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February 11, 2010

Corporations and Advertising


Advertising's presence is everywhere. It shapes social change and affects people's views of the world. As a major channel between producers and consumers, world advertising is dominated by a few multinational agencies who spend the most money and structure the industry by developing and providing the advertising "package" needed by multinational corporations to sell products.

Multinational corporations are the force behind the advertising industry. Although we do not know who owns the big advertising agencies, the close relationship between them and multinational corporations suggests that advertising agencies often are subsidiaries of larger multinationals. Thus, advertising agencies are used by multinational corporations to promote a homogeneous, global culture through which they can sell their goods. Toward that end, they have often attempted to neutralize different languages, customs, religions, and thus social and cultural identities.

The interests of multinational advertising agencies are not limited to promoting consumer products. Most agencies and their foreign subsidiaries have interests in other communication enterprises including film, videotape production-market research, publishing and management consulting. The flexibility of the advertising industry allows it to serve many purposes. It not only sells products, it defends social causes, promotes educational policies, and plans political campaigns.

Ownership of national media by multinational corporations is only one means of intercultural penetration. Through the purchase of advertising space in various media, corporations influence programming content. During the past ten years there has been a marked increase in advertising-backed radio and television. Media services - newspapers, television, and radio - depend upon advertising for financial backing and therefore are subject to strong influence and pressure from advertising agencies. For example, the cancellation of the television show Lou Grant starring Ed Asner was thought by many people to be directly related to his personal and the TV character's outspoken support of various political issues.

Advertising executives argue that advertisements create consumers of lower income groups and new jobs which move them up the socio-economic ladder. However, the situation in most Less Developed Countries (LDCs) is that multinational corporations that can afford large-scale advertising campaigns depend upon capital-intensive methods of production. Investment goes into new machinery which requires small amounts of labor and thus does in jobs for the poor. In addition, profits go to stockholders as dividends, maintaining or increasing the concentration of wealth.

Types of Advertising

There are four main media used in advertising: billboards, print, radio, and television. The advantages and disadvantages of each medium depend on the needs and restrictions of specific countries around the world. Because the majority of people in LDCs are illiterate, radio and visual images on signs and billboards can be effective means of communication, especially in rural areas or poor urban areas where television is scarce. In India, Savings Banks International reported that radio and television were the most effective in reaching the masses. "Radio spots and jingles are used extensively to communicate the ideals of thrift, particularly to the rural illiterate people".

When advertisers do not take illiteracy into account, results such as the following are common.

The New Guinea government circulated large posters that said Protect Our Rare Birdwing Butterflies; and beneath this, pictures of the butterflies in question, along with the warning: "$200 fine for collecting; $120 penalty per specimen in possession thereof." Villagers immediately collected these butterflies and took them to agriculture officers for payment.

A common beer ad in New Guinea shows a foaming glass with the caption: Be Specific, Say South Pacific. When the sale of beer was permitted to indigenes, the London Missionary Society posted identical ads, except for the caption: Say No. Beer sales immediately increased. Drinkers ordered No.

Print can be effective where people are educated and literate. However, in most LDCs, many people are illiterate and speak different languages. It is also very expensive to produce newspapers and the equipment available is shabby and out of date. In the majority of Third World nations there is one newspaper for every thirty persons, one-tenth that of developed nations.

Janus suggests that television is an effective means of advertising because it overcomes two major marketing obstacles: language differences and literacy limitations. It does so with visual aids and symbols and is able to communicate even to heterogeneous societies. Advertising agencies also consider television the keystone to global marketing success. However, even the use of television has its drawbacks. Few people in developing countries can afford or have access to a television set.

Although advertising agencies expanded most during the first twenty years after World War II, J. Walter Thompson and McCann-Erikson, the forerunners of American-based international firms, dominated advertising throughout the world from the 1920s until the late '50s. U.S. multinationals continue to dominate in countries where they operate, both in developed and less-developed nations. Local advertising, whether in the Caribbean, Africa, and parts of Asia and Europe, is also dominated by U.S. multinational advertising agencies. For example: "In Belgium and Britain, all of the 10 largest agencies are US-owned or affiliated; in West Germany, of the 10 largest, 9 are US transnational agencies. Italy's 10 largest agencies include 7 associated with US giants". In Mexico, US agencies partially or completely own 8 of the top 10 advertising agencies and in Venezuela, they own 9 of the top 10.

In the past, US multinational advertising agencies represented only US corporations. Today, however, due to their effectiveness, local clients are requesting their services and local agencies are pushed out of the picture because they are unable to compare with the big companies.

Even in markets inaccessible to US corporations, their influence is felt. China, both before and after the Cultural Revolution, copied the U.S. advertising model. There, advertising differed only in what it promoted: socialism, science, and technology.

Billions of dollars are being spent on advertising in developing countries. In 1970 capitalist countries spent $33 billion on advertising - $20 billion was spent by the U.S. alone. By 1980, the US spent $55 billion, 49% of the $111 billion spent. In 1970 US advertising agencies spent $1.8 billion on ads outside the US and Canada - 18% of their total. By 1977 their foreign billings had reached $5.8 billion, or 30% of their total expenditures.

Multinational advertising agencies have increased their influence and control by diversifying their functions. They are financially involved in the international pharmaceuticals industry, public relations, commercial research, and non-advertising enterprises. Their profits are closely tied to the economic stability of countries where they provide advertising services. In Mexico, US advertising agency billings decreased substantially after the currency devaluations in 1976 and 1982. The same decline in billings occurred in Chile under Allende when his antagonistic policies towards multinational corporations led to a drop in billings from $9 million in 1970 to $.4 million in 1974.

Advertising is also profoundly involved in the political arena. Business interests, dependent on the political environment of many Latin American countries, nave obstructed attempts by these countries to "orient radio and television towards the fulfillment of social, educational, and cultural development needs...". Opinion polls and other forms of advertising are used to sway public political support in the US and elsewhere.

US advertising agencies have been hired to do public relations for foreign governments. This occurred in Chile after the overthrow of Salvador Allende. In Argentina, after the 1976 coup and in Ethiopia under Haile Selassie, US advertising agencies were hired to improve the worldwide image of these governments.

If money spent on advertising is a determining character of media control and domination, then the US is clearly in the lead, with Britain, France, and Germany lagging behind. The technical sophistication of US multinationals permits them to set the standard for advertising production and services. In order to be competitive, local agencies must reproduce the same quality and style. However, LDC's lack of equipment, resources, and technical training make this impossible. With this kind of domination, "what chance does a developing nation have to create and maintain a national culture in a context in which media domination leads to cultural domination preventing local and national endeavors?"

Changing Cultures Through Advertising

The impact of advertising on culture is difficult to measure. Generally, however, the media promotes a consumer-oriented lifestyle exhibited in its most advanced form in the industrialized capitalist world. The control of the media by multinationals prevents nations from preserving and reinforcing their own cultures.

Well-designed advertising campaigns can have unintended but profound effects on individual communities. When US television was introduced in American Samoa, segments were transmitted complete with advertising, whether it was relevant to Samoa or not. Advertisers were given free time and products which had gone unnoticed for years were suddenly in great demand.

In Latin America, multinational corporations create regional advertising associations which determine the structure and practices for advertising, even that of local agencies. They often enter local markets as a minority partner and then gradually buy their way into power. Multinational corporations do not like to take a backseat to local partners. As one company spokesman said:

The key to our desire is that we don't want to be just an investor. We do believe in foreign nationals running a company; on the other hand, we want those companies to operate within a framework of serving our clients. To do that, we must be strong voice in the operation.

Although in many nations advertising is dominated by outsiders, countries such as Indonesia, Singapore, and the Peoples Republic of China have strict regulations. In 1981, President Souharto proposed a ban of commercials on Television Republic Indonesia, the state-run and only television channel. He hoped that the measures would mollify religious leaders who feared the effects of consumer marketing practices on the rural population.

Such bans are not limited to television. Print and other advertising media are also restricted. In Singapore, Marlboro cigarette ads are banned; in the PRC bluejean ads are banned because they represent "western decadence."

In addition, sanctions against multinationals for false advertising - where product characteristics are misrepresented - are enforced by many countries. The worldwide promotion of infant food formula is a well-documented example.

Unfortunately, in some countries such as Pakistan there are no consumer protection laws against false advertising by local businesses. In many countries it is not required to list ingredient information on products - even medicines.

The worldwide influence of advertising cannot be overlooked. The power of advertising comes not only from the creation of a market for products but also from the promotion of a consumer-oriented lifestyle which converts people whose values and lifestyles are different. While multinational advertising agencies exert control over the structure of the advertising industry as well as media content, even local advertising can have similar destructive effects.

Article copyright Cultural Survival, Inc.

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