Public service announcement: watch out for advertising

Stat house
December 2003

Public service announcement:
watch out for advertising
According to the Worldwatch Institute, global advertising expenditures grew 0.6 percent in 2002 to $444 billion; of this total, $309 billion was spent on major media, including television, radio, and newspaper. This modest growth was almost fully driven by the United States, which at $235 billion accounts for over half of the total global advertising market.

Increasingly, advertisers are marketing to children—both to influence consumption preferences early and to take advantage of the growing amounts of money people are spending on children ($405 billion in 2000). According to one estimate, American children are bombarded with 40,000 television ads per year, up from 20,000 in 1970. Half of these ads encourage children to request unhealthy food and drinks.

Embedded ads, such as product placements in movies, can seriously influence children, according to Worldwatch. In a recent study, researchers found that smoking in movies is strongly associated with youth smoking habits—as strongly as other social influences, such as parental or sibling smoking habits. U.S. advertising to children has spread to schools, where ads adorn walls, sporting equipment, and even educational programming.

To reduce children’s exposure to marketing, several countries, including Denmark, Greece, and Belgium, restrict television advertising to children; Sweden and Norway totally ban it. Even full bans are only partly effective, however, because satellites can beam television ads from other countries into restricted markets.

In 2002, U.S. advertising grew by 1.7 percent, stimulated by an economic recovery and cyclical events like the Winter Olympics and the U.S. congressional elections—the latter generating $1 billion in ads. Yet the worldwide increase followed a fall of 9.2 percent in 2001, which was triggered by the U.S. recession, the financial market collapse, the Internet “bubble burst,” and terrorist attacks. In Japan, which is the second largest advertising market and buys 12 percent of major media advertising, spending fell 5 percent in 2002. In Germany, the third biggest market and the largest one in Europe, spending fell by 6 percent. In contrast, advertising in China, the seventh largest market, is growing quickly; it was unaffected by the downturn in 2001 and has jumped 14 percent over the past two years.

The global average advertising spending per person for 2002 dropped slightly to $71 ($49 spent on major media), as increases in spending were matched by population growth. Yet this figure masks a huge variation across countries. While major media ad spending stood at $4 per person in China and $282 per person in Japan, in the United States it was $494 per person—10 times the global average.

In 2001, five of the top ten advertisers were car companies.And even while the economy stagnated that year, the global passenger car fleet grew to 523 million, with production of new cars reaching 40 million. The pharmaceutical industry, the sixth largest global advertiser, spent $2.5 billion on television and print advertising in 2000 in the United States, directly targeting consumers and generating demand for drugs. While pharmaceuticals can help save lives, advertising can promote unnecessary use of expensive drugs. A recent survey of U.S. physicians found that 92 percent of patients requested an advertised drug from their doctors and that 47 percent of those doctors felt pressured to prescribe those drugs.

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