The arguments against advertising refer to its negative economic and social impact and centre around: the inappropriate size of advertising expenditures, given the scarce economic resources of developing countries; the stimulating of demand for goods that are not appropriate, given the income and demand structure; and their contribution to a cultural standardization among countries.
Advertising has both a social and economic impact. Its socio-cultural effects relate to whether advertising creates or reflects the values and life-styles of members of society. Advertising can have adverse effects when it persuades consumers to buy things they do not absolutely need, when the differences among competing producers are slight or non-existent, and when it induces false beliefs in the consumer about the capabilities of particular products. Criticism of the economic effects of advertising is generally based on the resultant misallocation of economic resources, since consumers spend more than they would if they had a genuine choice. This is particularly the case with products characterized by high advertising-to-sales ratios and a low level of informational content.
Institutional and commercial advertising may be powerfully suggestive in their use of motivational psychology. Advertisements can affect voting behaviour, purchasing habits, styles of dress, speech and mannerisms, family and social relations, use or non-use of stimulants, and many other aspects of life. Advertising can thus create, destroy or change values. The power of advertising is abused when it is intentionally deceptive and when it withholds information needed for informed judgement. In the health area, advertising may have harmful effects on nutritional intake; on recovery from illness; on occurrence of accidents and some crimes; and on emotional and mental health.
One of the most lucrative sectors of the communication industry is advertising, with national and transnational ramifications and channels. Although the colossal size and ever-growing extent of advertising firms in the USA creates the impression that it is primarily an American phenomenon, it has become an enormous world-wide activity. At the beginning of the 1990s, annual expenditure on advertising was approximately $64 billion a year. More than half of this was spent in the USA, but several other countries - the UK, France, Germany, Japan, and Canada - accounted for over one billion dollars each. The dependence of the mass media on advertising is also growing; few newspapers in the world of private enterprise could survive without it. As for radio and television, advertising provides virtually the sole revenue for the privately-owned broadcasting companies which are dominant in the USA and in Latin America and is an important source of financing in various other countries.
As a means of supplying information, advertising is biased, in the sense that it concentrates on particular features to the exclusion of others. Indeed what distinguishes advertising from the editorial content of newspapers and from radio or television programmes is that its avowed purpose is that of persuasion; a balanced debate in advertising is a contradiction in terms. Because advertising is overwhelmingly directed toward the selling of goods and services which can be valued in monetary terms, it tends to promote attitudes and life-styles which extol acquisition and consumption at the expense of other values. A particular material possession is elevated to a social norm, so that people without it are made to feel deprived or eccentric.
Advertisers in all branches of industry are failing to make responsible contributions, by sufficiently legitimate and complete descriptions and claims, to social needs. Proof of this is provided by the growth of consumer movements and the increase in international governmental investigations and regulatory enactments. The social needs neglected by advertisers include population planning, use of natural resources, levels of safety, pollution control, and individual freedom of choice. The consumer movement also calls attention to the irresponsibility of some governmental advertising, press conferences and programme publicity. Special cases are the advertising and promotion engaged on by the military-industrial complexes for armament expenditures, the political education and propaganda advertising used by centrally planned countries, and censorship. Commercially, the equivalent may be the highly selective data that appears on package labelling.
Advertisements addressed to children or young people may contain statements or visual presentations which might result in physical, mental or moral harm to them. Such advertisements may take advantage of the natural credulity of children or the lack of experience of young people and may strain their sense of loyalty. Advertisements may also take advantage of the hopes of persons suffering from illness, or of an impaired ability on the part of such persons to judge critically an advertisement holding out the promise of a cure or recovery from illness
Advertising has positive features. It is used to promote desirable social aims, like savings and investment, family planning, and purchases of fertilizer to improve agricultural output. It provides the consumer with information about possible patterns of expenditure (in clothing and other personal needs, in house purchase or rental, in travel and holidays, to take obvious examples) and equips him to make choices; this could not be done, or would be done in a much more limited way, without advertising. Small-scale 'classified' advertising - which, in the aggregate, fills almost as much space in some newspapers as 'display' advertising by major companies - is a useful form of communication about the employment market, between local small businesses and their customers, and between individuals with various needs. Finally, since the advertising revenue of a newspaper or a broadcaster comes from multiple sources, it fosters economic health and independence, enabling the enterprise to defy pressure from any single economic interest or from political authorities.