Since July, Switzerland has been considering switching off the illumination of shop windows in case of winter power shortages. Germany has ordered overnight shutdowns for advertising lights from 10 p.m. to 4 a.m. starting September 1, 2022. The step seems quite reasonable.
Predictably, the lobbying association of the advertising industry met this with an outcry. The German advertising industry feels "being in danger because of the new nationwide energy-saving regulations." The measures taken jeopardise the essence of the out-of-home media industry."If this threat becomes a reality, it will be a stroke of luck for our country."
In fact, no one needs out-of-home media such as posters or illuminated billboards in public places. On the contrary, this illuminated advertising is disruptive to the market economy. It annoys people and misleads us. That is why we have to switch it off. For example, out-of-home advertising has been completely banned in São Paulo for almost two decades and in four US states for many more decades. This applies to virtually all advertising.
Figures, facts and data
The Central Association of German Advertising (ZAW) estimates that EUR 45 billion, or 1.3 per cent of GDP, was spent on advertising in 2020, provided by about 900,000 employees.
However, these figures are likely significantly underestimated, as many advertising and marketing activities, such as those carried out by company executives, are not counted or counted partially.
Moreover, these figures exclude personnel costs. A more realistic figure for advertising expenditure is at least 2 per cent of GDP, which currently corresponds to about EUR 66 billion. This figure can reach between EUR 160 and 330 billion per year, corresponding to a range of 10-20 per cent of consumer spending when using the concept of the marketing backpack. This concept of "the difference between production costs and price" goes back to Günther Faltin.
Any real benefit does not accompany these high macroeconomic costs: advertising does not feed us, does not clothe us, and does not give a roof over our heads. David Graeber calls advertising a "useless" job, which only brings costs to society and frustration to those concerned.
David Graeber - an American anthropologist and social activist.
Advertising feeds us with catchy slogans and colourful pictures of beautiful things instead of the things themselves. Advertising directly increases the price of the advertised goods.
Every cent of advertising is paid for by us, the customers, in the product's price. Advertisements usually do not inform about products. According to advertising experts, they should not – but they are generally structurally misleading. Advertising is designed to sell. There's no more to it.
For over 100 years, leading economists have been saying that competitive advertising, that is, advertising aimed at increasing market share only, is meaningless. More than 90 per cent of all commercial advertising by profit-oriented companies is considered competitive.
Alfred Marshall already called it "social waste". Arthur Pigou also considered it a waste of energy and resources. According to Kenneth Galbraith, with advertising, companies artificially create needs that they then satisfy. Thus, companies have filled the void that they had created.
John Kenneth Galbraith - American economist, representative of the old (Veblen) institutional and Keynesian currents, one of the prominent theoretical economists of the 20th century.
Arms race of brands
Economists argue that marketing, so popular among business economists, is a waste of resources embedded in the system: redistributing market shares between companies and artificially awakening new needs.
Both are pointless and expensive. Both lead to a waste of resources, which society and the environment must pay for.
And all this just so that the winners in the advertising competition are the few companies who have set off the brighter fireworks, used the cleverer shapes, the unique sounds, the most colourful effects; those who waste money to raise it after landing with a profit.
It has nothing to do with efficiency, which economists are so fond of advocating. While the economic principle, known to every first-year economics student, preaches the economical use of limited resources, the non-economic principle of marketing enjoys wasteful, almost unlimited spending.
Advertising stimulates economic growth, wastes energy, and damages the environment
However, far worse than the direct waste of energy is the impact of advertising on our overall interaction between people and nature.
Every day we come across between 3,000 and 10,000 advertisements. Almost all of them send us a single message: BUY! Advertising encourages us to get greedy and, therefore, to consume more and more energy. The question "to have or to be" posed by Erich Fromm more than three decades ago is answered by advertising with hundreds of billions of messages every day: TO HAVE.
Our ubiquitous advertising culture sends us into a "more and more" materialistic world. Instead of contentment or even modesty, greed is constantly encouraged. This materialistic and selfish view of the world implies built-in obsolescence.
Advertisements encourage us to think that the old is no longer good enough and we need the new and fashionable one. The idea that a product will not last long and that we'll sooner or later have to replace it with a new one is only stuck in people's minds because of the intrusive mass advertising.
Thanks to pre-planned wear and tear, we tend to spend three weeks of the year working completely pointlessly and uselessly but wasting many resources and much energy.
On the other hand, the systematic dishonesty of advertising is ethically questionable. Advertising deliberately undermines the health of our children by advertising unhealthy food.
Moreover, it poses a threat to press freedom since the media should try to report on their advertisers as positively as possible, but not objectively.
To wrap it up: from a macroeconomic point of view, advertising is a waste of energy, and it should be reduced as much as possible. However, as we all know, fighting any temptations and addictions is quite challenging, be it a bottle of wine at the weekend or a new pair of shoes at the end of the month. That is why we need extra support, such as a ban on out-of-home advertising.