Is advertising the hidden persuader or a benign economic necessity?
Exclusive extracts taken from Sir Michael Perry’s speech to ministers
It’s rather ironic that I’m discussing this topic. It means that
advertising hasn’t managed to convey what it does and how effectively it
does it to a key group of opinion formers. Advertising hasn’t advertised
The inevitable result is that around the world advertising is under
attack - I don’t need to tell you that a lot of unbelievers have it
unbelievably wrong. Let me nail my flag firmly to the mast. My own
company, Unilever, believed in advertising to the tune of pounds 127
million in the UK alone in 1994 and almost pounds 1.27 billion
worldwide. That’s nearly 6 per cent of our total costs, so you can see
we believe it’s a valuable investment.
It started almost 100 years ago, when William Ewart Gladstone, the
surprising ‘father’ of British advertising, did two things in his budget
of 1850 that bring us here today.
The factories that sprung up in the Industrial Revolution were churning
out products and providing jobs. But they also provided a coat of
industrial grime on the faces and clothes of the workers. With soap
being a luxury not a necessity, the Great Unwashed were christened.
Gladstone repealed the tax on soap, which gave William Lever - the
founder of my company - the incentive to mass produce it to a guaranteed
standard of quality that was previously unknown. He called it Sunlight
Soap. But he had to tell people what he’d done and this is where
Gladstone’s second measure came in handy. He also repealed the tax on
paper and advertisements. And that created the popular press, which gave
William Lever and others the means to communicate with - and virtually
create by doing so - today’s ‘mass audience’.
So the marketing model that applied ever since was sketched out there
and then. You make the best quality product you know how. You put your
name on it - you brand it - to guarantee the reliability of its quality.
Then you use mass media to tell as many people as possible what you’ve
done. This hopefully creates demand, so that you can keep the individual
price unit low, which encourages people to buy; which gives you the
money to invest in research and development, so that you can continue to
improve it with new technology; which encourages people to go on buying
it and keeps it ahead of its competitors - all of whom are doing
precisely the same thing. That’s the marketing spiral that we follow to
The whole purpose of a brand is to create a long-term relationship with
the consumer and advertising is simply one way - the most efficient way
we’ve yet devised - to conduct a dialogue with that consumer.
When William Lever started his dialogue, it was a pretty simple message
- ‘trust me’. Today that element of trust a successful brand represents
is much subtler, more multi-layered.
Brands - the brands the consumer has adopted as his or her own - are a
small and important exception. They’re ‘friends’ and friends don’t let
you down, because they’re always the same. Ironic, but as society has
degenerated, so brands have regenerated. Because we can and do control
how they perform and how they speak for themselves - through
So why do advertising’s opponents feel the need to attack it so fiercely
and so often? Perhaps the best way I can explain it is to deal with the
most frequent criticisms.
Critics talk about advertising as if we’re only in it for today’s fast
buck and let tomorrow take care of itself. If, indeed, we approached our
business that way, there wouldn’t be a tomorrow. Unilever can trace its
origins back 100 years and advertising was at the heart of our business
from the beginning. We’re still here and we’re doing quite nicely, thank
you. We still believe in advertising.
Ah yes, say the critics, it’s all very well to create the demand but you
charge too much. You could sell your products cheaper. Yes, we could -
if the consumer came to us and said that a particular product would do
just fine the way it was until Doomsday. Don’t go to the trouble of
inventing the fountain pen, the quill will do just fine. Detergents?
Don’t bother - we’re used to rubbing our clothes with hard old bar soap.
The examples are legion. Many, if not most of the products in your homes
today that you take, quite rightly, for granted, came out of some
manufacturer sensing and trying to answer a latent need. It was not the
consumers storming the barricades, shouting: ‘give us cornflakes!’ or
‘we demand instant coffee!’
Let me not sound na•ve here. This was not social benevolence at work.
This was competitive business acumen, the competitive edge you achieve
by coming up with the better mousetrap, detergent, personal computer or
sports shoe. If a manufacturer doesn’t make enough money so that he can
put some of it into making the next, improved product and then have the
means - advertising - to communicate what he’s done and so start the
next cycle of the process, he will have no incentive and no means to do
it. And the consumer will be the loser.
Product innovation is directly dependent on the availability of
advertising. Existing brands that give reassurance and credibility to
product innovation are important. And in the cycle of which innovation
is a part, so are a number of other things.
If you can’t tell people what you’ve done, they’re not likely to buy
many of what you’ve made. So you won’t go on making them. You’ll close a
factory or two and a lot of people will lose their jobs. Without
innovation driving it forward, perhaps your business stagnates - perhaps
you go out of business and a lot more people lose their jobs.
If you’re not making so much, you don’t have to tell people. You don’t
advertise so much, so the media - which are largely subsidised by
advertising - suffer. Unless Rupert Murdoch decides to give it away, the
cost of the Times without advertising would be several times what it is
So, what have we got? Better products at lower prices, affordable media
and a great number of jobs, all depending on the fact that advertising
is a vital part of a mixed economy. And something else. You could argue
- and I do - that advertising is a synonym for consumer choice.
The Americans - as you might expect - are very eloquent on this issue.
They’ve even extended the principle of freedom of speech to include
freedom of commercial speech. Their argument being that, if it’s legal
to make and sell a product, then the maker of that product should have
the right to tell the public what he’s made. Allowing for the jargon, I
can’t see too much wrong with that.
Ah yes, say the critics - but freedom can so easily turn into licence.
There’s so much bad advertising around. And there, for once, I do agree
with them - although not for the reasons they might imagine. There are
far too many ads that are commercially inept, too many that are in
And it’s just because advertising mistakes are so public and so readily
criticised that the advertising industry in so many countries - led, I
might add, by this one - has responded to the need to be responsible. As
head of the Advertising Association - as well as a major advertiser - I
know how much sustained effort has gone into the system of self-
regulation the industry has had in place for many years.
Perhaps the most dramatic recent example of the voice of the consumer
being heard and being decisive was last year in the US, when public
pressure led to Calvin Klein withdrawing its advertising for jeans using
young models who looked under age.
Klein could talk until he was blue in the face - and he did - about
reflecting the new spirit of freedom, a self-aware generation glorying
in its own individuality, all of which is perfectly true. But the public
said: ‘No, you’re exploiting these young people - and us - and we’re not
having it.’ The public won, as it always will and should. So I reject
the criticism that advertising is irresponsible.
I’ve sketched out very briefly the rationale for it as an integral part
of the mixed market economy in which we choose to live and I doubt that
I need to pursue that particular point further. What I would like to
throw into the discussion, though, is one endorsement that was totally
unexpected. When the Berlin Wall came down, the first thing the East
Berliners did was to rush into the Western stores to buy the brands
they’d seen advertised on the TV shows that had been hopping over the
wall for years.
Now, that’s a small example in itself but it turned out to be a
microcosm or ‘test market’ in which the competition was between two
quite different kinds of economy - what we might call ‘market-driven’
(our version) and ‘command-driven’ (the Communist version).
Consumers were deserting the one in droves because it had failed them
and rushed to embrace the other - once they had the choice.
There’s another example I find pleasing. The word ‘advertising’ tends to
bring out a certain, shall we say ‘intellectual prejudice’ in many of
its critics. I suppose it’s got to do with the rather homely nature of
some of the items that are most heavily advertised. I know - we make a
lot of them. ‘Detergent advertising’ has become a phrase that lumps a
lot of things together. And if someone wants to be really dismissive,
they talk at election time of ‘selling a politician like a packet of
soap powder’. Now, I could argue that if the average politician received
as much thought and skill in the shaping of his communication as does
the average packet of soap powder, he might come across very much better
to his consumer, the electorate. But I won’t press the point.
Instead, take a look at government advertising. The government has for
many years been one of the very biggest advertisers in this country.
Ah, yes, say the critics, but that isn’t advertising...
What nonsense. Of course, social advertising, public-service advertising
- whether it’s social benefits, Aids or public information of any kind -
is advertising and often state-of-the-art advertising at that. It takes
the proven techniques, techniques of simplification, dramatisation, and,
more importantly, personalisation and applies them to the way we live
To summarise, advertising makes the mass market possible. It fosters
competition, which keeps prices low and encourages product innovation.
It provides the choice of product that allows us all to express our
individuality. It is the key element in creating the confidence that
leads to continuity in manufacture and that stability secures continued
and increased employment in the long run. It makes a free press
I should also add that a lot of advertising fails. It is an imperfect
tool but, until someone thinks of something better, it is the best we
have at our disposal and I wish more people would take the trouble to
understand that and help us to correct its imperfections.
If there is one general truth I have observed after 40 years in global
business it is this: the world belongs to the consumer - whether she (or
he) happens to be going under the title of citizen, customer or voter.
And business will depend more and more on its understanding of what is
happening in that consumer’s heart and mind and how the changes in
society are affecting it. Not only is there no way back but the way
forward will only accentuate that need.
One of our current preoccupations in business is the rapid emergence of
the ‘new’ electronic media - the Internet, CD-Rom, the spread of cable
and satellite TV and, before long, interactive TV. The bottom line, as
the Americans say, is this: all of these new technologies will make it
possible to conduct a more personal dialogue with the consumer. And once
that’s possible the consumer will expect it.
Some people in our business find the complexity of the new scenario
disconcerting. I personally see it as the most exciting development
since I’ve been in the business. I just wish I were starting out all
Extracts taken from a speech by Sir Michael Perry CBE, the chairman of
Unilever, to a ministerial meeting organised by the Advertising
Association and the Department of Trade and Industry. Perry led the
delegation as president of the Advertising Association, a post he has
held for three years which is taken up by George Bull of Grand
Metropolitan this week. The full text of the speech is available from
the Advertising Association, 0171-828 2771