firms, it follows that these same firms must increasingly determine consumption habits compatible with their production wherever their products are manufactured and distributed.

This shift of consumption habits and the associated cultural changes brought about by advertising is recognized not only by the critics of advertising but by the advertising industry itself. The industry, however, stresses the educational value of advertising as a mechanism for bringing backward peoples into the modern world. Stridsberg (1974:76), an expert in international advertising, explains that "In what is called its pioneering phase, advertising's function is not to rob sales from

55

competitors or gull the unsophisticated, but to teach new consumption behaviour (...) It shows people how to use products and gives them confidence to try ... better foods, new ways of keeping clean, use of tools, a raft of objectives and techniques which the village schoolmasters fail to get across.tt

However, the process of transnationalization of consumption and the creation of a new consumer culture is not a harmonious process. The local cultures do not always passively accept new customs and new products. The new products offered to the local populations are sometimes more expensive, of poorer quality, or less nutritious than traditionally used products. Product acceptance often requires that the manufacturing firms make use of the transnational advertising agencies which have over the past decades developed the most sophisticated skills in overcoming customer resistance.

The shift of local consumption habits toward the logic of transnational production, therefore, often requires heavy investment in advertising. Many transnational firms clearly recognize that production and distribution in foreign markets may be difficult to achieve. Business International (1972:284-285) clearly describes one transnational firm's strategy for marketing its products in Latin America. ttBecause of the nature of the market in Latin America, international companies have found that production and sales of some items require special effort on both the consumer and supplier ends of the business. Gerber has had to work at getting consumer acceptance of the product. ... In Latin America, using processed baby food represents a major cultural change from the practice of preparing such food at home. Moreover, food prepared at home is usually more economical. To gain consumer converts, Gerber promotes its products as a service to parents." (Emphasis added.)

Similarly, Willatt (1970:31) admits that customer resistance to the product served as the principal element guiding Nestlk's long-range strategy for selling instant coffee in Latin America. "In Brazil and other coffee producing countries of Latin America, a major function of marketing is to overcome local prejudice against instant coffee - to counteract the theory that instant is an inferior substitute for the ground variety which plays such an important part in the national economy... This involves a three-stage strategy in any new market. The first stage is to sell instant coffee as a convenience item saving time and trouble; the next stage is to establish it as a Veal coffee". The third and final stage is to convince the consumer that it is Comparable in every way to ground coffee." (Emphasis added.)

The best-known example of the use of advertising to create homogeneous markets for the transnational corporation's product is that of infant formulae. Abbott Laboratories, American H o m e Products, Bristol Myers, and Nestle's each market an infant formula among the rural and urban poor of developing countries.

Although such products have been shown to cause serious health problems among infants, the advertising Itsuggests that it produces healthier babies. The newspaper advertisements frequently show a well-dressed woman in front of a pleasant, clean house, bottlefeeding a content plump baby" (Greiner, 1975 ; iv) (Janus).

Political considerations

More than shifts and distortions in the industrial structures and in the consumption patterns of a country are at stake, however. There are some very important political considerations to bear in mind. Mattelart (1977) points out some of the ways in which foreign advertising agencies have been of service to counter- revolutionary movements within Latin American societies. H e explains that as far back as the Second World

War, the giant American agency, J. Walter Thompson, cooperated with the OSS (United States Office of Strategic Services), to organize war recruitment and propaganda campaigns (Mattelart, 1977:288). At that time the agency had already stated publicly that advertising was the most modern, fast and direct method of persuasion known to man and should be used by governments, political parties, trade unions and the like (Advertising Aye cited in Mattelart, 1977:289).

But, perhaps more insidious is the political message implicit in much of the advertising that broad sectors are exposed to on a daily basis.

The messages transmitted through much of the advertising in the Thrid World presents a clear political option : the major social change worth fighting for is that of increased consumption. Consumption will provide the happiness and sense of fulfilment that has been missing under the present socio-political environment. Modern technology will produce more and better goods, and these goods will bring about a better life. It is but a short step from this attitude to the belief that the government that produces the most consumer goods is the best possible form of government. The diffusion of this message may have far more serious consequences for Third World countries than mere product advertising. The question to be answered in this context is: what type of Third World development is promoted by advertising which focuses on consumption, external change, individual advancement and hedonism ?

Barnet and Muller (1974:175-176) have included the research results of Evangelina Garcia of the Central University of Venezuela. She notes that the most revealing and continually reconfirmed finding of her studies on advertising is that society's marginal sectors have lost their perception of class differences. They are still aware that there are rich and poor but they feel that they all have access to the same consumer goods they hear about on the radio or see on television. They seem to feel that what determines whether or not they can possess these goods is simply a matter of luck and their luck can change.

As Fejes (1982:30) writes, the powerful r81e played by advertising and consumption in the defusing of potential political upheavals has not gone unnoticed by advertising agency personnel. He notes that "occa- sionally advertising campaigns incorporate explicit political themes thus exploiting the political frustra- tions felt by the more volatile segments of the population, promoting consumption as a pseudo-political act. In Brazil, for example, the Brazilian advertising agency affiliated with Kenyon ti Eckhardt adapted the standard "Pepsi Generation" campaign used by its client Pepsi in the American market to "Pepsi Revolution" for the Brazilian context. The agency executive handling the account explained : !'In this country the youth don't have protest channels. The present generation didn't receive any political or social education so w e provide them with a mechanism for protest. It is protest through consumption. By projecting the concept of change away from the political sphere onto the consumption sphere, advertising achieves political controltt (Ledogar, 1975:113, cited in Fejes, 1982).

Ewen (1976:18) discusses the growth of advertising in the United States as part of a planned response to increased workers' demands for political democracy during rapid industrialization. In order to ensure the success of the capitalist mode of production, the habits and aspirations of the working class had to be reoriented towards the conditions of factory life. The major industrialists and advertising specialists of the period of the 1920s and 1930s recognized advertising's power to weaken traditional social bonds such as the family, the neighbourhood, and the ethnic group, which stood in the way of the process of industrialization. They

56

used advertising to create new social relations, new forms of consciousness by defusing and neutralizing potential unrest among working people. The development of a consumption ideology responded both to the need for increased social control of the workers as well as the need for mass markets to consume the output of industries with expanded productivity.

Advertising became the link between material and social relations transforming working-class life into a mass culture which simultaneously provided the labour and the market for consumer goods and services.

Victoroff (1978:41) suggests that the real strength of advertising as a means to diffuse social unrest may best be explained in the context of a society that is in the process of social disintegration with regard to traditional values provided by the church and conventional political ideologies. Advertising fills this void carrying with it a strong ideological value. Advertising, by creating social consensus around a particular set of values, plays the important r6le of social integration (Janus).

Advertising and education

Television, because of its easy accessibility, is one of the first media used by young children. Often, it is even used to entertain infants (Schramm, Lyle, Parker, 1961). Studies from various countries where a large amount of television is available (United States, Japan, Australia, Canada) report consistently that younger children (until the age of 9 or 10 years) watch an average of 3 hours per day, and older children watch even more. Thus children tend to spend nearly as much time watching television as they do in the classroom. Perhaps the most impressive finding in the research on children and the mass media is the enormous amount of learning that appears to take place even at early ages (Roberts, 1973:199). Research supports the conclusion that "television can exert a powerful influence on the young viewer in ways that are quite independent of the particular content that is portrayed on the screen" (Murray, 1980:24). Few studies have examined the ways in which commercial mass media and their high percentage of advertising act to reinforce or counteract school learning.

A n exploratory study was carried out on sixth grade students in Venezuela to determine the degree of congruence between television content and the childrens' attitudes and values (Santoro, 1975). In the projective interviews, the children invented stories about violence, crime, physical force, competition and destructive actions motivated by greed. The charac- ters of the stories tended to be of American, English, Chinese or German nationality and the action took place outside Venezuela. The author concluded that these stereotypes held by the children reflect the same stereotypes found in television content. They contrast sharply with the content of classroom materials which stress local people and customs, and national locations.

In another study carried out in Mexico by the Instituto Nacional del Consumidor (1981) more than 900 sixth grade children were asked a series of questions related to contents presented in government textbooks, and those transmitted by commercial television in Mexico. The results indicate consistently that the impact of commercial television content is far greater than that of school textbooks. Mexican children know considerably more about the stories of soap operas and action programmes than about Mexican history ; more about advertising symbols and slogans than about the symbols of the nation ; more about the most important television stars than about national heroes.

Montoya and Rebeil (1981) undertook a study

of 480 Mexican students aged 12 to 16 years to determine the comparative impact of televised high- school courses and ordinary commercial television contents.

They found that the students watch an average of 3.6 hours per day of television in addition to the televised high-school courses and that they prefer the Mexican commercial channels 2 and 5 over the educational and public stations. Their results confirm the hypothesis that the number of hours spent watching commercial television is directly linked to certain values presented on commercial television rather than on the educational programme. They conclude that commercial television which is composed of 20 per cent advertising and approximately 75 per cent foreign- produced contents, has a greater impact on the students than does the televised high-school course content.

The limited number of studies that analyse the comparative impact of commercial television and classroom teaching on students suggest that the mass media have as much or more overall influence on the children. It is important to stress, however, that advertising exerts influence on the children both outside the educational environment as well as directly within it. The examples come from the United States where education programmes on nutrition sponsored by the leading food manufacturers in the United States for classroom use. In 1978, one Congressional subcommittee stated that these programmes were nothing more than 'product promotions', in other words, they consisted of advertising directed at children who, as a result, were turned into captive audiences for such messages. The chairman of the subcommittee gave a warning that 'there is a distinct danger that the classroom will become the new frontier of advertising' (Adver- tising Age, 6 February 1978:Z).

But, perhaps, the most important aspect of the relationship of advertising to education concerns the vast numbers of Latin American children who do not have access to formal schooling or who, for economic and cultural reasons, drop out after only a few years. For these, the mass media serve as the only source of learning outside the neighbourhood or village. The commercial character of Latin American media takes on special significance as the unchallenged worldview presented to these large numbers of Latin American youth (Janus).

Re-evaluating the impact of advertising

Advertising helps to shape popular consumption and belief directly, through the influence of advertisements themselves, and indirectly, through the way that advertisers' interests influence the general information and imagery provided by the mass media. Both of these processes have been the subject of extensive debate.

Most discussions of advertising's direct impact have concentrated on the more immediate forms of influence. Advertisers themselves have tended to regard effects as more or less synonymous with the effectiveness of specific campaigns. They have been interested in whether people have been persuaded to switch brands, been encouraged to try a new product, or become more favourably disposed towards a company as a result of efforts to improve its corporate image. A good deal of academic work has followed suit by defining 'effects' rather narrowly and concentrating on the impact of particular campaigns or types of ads on behaviour. A lot of work continues to be done along these lines, but the last few years have also seen a shift in research interest : away from immediate short-term 'effects' and towards more general, longer term and less obvious forms of influence.

The issues involved here are not new. They have

57

been the stock-in-trade of cultural criticism since the beginnings of the modern advertising system, and it is possible to trace a more or less unbroken line of concern from early commentators like Daniel Defoe down to modern writers like Kenneth Galbraith. But it is only recently that social scientists have begun to take up these issues in a concerted way, and to explore the ways in which advertising helps to structure and reinforce the overall pattern of social consumption and the core values on which it rests. A shift is also detectable in commercial research, with advertisers becoming more and more interested in how individual purchasing decision and attitudes to goods are linked to broader patterns of social consumption.

A parallel movement has also occurred in academic research on advertising's impact on media organization and production. Here again, there has been a shift away from the search for immediate connections between advertising pressure and editorial performance, and towards an analysis of the way the overall operation of the advertising industry helps to determine both the structure of the media system and the diversity of its output.

This does not mean that the concern identified by conventional research are unimportant, or that no more work needs to be done on them. But it does mean that advertising's full impact on cultural production and social consumption cannot be properly grasped within the framework they have established. A more comprehensive approach requires us to work on the macro as well as the micro level of analysis, to examine structural constraints as well as intentional actions, and to develop the analysis of political economy and cultural formations as well as the psychology and socio- logy of everyday behaviour. The limits of established approaches are particularly evident in the debate about advertising's impact on media performance (Murdock).

Advertising and editorial performance : Positive and negative interventions

From the beginning of the mass publicity system, advertisers have required the media they use to provide a 'sympathetic' context for the reception of their messages. As the Advertising World made clear in 1902, from the industry's point of view : "An advertising medium should do its best to create a feeling of confidence between advertisers and readers and should not set itself to wilfully damn the case of the people whose money furnishes the dividends of the proprietors" (quoted in Garnham, 1981:14).

If a newspaper's 'best' was not good enough, advertisers were in a position to apply positive and negative pressures to try to gain a more favourable press. They could offer journalists inducements in the form of free lunches and other perks, or they could provide editors with ready-made stories, prepared by their publicity departments, which saved the paper the costs of independent news gathering. Alternatively, they could threaten to withdraw their advertising, thereby reducing the paper's revenue and putting its profitability at risk. This second possibility was quickly recognized by critics and led to frequent accusations of advertising censorship. Edward Ross spoke for many later writers when he argued in 1910 that : '"He who pays the piper calls the tune'. When news-columns and editorial page are a mere incident in the profitable sale of mercantile publicity, it is strictly 'businesslike' to let the big advertisers censor both" (Ross, 1910:304).

H e bolstered his case with a concrete example, claiming that : "On the outbreak of a justifiable street- car strike the newspapers were disposed to treat it in a sympathetic way. Suddenly they veered, and became unanimously hostile to the strikers. Inquiry showed that the big merchants had threatened to with-

draw their advertisements unless the newspapers changed their attitude (Ross, 1910:306).

Similar claims have been made many times since. According to one recent account, for example, the tobacco firm, W.D. and H.O. Wills, successfully pres- surized The Sunday Times into taking a less hostile attitude to the health hazards of cigarette smoking. In the course of an article on heart transplants, the paper's medical correspondent had pointed out that the hearts of several patients had been damaged by smoking and named the cigarettes which they used, including the Wills' brand, "Embassy". As it happened, there was a full page ad for "Embassy" in the middle of the article. Wills complained, were not charged for the offending ad and got another one free. Soon afterwards, however, they decided to withdraw a half a million pounds worth of booked advertising from the paper. In response, it is claimed that the editor revised the paper's existing policy and committed it to not campaigning against cigarette advertising (Hird, 1981:6).

Although such incidents have played a prominent r81e in debates about advertising influence, the supporting evidence is sketchy. It comes almost entirely from 'leaks' by insiders, and there is no way of knowing how typical these cases are. Consequently, as the last Royal Commission on the Press pointed out, w e do not know how often threats to withdraw advertising succeed "or how often journalists avoid the danger by lowering their standards". Nor are w e likely to find out, since it is not in the interests of those directly involved "to speak about the success of advertisers in exerting pressures of that kind" (Royal Commission on the Press, 1977:105). But the consensus of informed opinion, even among those critical of present press structures, is that "it is extremely rare for news items to be suppressed or rewritten to placate potential advertisers" and that l'attempts to influence general news reporting and comment by witholding advertising is much less frequent than is generally supposed" (Curran, 1981:66). But negative interventions to suppress or censor news and features are not the only forms of direct action open to advertisers. They can also exert various kinds of positive pressure.

Among the more obvious examphes critics point to are the open attempts to purchase positive publicity in the women's magazine market during the 1960s, when a combination of rising production costs and falling readership made editors more than usually receptive to ways of reducing expenses. In this climate "advertising agencies were able to submit fiction, horoscopes, and other editorial items, specially written to reinforce their messages, for inclusion in the magazines'l. Some of these items were expressly intended to counter adverse publicity of their clients' products. One advertising agency, for example, "reacted to medical disclosures concerning the harmful effects on the skin of one particular detergent by having 'counter- propaganda' inserted in the beauty columns of several women's magazines in the form of articles advising on 'the care of the hands after wash-day"' (White, 1977:27). As with threats to withdraw advertising, there is no way of knowing how widespread these kinds of direct intervention are. However, the available evidence suggests that they are relatively rare, and that it is much more important to look at the indirect pressures which advertisers apply through their normal working relations with journalists.

Many newspaper men see nothing wrong in giving their advertisers good publicity, providing their products pass muster. As one distinguished ex-Fleet Street editor put it : "Is it wrong to give some degree of preference to stories which advertise ? Not at all, qrovi- ded that their products are good. To many advertisers, the newspaper acts as an additional shop-window. Those that help to keep our own shop open are entitled

58

to a little extra limelight" (Wintour, 1972:39). But as critics have pointed out, this attitude may lead newspapers to put the advertisers' interests before those of the public. This risk is particularly high in the sections devoted to areas such as fashion, travel and motoring.

Whereas the politicians and personalities who feature in the general news pages are not normally major advertisers, the main information sources for fashion and motoring correspondents are very often the same companies that provide most of the advertising on these pages. This means that positive pressures for favourable editorial publicity are much more likely to be effective. As the Guardian's ex-motoring correspondent points out : "No self-respecting (car) manufacturer nowadays launches his latest model in the country of manufacture. Instead correspondents are flown on a two-, three- or four-day binge to somewhere glamourous and entertained with belly dancers and lots and lots of alcohol... The effort and expense from the manufacturer's point of view is usually worth- while, however, in terms of the amount of extra space that newspapers feel obliged to give their correspondents having been away for so long" (quoted in Tunstall, 1971:94).

And if these positive inducements are not sufficient to ensure a favourable write-up, as another ex- motoring correspondent recalls, there is always the "pervading fear that valuable advertising will drain away in the face of persistent criticism that names names and condemns specific products1' (quoted in Curran, 1981:65). This combination of indirect pressures produces a hybrid form of journalism, somewhere between advertising and true editorial matter, which is known in the industry as 'aditorializing' (Whale, 1977:91).

As costs continue to rise and competition for readers and advertising intensifies, so this form of journalism becomes more and more attractive. The pressures in this direction are likely to be particularly powerful within the local and regional press, where the paid for titles are increasingly competing with 'free sheets' whose sole aim is to provide a sympathetic vehicle for advertising. Here as elsewhere, however, w e need to guard against over-generalizing the impact of advertisers' influence and under-estimating the strength of countervailing movements. Over the same period that service features have expanded in the press, the rise of the consumer protection movement coupled with the growth of investigative journalism, has led to an increase in media coverage of consumer rights issues, much of it openly critical of the products and operations of major advertisers.

However, if the direct links between advertising pressure and editorial performance are less secure and significant than many critics have argued, this does not mean that advertising only has a limited impact on the mass media system. Rather it suggests that w e need to shift our attention away from the search for one-to-one links between individual advertisers and specific items or areas of media coverage, and begin exploring the ways in which the overall operations of the advertising industry shape both the structure of the media system and the competitive strategies of media organizations. As James Curran has rightly pointed out : "To see the impact of advertising only in terms of overt attempts by individual advertisers to influence media content is to misconceive both the true nature and the significance of advertising influence... In particular, attention needs to be given to ways in which advertising as a concealed subsidy system has shaped the mass media; and to ways in which the media have adapted to the marketing needs of advertisers in order to compete for these subsidies..." (Curran, 1981:44-5) (Murdock).

Advertising and editorial policy : hidden pressures

As the competition for readers and advertisers has intensified in the press, so the status of the newspapers' advertising personnel has risen. As one ex-executive has remarked, nowadays : Virtually universally, the job of advertising director carries with it a seat on the main board. Moreover, the advertising department is the commonest general road to further promotion : leaving out the papers when the job in an 'in-family' perk, the majority of chief executives are ex-advertising men" (Cleverley, 1976:37). His impressions are supported by the available research. One recent study of a major provincial daily, for example, found that while the number of people employed in the advertising department had risen from 7 to 119 between 1959 and 1977, the strength of the editorial stable had increased by only 21 (Simpson, 1981:122). Along with their growing size and status, advertising departments have also extended their influence over editorial policy at various levels. As a result, according to a well-known trade journalist, "there are grounds for supposing that advertising pressures are inhibiting editorial decisions, to the detriment of readers... ten years ago, the division between editorial and advertising departments was absolute. The journalists produced the paper without reference to anyone else, and the advertising representatives went out and sold space... Since then, however, the ownership of several titles has moved to more commercial hands and, at the same time, the competition for a limited amount of available advertising has greatly intensified. As a result, advertising managers are seen more often on the floors of editorial departments" (Murray, 1982:52).

The most obvious index of the growing importance of advertising revenue goals is the increase in the amount of editorial matter which is directly linked to the advertising material which surrounds it. Tradi- tionally, the juxtaposing of editorial news and related advertising has been ''regarded within journalism as indicating a lack of integrity" (Tunstall, 1971:84). But as Table 26 shows, this concern has been steadily eroded, and since 1946 there has been a marked increase in the proportion of editorial items which appear on the same page or directly opposite display ads for the products and services they discuss and endorse. This expansion has been particularly significant among the 'quality' papers where recent research suggests that between a quarter and a third of all editorial matter is now linked to advertising in this way (Curran, 1978b). These links are of several kinds. Some are the outcome of the 'aditorializing' process discussed earlier, while others, like the Sunday magazine supplements and the special weekday supplements on particular industries or products, are initiated by the papers themselves with the express intention of attracting advertising by offering a relevant and positive editorial environment.

The 'quality' and provincial papers are considerably more dependent on advertising revenue than the 'populars'. The unequal growth of linked-copy revenue is one index of this, the variations in the amount of space devoted to ads is another. As Table 27 shows, although the proportion of space occupied by ads increased in all types of newspapers between 1960 and 1975 (the last year for which w e have reliable figures), it still varies considerably from sector to sector. While the 'popular' dailies manage to keep 65 per cent of their available space for editorial matter, the 'quality' dailies only manage 58 per cent, and the provincial dailies even less. This pattern is repeated in the Sunday sector, with the 'populars' devoting 55 per cent of their space to news and features as against the 'quality' papers' 44 per cent. Moreover, as Table 28 shows, the colour supplements which the Sunday papers give

59

TABLE 26

EDITORIAL CONTENT LINKED TO ADVERTISING IN SELECTED NATIONAL NEWSPAPERS 1946-1976*

Advertising-linked content as % of total editorial space in :

1946 1956 1966 1976 % increase 1946-76

' Quality' Papers The Times Daily Telegraph Sunday Times Observer

' Popular' Papers Daily Mail Dai 1 y Express Daily Mirror Sunday Express Sunday Mirror

14 3 16 13

18 11 23 22

6 5 0

11 2

36 14 38 13

10 8 3 12 5

30 22 33 24

11 10 5 9 5

+ 16 + 19 + '15 + 11

+ 5 + 9 + 3 + 7 - 1

Source : Curran, 1978b, Table 11.1, p:234.

* 'Editorial content linked to advertising' is defined as items covering the same product or service as display advertisements on the same or facing page.

TABLE 27

PERCENTAGE OF TOTAL SPACE DEVOTED TO ADVERTISEMENTS IN SELECTED TYPES OF PUBLICATION, 1960-1975

Type of publication 1960 1975 Percentage increase 1960-75

National newspapers Quality' dailies 'Popular' dailies ' Quality' Sundays 'Popular' Sundays

Provincial newspapers Morning papers Evening papers Weekly papers

41 34 52 40

35 49 53

43 35 56 45

46 53 60

+ 2% + 1% + 4% + 5%

+ 11% + 4% + 7%

Sources : Royal Commission on the Press (1961-2), Table E, p. 23 ; Hartley et al. (1977), Table 5.3, p. 19.

away carry a greater proportion of advertising material less reliant on linked-copy and on advertising generally than any other major category of consumer magazine. than the 'quality' sector. This does not mean that These supplements were pioneered by the major 'quality' the drive for advertising revenue has no impact on titles in the 1960s, but the idea has now been adopted their editorial policies, simply that the links are less by all the major 'popularsf. Even so, the available obvious. evidence suggests that the 'popular' press remains

60

TABLE 28

P E R C E N T A G E O F T O T A L S P A C E D E V O T E D T O ADVERTISEMENTS IN SELECTED TYPES O F CONSUMER MAGAZINES (Jan-Feb 1982)

Type of Magazine Sunday colour supplements Radio Times/TV Times Womens' weeklies * General weeklies Teenage weeklies

56% 45% 32% 25% 13%

Source : Jory (1982), p. 17. * These figures only refer to magazines published by

IPC.

The popular papers' attractiveness to advertising depends on their ability to deliver mass readerships among the higher spending groups of the general population, and the pursuit of this goal has led them to adopt editorial strategies which produce a view of the world which reinforces the consumerist ethos of advertising. Reader research has consistently shown that news about politics and public affairs has relatively little appeal to women and young people, two of the advertisers' main target audiences. Conversely, entertainment features and human interest stories have been shown to have a high appeal to all groups of readers. Consequently, as the pressure to maximize revenues has increased, so the space allotted to politics and public affairs has been cut back while entertainment and human interest coverage has been increased (Curran et al., 1980). This has resulted in a comprehensive de-politicization of the popular press, in which the newspapers' classical information function has been progressively displaced by the orientation to entertainment. Although the coverage of show- business, pin-ups, scandals and gossip is not normally linked directly to the ads that appear alongside it, it does provide a powerful confirmation of the world view that advertising promotes. Both advertisements and entertainment-oriented journalism consistently address readers as consumers rather than producers, as purchasers rather than workers. Both concentrate on the spheres of leisure and consumption, both cele- brate the pleasures of possession, and both represent social divisions as differences of life style rather than life chances, the products of individual choices rather than structured inequalities.

This consumerist mode of address also pervades the way that news about production is presented. Industrial disputes for example, are persistently presented in terms of 'us', the reader-as-consumer, versus 'them', the militant trade unionists bent on disrupting the regular flow of goods and services and pushing up prices with excessive wage demands. They are almost never depicted as responses to general shifts in the structure of employment and working conditions, which are shared by a wide range of workers. The communalities evoked and appealed to are always communalities of consumption and the marketplace. Consequently, even where editorial coverage is not directly linked to the promotion of particular products, it is nonetheless connected surreptitiously to the geneml ethos of consumerism which underpins the advertising system as a whole.

A similar dynamic is also evident in commercial television. Although direct links between particular programmes and particular products are still very tightly controlled in Britain, there is a powerful covert

connection between the style and ethos of many of the most successful shows on the one hand and the style of the ads and the ethos of consumerism, which underpins them, on the other.

Here again, the battle to maximize audiences has drawn both major channels into using programme formats that work with the images and ethos of consumerism. The top-rating game shows in which the contestants compete for consumer durables, for example, not only advertise the particular commodities that are given away, they also promote theethos of consumerism "by turning expenditure into an adventure. The heroic figure of consumerism is not the accumulator of wealth but the big spender who has cast off the retentive inhibitions of the puritan conscience and converts wealth into instant gratifications" (Conrad, 1982:103-5). The contestants on the game shows are the archetypal exponents of this ethos in its most accessible guise. They are the everyday heroes of consumerism, whose delight in winning replenishes the claim (that all ads make) that commodities can transform your life. As well as sharing advertising's ethos of euphoric consumption, many popular television shows also trade-off the visual style of the ads themselves. Because time is money, advertisements have perfected a particularly compressed style of presentation. They are built around eye-catching and memorable images, they use rapid cutting and dissolves to create a sense of pace and excitement and they employ production values which make every location, from a penthouse apartment to an ordinary kitchen or suburban street, look glamorous and full of possibility. Moreover, as the ads have become more expensive to make and more sophisticated, it is arguable that audiences, and particularly young audiences brought up on commercial television, have come to expect the same values of glamour, action and visual excitement from the programmes that surround them. As a result, programmes using other styles of story-telling or shows whose budgets cannot sustain the same production values may be edged out of the prime-time schedules.

For the moment, though, this argument has to remain speculative since w e lack firm research evidence on this and on most other aspects of advertising's long- term impact on the media system and media audiences. To raise this question at all, however, is to point to a level of analysis which goes beyond the search for one-to-one links between advertising and particular examples of media production, and examines the way the overall workings of the advertising industry helps to determine the range and diversity of output in the media system as a whole. And on this, w e do have some evidence to draw on from recent work on the political economy of the press (Murdock).

Advertising subsidy and media diversity

The advertisers are adamant that the money they pay to buy space in magazines and newspapers helps to ensure that the press caters for a wide range of interests. As the Institute of Practitioners of Adver- tising recently put it (1982:3) :

"Advertising helps to bring more newspapers and magazines to the public than would be the case if advertising were not permitted. It also helps to provide the funds necessary to support the editorial staffs and investment needed to produce an effective and saleable product of relevance and interest to the buying public." As they rightly point out, without the subsidy

from advertising revenue, many publications would have to charge substantially higher cover prices to meet their costs, and this would lead to a rapid decline in sales and the probable closure of a number of titles,

61

thereby reducing the consumers' range of choice. This is an attractive argument but it confuses multiplicity and diversity. Subsidies from advertising have undoubtedly helped to sustain large numbers of titles (particularly in the magazine field) but they have not ensured that the available publications fairly reflect the whole range of interests and opinions in British society. Quite the contrary in fact, since, as critics have pointed out, advertising subsidy cuts both ways. It helps to sustain the titles which receive it but equally it helps to make those from which it is withheld econo- mi cally unviable.

Advertisers are most interested in supporting titles which give them access to mass audiences or to minorities with good purchasing power, and publications spend a good deal of money on research designed to convince them that they are successfully reaching the readers their marketing publicity promises. The womens' magazine Options for example ran the following announcement in the advertising trade press soon after its launch in Summer 1982 : "We aimed Options at a prime target of A B C 1 women aged 25-54. NOP research based on the first two issues indicates a well above average readership profile for Options in these key socio-economic groups."

This aim was achieved and after only a year on the market Options had the seventh largest circulation of any monthly womens' magazine. Not surprisingly, its success in reaching its target audience has made it highly attractive to advertisers, thereby confirming and extending the existing biases of this sector of the magazine market. Since the discovery of affluent youth in the late 1950s, a succession of titles have been aimed at young women. "In marked contrast, few publications have been directed towards elderly people because their disposable income - and consequently advertising utility - is much less than that of young people.'' Moreover, "many of the new women's magazines aimed at the late teen and twenties market have been oriented towards the middle class. Consequently many more magazines now cater primarily for the young (under 35) middle class than for the older (over 35) working class, although the former number about five and a half million and the latter 16 million" (Curran, 1981:57). Nor is this an isolated example. The demands of advertisers have also had a marked effect on the pattern of provision elsewhere in the magazine market. They have encouraged the rapid expansion of magazines linked to particular areas of leisure and consumption (such as sports and hobbies), and stimulated the growth of titles serving groups with command over other people's money, such as bankers, corporate executives and doctors (whose influence over public sector medical purchases make them a particularly attractive audience for the major drug companies). But at the same time, they have limited the growth of political magazines on the grounds that they do not appeal to a clearly defined consumer market, reach key decision-makers or provide a sympathetic editorial environment.

A similar dynamic is also at work in the popular newspaper market, as the case of the Daily Herald demonstrates. This was the last national daily paper. to speak consistently for the socialist ideals of the mainstream of the Labour Movement. When it closed in 1964, it had an average issue readership of 4.7 million which was almost double the combined readership of three of the country's leading 'quality' papers - The Times, Financial Times and Guardian. However, whereas these papers circulated among the educated and affluent readers who were attractive to advertisers, the Herald "was read by the wrong sort of people. It appealed more to men than to women, more to older people than to younger people and overwhelmingly to working-class rather than to middle-class readers" (Curran and Seaton, 1981:118). Consequently, even with its sizeable circulation it was unable to attract

sufficient advertising to remain viable. When the Herald folded, the publishers replaced it with a new paper, the Sun, which was designed to keep the Herald's traditional supporters while attracting the younger, more affluent readers required by the advertisers. The result was a socially concerned but less radical version of the Herald which appealed to neither audience, and in 1969 the paper was sold to Rupert Murdoch's News International group. H e promptly re-launched it as a tabloid based firmly on the new entertainment- oriented formula described earlier, and it is now Britain's best-selling daily newspaper.

The present political economy of the press, then, ensures that people's range of information and entertainment choices is securely tied to their ability to consume. The greater their purchasing power the more media choices they are likely to have. Even the staunchest defenders of the present system concede this, and admit that '!in the present economic situation it has come to mean the rich and the business executives are the only minority groups fully catered for'' while the opinions and interests of minorities at the other end of the social scale remain unarticulated or under-represented (Beloff, 1976:14). Inequalities in advertising patronage are central to sustaining this pattern of unequal provision. Indeed, they are the key mechanism "by which Britain's mass media are fashioned according to the marketing needs of the economic system and the class inequalities of power, influence and consumption within British society'' (Curran, 1981:45).

For the moment this skew is prevented from emerging within commercial broadcasting by the public service requirement which insists that the companies cater for a broad range of minorities and special interests whether or not they are attractive to advertisers. However, this principle is being strongly challenged by those who want to dismantle the existing system and use the new technologies to develop "a free electronic publishing market7' which would operate in the same way as the press (Jay, 1981:25).

It is argued that the emerging media technologies will do for the modern age what the great library of Alexandria did for the ancient world by providing a "unified and universally accessible'' store of information which will be cheaply and conveniently available to all (Smith, 1980:316-7). This is an enticing vision but it ignores the economics of the situation. If the logic of the price system and advertising subsidy is allowed to determine the distribution of information and entertainment, then the same inequalities and imbalances in provision that are evident in the print media will be extended to the new electronic media. Hence, while the choices of the more affluent groups will undoubtedly be extended, the options open to the less affluent will remain restricted, producing a widening 'information gap' between rich and poor.

This is not the kind of issue which people usually have in mind when they raise the question of advertising's social and cultural impact, and yet it is in this area of long-term impacts on social life and consciousness that the most significant questions would ultimately lie. A full investigation of the issues at stake here would take us well beyond the brief of the present exercise, but by way of conclusion I want to suggest very briefly one or two of the questions that recent work has opened up for future research (Murdock).

Advertising and social consumption

As w e noted earlier, the last few years have seen a strong revival of interest in advertising's 'ideological effect' on people's common-sense understandings (Hall, 1982), and in its impact on general patterns and styles of consumption.

62

This second issue has been placed firmly on the political agenda by the health lobby's persistent demands for tighter controls over the promotion of alcohol and tobacco products, on the grounds that advertising increases consumption and encourages young people to take up smoking and drinking. Their argument is supported by social learning theory which suggests that as well as stimulating demand for specific brands, ads also lead people to model the general behaviour patterns depicted, thereby increasing total consumption (see Atkin, 1982:194-5). This is a plausible enough argument, though the supporting research evidence is still somewhat thin and suffers from the same problems of inference and interpretations as related work on the impact of violent imagery. The advertisers, not surprisingly, reject this argument and claim that advertising only influences brand preference and has no significant impact on total consumption. As Mike Waterson, the Research Director of the Advertising Association, has put it : "those who wish to ban advertising appear to believe that advertising of tobacco or alcoholic drink stimulates total consumption of these products. The truth of the matter is that virtually no advertising is designed to do this. Advertising money is spent by manufacturers fighting each other for brand share. If one wins, another loses. If British Leyland sells more cars, Toyota will sell less, but no matter how much all manufacturers spend together, it is most unlikely to lead to an increase in the total number of motor cars sold'! (Waterson, 1983:26).

H e supports his case by pointing to socialist societies where tobacco and alcohol consumption is high but where there is little or no advertising, and to the United States where the money consumers spend on illegal (and unadvertised) marijuana is estimated to be more than their expenditure on tobacco.

A similar clash of views between the advertising industry and its critics also characterizes the debate about whether or not advertising stimulates unnecessary wants. This complaint goes back to Daniel Defoe's strictures on the early advertisers but it owes its present prominence to Galbraith's assertion that advertising's central function is "to bring into being wants that previously did not exist'' in order to guarantee the expansion of mass consumption on which the continued growth of mass production (and profitability) depends (Galbraith, 1962:133). This argument was then taken a stage further by critics who claimed that advertising not only stimulated new wants but encouraged people to buy things they did not 'really' need. At one level this assertion is unassailable. Advertising clearly has turned many products which started out as luxuries into standard household items. But, the advertisers reply, this has had an entirely beneficial social effect. As Saatchi and Saatchi put it in a recent riposte to critics : "People don't need to clean their kitchen floors in five minutes-it could be done with soap and water in ten. Nor do they need radial tyres on their cars; cross-ply tyres would stop the rims rattling along the road...

"If Gillette razors had not been advertized, men would have happily carried on with the cut-throat, which would have been a shame because a Gillette razor not only shaves better than a cut-throat razor, it is also a lot safer and more comfortable" (Saatchi and Saatchi, 1980:ll).

Critics, on the other hand, regard this as a piece of special pleading which concentrates on products which most people agree have added to the quality of life by freeing people from drudgery and reducing the risk of accidents. At the same time, both sides are united in viewing advertising's impact in isolation from the other forces shaping social consumption. The most obvious of these are economic. Recent research strongly suggests that the level of advertising activity plays a less important r61e in determining

the effective demand for non-essential goods (such as alcoholic drink) than the general level of wages and the price of the product (see for example Hagen and Waterson, 1983). In addition, consumption is also shaped by less obvious constraints. Instead of taking the conventional view and "supposing that goods are primarily needed for subsistence plus competitive display", recent work in anthropology for example assumes ''that they are needed for making visible and stable the categories of culture" (Douglas and Isherwood, 1978). From this perspective consumption appears as one of the main ways through which people make sense of the culture and place themselves within it, and every acquisition becomes a declaration of personal and social identity. The utility of this approach has been amply confirmed by research on adolescent consumption.

U p until recently it was widely assumed that the goods produced by the fashion and pop music industries had created a universal youth culture which all adolescents participated in. Research has now exposed this as a myth and shown that far from creating a classless culture of youth, the new teenage commodities have become one of the prime means through which social divisions and antagonisms are signified and acted out (see Murdock, 1975 and 1981). Nor is this a special case. As Pierre Bourdieu has shown, patterns and styles of consumption are intimately and complexly tied to the dynamics of class differentiation at every level of the social order (Bourdieu, 1979). This emerging work on consumption points to a more productive way of posing the question of advertising's social impact. Instead of asking how much influence advertising has on consumption, it suggests that w e need to examine the ways in which advertising classifies the social and cultural world, to see how these schemas relate to people's everyday perceptions, and to explore how the complex combinations of these two systems structure consumption among contrasted groups and in varying contexts (Murdock).

Advertising and popular belief

Alongside this growing interest in the social dynamics of consumption, recent work has also begun to raise questions about advertising's impact on the structure of popular beliefs. In the end, the more radical critics argue, disputes about whether or not people really 'need' the commodities which advertising promotes do not get to the central issue - which is how the advertising system helps to define what w e mean by needs and their satisfaction in a way which privileges individual consumption and displaces other conceptions. This cultural displacement, it is argued, works in and through the ideology of consumerism which has nurtured "a mode of perception that has confronted the question of human need and at the same time restricted its possibilities1' (Ew en, 1 9 7 6 : 2 2 0 1.

Advertising is central to this displacement process because it expresses the ideology of consumerism in its most compressed and intense form. It is addressed to audiences exclusively as purchasers of products rather than users of collective goods, such as roads, schools or hospitals, which have been paid for out of public money to satisfy general social needs. These other needs, it is argued, "are not only not covered by the consumer ideal: they are even denied by it, because consumption tends always to materialize as an individual activity" (Williams, 1980:188). And this has two important consequences for the overall pattern of popular belief. Firstly, it encourages the perception that "public problems (like air pollution) are to be understood as susceptible to private commodity solutions (like eyedrops)" and that political action is therefore redundant (Gitlin, 1982:217). Secondly, it invites people

63

to see personal expenditure as an unambiguously positive value which delivers the instant benefits of new consumer goods, tailored to one's immediate, individual needs. In contrast, public expenditure appears as a loss, something negative, something the State takes away in taxes to spend on facilities which you might never need to use.

Taken together, so the argument goes, these 'ideological effects' of advertising help to hasten the privatization of social life and the decay of the public sphere both culturally and materially. Culturally they promote the notion of private enterprise and the free market system as the best way of satisfying needs and wants and help to establish it as a natural feature of common

sense understandings. And materially they help to organize consumption around families and couples rather than wider social groups, around private enjoy- ment rather than collective participation and discussion, and around domestic space rather than public space.

As suggested elsewhere, the current commercializa- tion of the new television industries is likely to reinforce and accelerate these tendencies, firstly by making advertising a more prolific and penetrating component of cultural production, and secondly by making the T V set the preferred means of delivering information and entertainment goods and organizing political 'feed- back', thereby furthering the 'domestication' of social life (Murdock, 1983)(Murdock).

i

64

Conclusion

Advertising is an integral part 01 the socio-economic system within which it operates. Any strategy evolved to make it more responsive to the needs of society must take into account the fact that neither the mass media nor advertising act independently of other elements of the national communication system or of the economy itself. Partial strategies intended to limit advertising may have unexpected side effects in other areas of the mass media or of the economy. Thus, to be effective, attempts to restructure the relationship between advertising and the mass media must be based on a comprehensive analysis of the total economy and of the whole media system.

The growth of modern advertising, moreover, and its transnational expansion can only be explained in the context of the increasing transnationalization of the world economy. Thus, national strategies which fail to approach transnational advertising as a global system risk being ineffective.

In addition, the growth of advertising cannot be analysed as an economic phenomenon alone : it also has an important cultural and ideological r81e which has become an integral part of the daily life of the vast majority of human beings. As such, it orients consumption by appealing to the desire of the consumer to be up to date on the latest trends and fashions, so as to provide a sense of belonging. Strategies for change must reflect the important cultural and social function of advertising in most parts of the industrialized as well as of the developing world.

A programme of universal action to curtail the growth of transnational advertising is virtually impossible because of the different historical and political conditions of each country. Each social entity has its own traditions, economic power groups, laws,' etc., which preclude the development of one broad strategy applicable in all contexts. However, one feature of a position common to all countries might be that it should be based on the democratization of society and the participation of broad sectors of the population in the decisionmaking and planning processes of their respective communities and nations.

From such a starting point, where it seems appropriate, specific institutions might be created that would allow public participation not only in communications in general, but also specifically in advertising. A kind of "advertising review councilt1, for example,

made up of representatives of different social groups, associations and organizations, might review advertising from different viewpoints. The effectiveness of such an institution would nevertheless depend on the degree to which each society creates its own concept of the 'tlegitimate r81e of advertising" in its own socio-historical context.

Public participation in any kind of decision-making relative to advertising is not feasible without associated educational programmes, to increase popular awareness of the advertising phenomenon. In this way, advertising education should form an integral part of the larger programmes of "media education".

Public participation and education can certainly be helped by regular public debates at local, national and international levels. These debates could concentrate on the crucial issues of the development of advertising and channel the opinions of community representatives. The basic function of these debates would be to incorporate the theme of advertising into the social agenda.

Last, but not least, a tremendous amount of research is needed to clarify the various possibilities for social action and raise the level of public consciousness in relation to advertising. It is not only a quantitative development that is necessary, but also a new methodological approach. Researchers are only beginning to move away from a traditional concern with specific, immediate effects and to take seriously the more general issues posed by social and cultural critics. This is not to say that the old problems of impact are irrelevant or unimportant, but to emphasize the need to ask a wider range of questions.

For example, how do the demands of advertisers structure the range and diversity of cultural production ? H o w do they affect the balance between the market sector and the public sphere ? In what ways does advertising promote an ideology of consumerism and how is this ideology related to the privatization of social life and the disappearance of the public sphere ? H o w will the emergence of the new media impinge on these processes, and how will they alter the social and cultural impact of advertising ?

Posing these kinds of question is a necessary first step. The answers will only come from more imagina- tive and adventurous research. Developing this research is an urgent task for the near future.

65

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Large, P. (1982) : "Oracle for the masses", The Guardian, 2 September, p. 15.

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Nevett, T.R. (1982) : Advertising in Britain : A History. London, Heinemann.

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