Wednesday, February 18, 2009



Advertising repels me because it is the language of commerce. In commercial life, private economic actors resort to virtually any means to win a profit. This leads to undignified, obfuscatory and flat-out misleading speech intended to drum up sales. But it is not entirely their fault, because we live in a free market economy. In the free market system, private actors own the manufacturing facilities and distribution channels that move goods through the economy. Government plays a regulatory role, but at bottom, economic activity in America is private. Government simply ensures that private actors do not defraud or injure each other as they bargain, buy and sell. And this is necessary, for economic actors would certainly defraud or injure each other if the law did not constrain certain actions.

In the free market, competition abounds. When private actors compete to offer particular goods and services to the public, consumers benefit because competition forces private sellers into a bidding war for the lowest cost. The competitor who offers the same goods or services for the lowest price wins. Despite this positive effect, however, private competition also induces negative behavior. After all, competition is a form of warfare. It implies that there is a prize that only one person can win, leaving the competitors to fight each other for the glory. If the prize is enticing enough, it will draw countless competitors into a bitter struggle for victory. Common experience tells us that people abandon dignity when it comes to winning a desired reward. Just watch a reality show on television to answer the question whether human beings will do anything to win a tempting prize. The same holds true in the free market. In free market economics, the “prize” is profit and dominant market share. Competitors for that “prize” will do almost anything to win it.

Consumers are the means by which free market actors achieve their goals. To win profits and market shares, commercial actors must reach out to consumers. Because competitors in the same field offer roughly the same goods and services, a determined private actor must persuade consumers to buy his goods and services, not the competitors’. Persuasion is never easy; most people know what they think about particular issues. For example, no florid rhetoric or logical feat will ever convince an abortion opponent to switch his position. But in commerce, people face relatively uncontroversial subject matter. They simply need to buy something, and numerous competitors offer the same thing. In these circumstances, persuasive speech can actually influence a listener. In commerce, speakers do not talk about lofty philosophical issues; they talk about chairs or televisions or bundles of hay. It is not grandiose. The seller who best describes his chair or television or bundle of hay will win the customer. This is the heart of advertising.

Advertising is “commercial speech.” Our Supreme Court recognized that advertising plays a vital role in the free market system in its seminal decision Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976). It wrote: “Advertising, however tasteless and excessive it sometimes may be, is nonetheless dissemination of information as to who is producing and selling what product, for what reason, and at what price. So long as we preserve a predominantly free enterprise economy, the allocation of our resources will in large measure will be made through numerous private economic decisions. It is a matter of public interest that those decisions, in the aggregate, be intelligent and well informed. To this end, the free flow of commercial information is indispensable.” Id. at 765. Later in its opinion, the Court clarified that the First Amendment protects only a certain “type of information” within “commercial speech:” “[A] different degree of protection is necessary to insure that the flow of truthful and legitimate commercial information is unimpaired.” Id. 774, fn 24.

What, then, should advertising do? The Supreme Court seemed to know that advertising can be “tasteless and excessive.” It even seemed to hesitate before declaring that advertising deserves protection under the First Amendment. To avoid thorny practical problems, it took a middle course. It protected advertising only to the extent that it protects “the free flow of information” in a private enterprise economy that helps consumers make “intelligent and well informed private economic decisions.” Those “intelligent and well informed private economic decisions,” in turn, depend upon “truthful and legitimate commercial information.”

Why did the Court make these qualifications? If it accorded First Amendment protection to advertising only if it provides “truthful and legitimate” commercial information, it must have known that advertisers all too often disseminate untruthful and illegitimate information about their products. As discussed, competition in the private market is ferocious. Competitors want to win, and to win they must lure in more customers with enticing information. Advertisers do not want customers to hear bad news or facts that will turn them away from their products. If a customer hears that a product has a terrible service record and was rated “lowest in safety” in a magazine, he most likely will not buy it. But will an advertiser mention these facts? Certainly not. The Supreme Court seemed to know that advertisers are not wont to “play fair,” and it only agreed to protect their speech if they agreed only “to tell the truth” and “be fair.”

Asking advertisers to be fair is like asking the devil not to play tricks.

Fairness does not win customers in commerce. Advertising does not work when it tells the whole truth about a product. It works when it implants an idea or image in the listener’s mind. Accurate information may help the consumer make a “well informed, intelligent” economic decision. But advertisers would rather see the customer just spend his money. Whether his decision was “intelligent” makes no difference. More customers mean more sales, and more sales mean more profits. More profits advance the advertiser down the path to coveted victory in the free market competition. As we saw, victory is the ultimate goal. If inaccurate, misleading information results in more sales than accurate, truthful information, which information do you think advertisers will more likely broadcast? In a word, the Supreme Court was hopelessly na├»ve in concluding that advertisers will always choose the “truthful path” in advertising. The “best” advertisers stretch the truth to the furthest possible limits. In that way, they garner the most customers without technically violating the law. “It was not technically a lie,” they say, “because we printed a disclaimer on the bottom of the page that said: ‘See Store for details.’ So it was not misleading.’” Does such “arguable lying” constitute the “free flow of information” that is supposedly so important to the free market economy?

GEICO is a masterful advertiser because it understands that people do not want to hear truthful, legitimate information about goods and services. The Supreme Court thought that commercial speech was valuable because it “disseminated information” to consumers that allows them to make “intelligent, well informed private economic decisions.” But GEICO knows that such information is boring. People do not want to hear about percentages, statistics and insurance policies during commercial breaks on prime time television. GEICO sells car insurance. It is hard to imagine a more boring subject. So how do they lure in customers? Simple: They do not talk about their exhaustive insurance programs. They do not even talk about how their insurance objectively compares to their competitors. No, they show you an animated gecko who speaks in a cockney accent. Or perhaps they show you a hairy caveman who cannot get a girlfriend or board an airplane. Then, at the very end of the advertisement, they post the company logo and a phone number. A voice then quickly says: “10 minutes could save you 15% or more on car insurance.”

What is significant about this? First, GEICO’s advertisements really provide no information. They merely stimulate the senses with memorable images. Consumers need car insurance, but they really do not care about the details. They just want to know who sells it and how much it costs. GEICO’s advertisements answer both questions. More importantly, they forge a mental link between “car insurance” and their company. In other words, when a consumer thinks “car insurance,” he thinks “gecko” or “caveman.” Then he calls GEICO. Skillful oratory and “truthful information” did not produce this result. Clever imagery and sensory appeals did. It is neither subtle nor sophisticated. Rather, GEICO advertising proceeds on an unabashed hypothesis: That consumers are completely stupid. GEICO assumes that consumers just want to see animated geckos and save money. That’s all they need to know to make “intelligent and well informed” decisions about car insurance. And they are probably right.

GEICO is shrewder than it appears at first glance. Its most recent advertising push confirms this. Now, GEICO shows completely random encounters between people and a stack of money. There is a pair of bobbly eyes on top of the stack. Then an 80s tune kicks in: Rockwell’s “I always feel like there’s someone watching me.” Narration fills in the gaps: “It (the stack of money with eyes) just knows you want to save money on your car insurance.”

As a satirist, GEICO’s brazen approach amazed me. I have always criticized commercial behavior for its fanatical fixation on money. Here, GEICO actually shares my satirical view, but seriously imputes it to consumers for its own gain. GEICO, like me, assumes that consumers are idiots who just want to make or save money. GEICO puts that view into practice on consumers. Consumers may think that these advertisements are funny. But the joke is on them. GEICO assumes that they are all dummies who just want to save a few dollars. They do not need to hear about why GEICO insurance is better than other insurance. They just need to see a funny image and hear that they will save money. It is cunningly simple. It works because GEICO is right: Consumers are dumb. And GEICO is laughing all the way to the bank.

GEICO is a “good advertiser” because it does not disseminate very much information about its product. The fact that GEICO wins praise for its advertising reveals just how little the Supreme Court knew about commercial speech. The Supreme Court assumed that consumers want to hear “truthful, legitimate” information about goods and services. GEICO, by contrast, assumes that consumers are children who just need to associate an image with a logo, then go out and buy. The Supreme Court thought that commercial speech resembles political speech in the sense that competing economic actors would truthfully debate one another to “persuade” consumers to buy their products because they are “objectively better.” GEICO, on the other hand, knows that consumers do not want to hear reasoned debates; they just want to hear a catchy tune or see a funny scenario that has nothing to do with the product. Put simply, the Supreme Court knows nothing about commercial values. Commerce does not adhere to abstract principle; it knows only expediency. It does what works, not what ancient parchments dictate.

GEICO knows what works in commerce because GEICO understands that commerce is war. GEICO cuts right to the chase with its advertising: “Here’s our logo. Here’s an image you can remember. You could save money. End.” Logic, principle and debate do not enter the analysis. In commerce, there is only one goal: To maximize profits. In the competitive free market, that means luring the most possible consumers to your product. GEICO succeeds because it does not waste time trying to persuade consumers with reasoning or “information.” It simply gives them something funny to remember and tells them they could save money. That is much more likely to motivate the average consumer than a detailed comparison between rival car insurance policy terms. GEICO wisely keeps it simple for the stupid. That is precisely what successful commerce demands.

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