How Capitalism Will Save Us (12 page)

This thinking has led to bans on TV commercials for products like cigarettes and hard liquor. A few years ago, Senator Tom Harkin tried through his Healthy Lifestyles and Prevention America Act to get the Federal Trade Commission to restrict junk-food advertising to children. Americans haven’t heard the last of efforts like this. Bans against advertising certain toys and foods to children are already in effect in Europe. Sweden has outlawed all TV advertising to children under twelve.

Actually, evidence suggests that advertising is often far less persuasive than people think. For a large segment of the population, ads are more annoying than convincing. A study by Yankelovic Partners found that a substantial majority, 69 percent, claimed that they “are interested in products and services that would help them skip or block marketing”—hence the rise of devices like TiVO that let TV viewers skip the commercials.

Ask people in the industry, and they’ll tell you that the real problem is that, in fact, many ads fail. Today more ads than ever compete for viewer attention, a condition known as “clutter.” According to Rex Briggs, CEO of Marketing Evolution, a marketing research and consulting firm, and Greg Stuart, former CEO and president of the Interactive Advertising Bureau (IAB), so many ads flop that the pair decided to write a book called
What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds
.

One rule of thumb is that you need to run at least three ads before people can even remember your brand. You need to run seven before consumers
consider making a purchase. That’s when people understand what your ads are about. And believe it or not, studies show they often don’t.

The problem of creating awareness has become so great that advertisers have been resorting to so-called guerrilla advertising—placing ads in unusual locations, such as on train station stairsteps, people’s cars, or building scaffolding. But even these guerrilla approaches have become so common that they are losing their impact.

But what about those ads that you do remember—the ones that generate buzz and that, for all appearances, seem seductive? They often don’t work, either. Who can forget the
Pets.com
sock-puppet dog—star of one of the most memorable ad campaigns in the last decade? Most people remember those commercials. They told you why you should shop online for pet food at
Pets.com
: “because pets can’t drive.”

The sock-puppet character was such a hit that it ended up doing interviews and talk show appearances on its own outside the commercials. The problem was that while pets couldn’t drive, people could. The ads were good, but they were based on a faulty business premise. People preferred to pick up pet food as they shopped for groceries. Despite a brilliant, multimillion-dollar ad campaign,
Pets.com
was one of the great failures of the dot-com era. The company was bought out by
Petsmart.com
, which was more successful because it had something people wanted—stores.

Other much-advertised but failed product launches have included New Coke, the Ford Edsel, Levi’s Type1 jeans, and McDonald’s Deluxe sandwich line. All had brand-name backers and big bucks behind them. But they failed. Why? Because despite their expensive, alluring ads, they could not create desires that consumers simply did not have.

Advertisers clearly cannot create demand for things people don’t want. What Professor Galbraith and others failed to understand back then—and what many don’t realize today—is that entrepreneurs in a free market often rush to meet the needs and wants of people before those needs are conscious. Fifteen years ago, for instance, did you ever think you needed e-mail? Yet today most people would insist that they can’t live without it. In other words, the visionaries who invented e-mail perceived your needs before you did. The same goes for countless other products.

But what about the claims that advertising manipulates children? Aren’t they more impressionable? That’s not borne out by the Real World
experience in places like Sweden, Norway, and Quebec, where bans on advertising have failed to reduce childhood obesity. In Sweden, where such a prohibition has been in effect for more than ten years, obesity rates are comparable to those in the rest of the European Union.
³⁰

For all the criticisms of advertising, people who buy into capitalism’s bad rap overlook its critical role in the economy. Jerry Kirkpatrick, marketing professor at California Polytechnic State University and author of
In Defense of Advertising
, writes, “Advertising is, at once, a rational, moral, productive, and above all,
benevolent
institution.”
³¹
In fact, he says, ads enabled America’s early entrepreneurs to build the nation’s young economy, and provide more of what people needed:

Ads continue to be a critical driver of our economy, building the brands of America’s companies and spurring the buying and selling that creates wealth for millions. According to a recent study by the economic consulting firm Global Insight, advertising helps generate more than $5.2 trillion in sales and economic activity throughout the United States, supporting more than twenty-one million jobs, or 15.2 percent of our U.S. workforce.

But there is another benefit that people seldom mention: advertising
is the reason that the U.S. media is larger, more vigorous, and more outspoken than the media in most other nations. Ads underwrite the vital institutions that provide outlets for free speech. Take the travails of newspapers. Their revenue base—classified ads—has been eviscerated by the Internet, particularly craigslist. With such a sharp loss in advertising dollars, most daily newspapers are in a precarious financial position, with their very survival in question.

Think about it: where did you hear those experts talking about the evils of advertising? Most likely on advertiser-supported television, radio, newspapers, magazines, and Web sites. Without advertising, media would be more expensive or government supported. Either way, free speech would be less free. Is that really the more moral alternative?

A
bout ten years ago, a little-known industrialist named Ira Rennert caused an uproar when he started building the ultimate McMansion, a mammoth residence in Sagaponack, a hamlet within Long Island’s affluent Hamptons resort area.

The
New York Times
reported: “Ira Rennert’s dream house in the Hamptons will have 29 bedrooms, 39 bathrooms, a 164-seat theater and a restaurant-size kitchen with 5 refrigerators, 6 sinks and a 1,500-gallon grease trap.”
³³

The sixty-three-acre seaside compound was also to include two tennis courts, two bowling alleys, and a basketball court; a garage sufficient for two hundred cars; and a power plant with four huge water tanks, a 2.5 million–BTU furnace, and a maze of underground tunnels, among other amenities.

Asked the
Times:
“Can a complex of such staggering dimensions be considered a single-family home?”
³⁴

National publications like the
Times
and
Vanity Fair
predicted that the house would destroy property values and ruin the neighborhood. They quoted people who feared the home was secretly being built as a hotel or a religious retreat. Rennert’s McMansion, and others like it, have come to signify over-the-top ostentation, greed, and selfishness. A reporter from the
Austin Chronicle
dubbed them “Chateau du Screw You.”
³⁵
For many people, they are symbols of what’s wrong with capitalism.

Indeed, McMansions are almost universally reviled—except, of course, by those who live in them.

McMansions may not be architectural masterpieces. We may not like them or like the idea of one springing up next door. But they are anything but indicators of capitalism’s moral malaise. They are the result of the democratization of wealth over the last three decades, enabling more people to enjoy luxuries once reserved only for the very rich. Noted author and commentator Dinesh D’Souza wrote about this trend in his book
The Virtue of Prosperity: