Pennies For Your Thoughts

It’s emblematic of our era that in a single week surrounding the traditional labor holiday, Mayday 2012, the New York Times ran no less than four separate articles on the efforts of powerful private sector entities to control how they are perceived by consumers and the public. Such a quick succession of features on corporate perception projects in the preeminent U.S. news organ, is both an ominous portent and a testament to capitalist irrationality—McDonald’s alone spends $2 billion a year on marketing, enough to fully immunize ten million African children—in the course of promoting what they call “an agnostic view of the world.” These facts have profound implications for the “free marketplace of ideas” allegedly promoted by market economies.

While mainline economics holds consumers to be independent judges of what goods they wish to consume, the private sector takes a more proactive view. The fast-food chain McDonald’s is described in the business section of the Times as “quietly launching a major counteroffensive” against its critics in the movement for better nutrition, in order to “change how we think about food” (“How McDonald’s Came Back Bigger Than Ever,” 5/4/12).

It’s clearly understood that the ability to do this is proportional to the resources an institution can bring. In the case of McDonalds, which “owns nearly 17 percent of the limited-service restaurant industry,” equal to the next 4 largest chains combined, the resources to be committed reach into the billions. Therefore, the company can “reach an audience far larger than the one that saw ‘Super Size Me’,” and pay to keep its stories at the top of the Twitter trends list, showing how today’s celebrated “grassroots social media” are just as readily manipulated by money as the older media they succeeded.

However, the most revealing dimension of even the fast-food chains’ ability to twist the marketplace of ideas is what McDonald’s calls “brand work.” In the face of spreading consumer demand for healthier food, the company aims to distort the perception that its processed food is unhealthy: “In exchange for perks like free trips, access to important people and sometimes financial compensation, bloggers are encouraged or even contractually bound to write about a company…. Some bloggers…get paid as much as $20,000 for the work, which by McDonald’s ad-campaign standards isn’t much money.”

The brand work is designed for “reaching an audience that has become wary of slick ad campaigns,” as the ad comes not from the company itself, but “from somebody they trust,” as an expert puts it. For stressed blue- and white-collar mothers, receiving a five figure payment for a humble blog post or being flown to meet high-ranking corporate officials is a major event, even if it’s mere pennies next to McDonald’s marketing budget. A “mom blogger” describes how she felt after meeting company president Jan Fields: “Now I relate to her…and in turn I relate to McDonald’s.”

Obviously, McDonald’s is far from the only company to invest heavily in molding its public image. Walmart, in another Times article from the same week, has “shown a highly developed ability to sell itself.” Walmart’s top lobbyist has boasted to its investors that, “Across the board, our reputation with elected officials is improved,” which “makes it easier for us to stay out of the public limelight when we don’t want to be there.” The reason for this improvement is not obscure. The company’s PACs and employees donated almost $1.7 million in the 2010 midterm elections and spent $7.8 million in federal lobbying in 2011. The retail empire’s lobbying staff claim to find “favorable opinions of Walmart outweighing unfavorable ones by 55 points,” a major change from previous years and a quite reasonable return on blowing through nearly $10 million in political spending in just two years (“Walmart’s Good-Citizen Efforts Face a Test,” 4/30/12).

Besides rising approval numbers, the returns on this political investment are very real—despite reports that Walmart spent $24 million in Mexican bribes, Republican Congressperson Darrell Issa declined to investigate the company, as such oversight could only be “just to get headlines.” Walmart has little reason to feel buyer’s remorse.

The “Scarlet Letter” Of Power

Turning from the more blue-collar market segments served by McDonald’s and Walmart, the same principles dominate more upscale markets, including those deeply tied to the interlocking circles of government and corporate power, such as Goldman Sachs, which had a profile of its image spit-shined in the Times around Mayday 2012. Turning from its tradition of keeping a low profile, Goldman has been reaching out, including having its CEO, Lloyd Blankfein, become the Human Rights Campaign’s first corporate spokesperson for same-sex marriage. Goldman has ample resources to make its progressive stance on sex preference equality widely known, in an effort to eclipse the company’s reputation as a self-enriching power player (“Once Remote, Goldman Sachs Puts on a Friendly Public Face,” 5/4/12).

Maybe the hardest sell among the industries the Times reported on that week was the lobbying industry. Just after May 1, the business section described the travails of political insiders struggling with “the scarlet letter of lobbyist,” a “tainted” term that has come to limit careers. The profession has decided “they can no longer afford to see their reputations slip even further.” Like the other firms that have set out to aggressively promote work they hope will reflect better on them—rarely do corporations or influence-peddlers do charity work without making it as widely known as possible. Indeed, the write-up describes resources devoted to “promoting civic-minded work they are doing free.”

However, burnishing the image of lobbying is a particularly tall order, especially with regard to “what most people agree is the single most corrosive element in the lobbying process: the perception that huge campaign contributions from lobbyists and their clients work to influence legislators’ policy positions and legislation…the campaign finance issue is the 800-pound gorilla in the debate over how to change lobbying laws.” Even the business reporters concede “it may be difficult to dredge up much sympathy for an industry that earned $3.3 billion last year for helping oil companies, drug makers, Wall Street firms, and others get access to Washington’s elite” (“Tired of ‘Tainted’ Image, Lobbyists Try Makeover,” 5/3/12).

What economists call “consumer sovereignty” is at the heart of most arguments connecting capitalism and human freedom, including in the famous texts by Hayek and Friedman. Since markets provide various alternative products and services, consumers choosing among them drive the economy, as their freely-determined choices make them “sovereign” over what lines of business will be profitable and which will not.

However, this rosy picture of the market is undermined by a number of gritty business realities. As the above Mayday-timed examples illustrate, large amounts of money allow firms to invest heavily in shaping the preferences of consumers and manipulating how products, brands and companies are perceived. The above examples fit into a pattern of perception management best illustrated with two pivotal dimensions of modern marketing—ubiquity and manipulation. Consumers don’t consider ideas and brands in the abstract vacuum of economic theorizing, but rather in a world swamped with ads tailored to manipulate consumer choices.

Unlimited Scope of Modern Advertising

Considering prevalence, the relentless character of modern advertising has long been notorious. Marketers estimate that while a 1970s urban consumer saw 2,000 ads daily, that number is now closer to 5,000 per day. Marketers boast to the business press that “Ubiquity is the new exclusivity” and that successful marketing is “in your face, and you can blanket a marketplace.” This suggests the virtually unlimited scope of modern advertising: on TV, online, in flight, in print, before movies, during movies, glued to the floor, sprayed onto food, projected onto buildings, posted by the road, played on the radio, pasted on cars, and written in the sky. And paramount is marketing to children before their critical thinking powers even have a chance to kick in (NYT, “Anywhere the Eye Can See, It’s Likely to See an Ad,” 1/15/07).

This crushing volume of marketing, while laughed off as insignificant by economists, has been found by grateful business concerns to have a cumulative effect. Advertising and corporate positioning are so ubiquitous as to have assumed a prominent place in modern culture and their presence is taken for granted even when it’s wildly incongruous with the surrounding context. For example, we might note that among the Olympics Partners (TOPs), the corporate giants which together contribute 45 percent of the Olympic budget, we find not only standbys of corporate power and marketing like General Electric, Visa and Dow Chemical, but also Coca-Cola and McDonalds. Exactly what conceivable relationship Coke and McDonalds, the standard-bearers for low-nutrition, high-calorie processed food, have with the paragons of human fitness and physical achievement is hard to conceive. Except, of course, that they contribute millions to the Games, in addition to the half of the Games’ total budget that comes from broadcasters, particularly NBC.

Bound up in this is the desperate effort of disgraced corporations to turn their cash reserves into more positive reputations. A favorite of mine is spots where hardworking employees of a company are put smiling before a camera to represent “the people of company X.” The motive is clear—repeat a message associating the company with normal working people, not a large corporate institution with unpopular policies.

Collecting Personal Data

The second problem is that modern advertising is not just relentless, but deliberately manipulative. Large retailers have come to exemplify the collection of personal data in order to tailor sales pitches—without the consumer’s awareness. This practice—and the huge resources poured into it—cast a long shadow over the dogma of consumer sovereignty. Profiling Target as exemplary of data-driven marketing, the New York Times reports that current corporate and academic research on consumption suggests that decisions are less often conscious choices and more often a matter of “habits,” rather than the meticulous comparisons depended on by theory, or the freedom-embodying choices of most economic theory. For example, “a study of people’s most mundane purchases, like soap, toothpaste, trash bags, and toilet paper [found] that most shoppers paid almost no attention to how they bought these products, that the purchases occurred habitually, without any complex decision-making.” While flexible during occasional major life events, these habits are sturdy and thought to weigh on about 45 percent of most people’s daily choices.

But this only increases the importance of landmark personal events to marketers, who in turn “can buy data about your ethnicity, job history, the magazines you read, if you’ve ever declared bankruptcy or got divorced, the year you bought (or lost) your house, where you went to college, what kinds of topics you talk about online, whether you prefer certain brands of coffee, paper towels, cereal or applesauce, your political leanings, reading habits, charitable giving and the number of cars you own.” In fact, the only drawback so far for retailers is how well their data-collection works, risking a “public-relations disaster” if women, for example, found out Target knew they were pregnant before their family did. Therefore, “the question became: how could they get their advertisements into expectant mothers’ hands without making it appear they were spying on them? (NYT, “How Companies Learn Your Secrets,” 2/16/12.)

This poker face evolved to where Target “camouflaged how much it knew,” in order to encourage new shopping habits in customers going through life changes, to the point an executive confides, “we started mixing in all these ads for things we knew pregnant women would never buy, so the baby ads looked random.” The program is considered a major success and is being used by other retailers, as well as other large marketers like Proctor & Gamble. The Target corporation ultimately told their statistician to stop communicating with the press, perhaps concerned they had tipped the industry’s hand.

The basic technique is older, however. Emblematic of this is the practice by supermarkets of drafting in the smell of fresh-baking bread through ventilation systems, in those parts of the store selling the highest-calorie food. Describing the experience of this on a shopping trip, a public health scholar and statistician described how, “Here and there the ceiling was perforated by a series of air vents and those directly above the cheeses were wafting down the warm aroma of freshly baked bread. Only by the cheeses, nowhere else; a few paces back nothing, but two strides ahead and there was a direct hit…. Supermarkets don’t actually make bread on the premises; they make bread using pre-prepared frozen dough. They do this not to make money on bread but to make money on other items through the strategic use of the sense of smell. Most people think that baking smells are used to make shoppers feel hungry. This is part of the plan, but through the strategic use of smell they are also tapping into the emotionally charged food memories lying dormant in the middle of shopper’s brains. The limbic system is one of the deeper, more primitive parts of the central nervous system and is involved in many of our emotions, especially those related to survival such as fear and anger, but also pleasure, from eating to sex…. These connections explain why scents and odours often reawaken distant memories and can evoke strong emotions.” They go on to describe the specific targeting of these associations in other store sections with the same or different smells (The Energy Glut, Ian Roberts and Phil Edwards, Zed Books, 2010).

These well-established and carefully researched corporate practices violate the typical “rational consumer” assumption, being that people don’t respond to basic human loves and passions, like sex in magazine ads and food smells in stores and prosperity in car commercials. The American right-wing “libertarian” view is that charges of consumerism, spin, and the need for public reform are patronizing parentalism and the greatest threat to our freedom and liberty. This is in keeping with key economic ideology in our era, but the truth understood throughout the real business world is that firms manipulate consumption with the power of money.

Free To Be Screwed

The 20th century apostle for deregulated capitalism, Milton Friedman, wrote in Free to Choose: “What about the claim that consumers can be led by the nose by advertising? Our answer is that they can’t—as numerous expensive advertising fiascos testify. One of the greatest duds of all time was the Edsel automobile, introduced by Ford Motor Company and promoted by a major advertising campaign. More basically, advertising is a cost of doing business, and the businessman wants to get the most for his money. Is it not more sensible to try to appeal to the real wants or desires of consumers than to try to manufacture artificial wants or desires? Surely it will generally be cheaper to sell them something that meets wants they already have than to create an artificial want…. The real objection of most critics of advertising is not that advertising manipulates tastes but that the public at large has meretricious tastes—that is, tastes that do not agree with the critics” (Milton & Rose Friedman, Harcourt, 1980).

“They can’t.” And yet, rudely, they do, as explained above. The fact that it fails sometimes doesn’t mean the ideas don’t dominate. Soviet propaganda was by no means universally believed. Does that mean that it wasn’t relentless propaganda, using heavy resources to create what the Friedmans mockingly call “allegedly artificially created desires?” Further, the very obvious problem with the point about costs is that real wants are limited. The dimension of market economies that conservatives and economists so frequently praise, constant escalating growth, means that new wants must be engineered if people are going to spend sufficient money to provide adequate demand for new industries and products. The benefits of this investment can far outweigh the costs, as the table on the next page illustrates. But finally, no matter how much evidence we compile, we don’t really think advertising manipulates people. We’re merely snobs. Case closed.

Of course, the market does respond to changes in society, as its defenders claim. Notably, there is the recent trend, documented in business media that monitor advertising techniques, of depicting Great Recession worker suffering and discontent in ads, so as to better reach customers. A commercial segment knock-off of Norma Rae, the famous pro-union film, “is not a union recruiting pitch but instead is part of a television ad for the Las Vegas Convention and Visitors Authority…. Other big advertisers like McDonald’s and Coca-Cola are also tapping into a sense of frustration among workers to sell products portrayed as minor luxuries.” This pitch is effective since “For those lucky enough to have work, the conventional wisdom has been ‘Keep your head down; don’t make waves’.” Indeed, McDonald’s, not content with Olympics sponsorship and paying off blogging moms, has lately run ads built on an understanding of class tension, including “A lunch revolution has begun”; “A sesame seed of revolt has been planted”; and my favorite, “It’s time to overthrow the working lunch.” Obviously these adversarial conceptions of the labor market still exist in Americans’ minds, otherwise savvy advertisers would be unlikely to roll out expensive campaigns based on them.

The business press is quick to note that, “Marketers are adopting the theme of workers’ rights at a time when unions themselves are confronting declines in membership and influence…the appeals to downtrodden workers keep coming.” Ironically, the business world’s humorous efforts to satirize itself are oddly on-target—a recent print and online ad for a Coke-sponsored giveaway shows a woman silently screaming in the workplace (New York Times, “In Ads, the Workers Rise Up…and Go to Lunch,” 7/7/12).

Speaking of Coke, another connection to the effects of “ubiquitous” and “in-your-face” marketing emerges in the current public debate over sugary drinks. The front line is New York City where billionaire media magnate mayor Michael Bloomberg has proposed restrictions on large serving sizes of sugary sodas and drinks. The main industry organization, the American Beverage Association, “has already committed tens of millions of dollars to help defeat proposed taxes and regulations on its products across the country—including $13 million in Albany in 2010 to successfully lobby the Legislature to reject a proposed one-cent-an-ounce state tax on sodas.” The result is a propaganda-off, as the City itself has spent millions (so far about one-tenth what the ABA spent in Albany) on ads supporting the measure. Meanwhile, “The beverage association would not disclose its budget for the New York campaign” (New York Times, “Soda Makers Begin Their Push Against New York Ban,” 7/1/12).

What overturns this point is again little-mentioned in coverage and is outside most Americans’ awareness—Coca-Cola spends about $3 billion on marketing its chemical-syrup water every year, while Pepsi spends $2 billion annually, according to Advertising Age. You did not choose your beverage yourself—corporations throw a lot of good potential profit out the window because they’ve found it juices sales, pushing and reminding you to buy, and builds regular habits. A single family can’t compete with an industry that antes up over $5 billion a year to reach the kids at every opportunity (AA, “Pepsi plays catch-up with Coke, adds $556m in spending” 1/29/12).

Little is beneath the sugar marketers, as the press reports that, “The beverage industry, like the tobacco industry before it, has cultivated relationships with minority-group lawmakers, arguing that their communities are disproportionately affected by sales regulations.” In other words, poor people buy these products, and therefore have the most to gain in health benefits from decreasing consumption, yet suddenly the industry is concerned with the rights of the poor—not enough to pay taxes for health care, of course. And at every turn, the industry’s only expressed concern is over consumers—the bottom lines of the huge firms in question are never even mentioned.

Similar proposals to tax soda sales reliably run up against the power of money to dominate the conceptual landscape. In Richmond, California, the city council has placed on the ballot a small sales tax on soda sales, with an uncertain fate, for as the Wall Street Journal notes “several local soda-tax efforts in various states have foundered amid heavy lobbying.” The city council sponsor of the tax, a retired cardiologist, is promoting it by pulling a red wagon around town with a large jug of sugar, representing the average American’s annual sugar intake. The doctor has raised $10,000 to campaign for the tax; the ABA has so far spent $150,000 on this specific measure (WSJ, “Campaign Over Soda Tax Bubbles Up,” 8/13/12).

The effect of all this money- and power-driven tilting of the playing field of ideas was put best by Lee Edmondson of ChannelPort Communications, which creates the content for the in-store McDonald’s Channel. He describes the goal as inoffensive, soothing content featuring “an agnostic view of the world.” Agnosticism meaning an encouraged surrender of critical inquiry—who knows why the world is such a mess or who’s to blame or what can be done to fix it? Americans are immersed in a market of ideas driven by money to make a fetish of consumption, do what “feels right,” and remain “agnostic” about the world—to withdraw from active participation and inquiry in the ideas market completely. In the market of ideas, money talks louder than words.

Z

Rob Larson is instructor of economics at Tacoma Community College in Washington State. His first book is Bleakonomics (October, Pluto Press).