Advertising as a "Leading Industry" in Contemporary Globalization
Funded by: The Metropolitan Institute at Virginia Tech in association with the Fernand Braudel Center, Binghamton University, and its research initiative supported by UNESCO's MOST programme (2002)
Researchers: P.J. Taylor and J.V. Beaverstock
Research Assistant: T. Gravitt (Metropolitan Institute at Virginia Tech)
This is a pilot project that is intended to develop into a contribution to a much larger project organised at the Fernand Braudel Center, Binghamton University. This bigger project is "Structural Trends in the Capitalist World-Economy" (Co-coordinators I Wallerstein and P Taylor) which involves identifying the "leading industries" at different critical periods in the evolution of the world-economy and investigating worldwide statistics on each industry’s operations. The overall purpose is to measure changing global profit rates in the development of the world-economy. Researchers at GaWC are focussing on the contemporary era and have chosen advertising as the "leading industry" to study for this period.
Justification for Choosing the Advertising Industry
The leading industries for the previous periods all involve the manufacture of commodities. That is to say they comply with the generally held view of ‘industry’ as the production of tangible outputs. This manufacturing is often seen as somehow more basic than the adjunct services necessary for them to operate such as banking, insurance and law. In the twentieth century advertising has become a major addition to the suite of ‘producer services’ (literally services to producers rather than consumers). The rise of the advertising industry is part of the massive growth in services in the twentieth century whereby the latter has eclipsed manufacturing in economic importance. Thus it has become specifically relevant to identify a ‘service industry’ as ‘leading industry’ in the contemporary world-economy. But why advertising?
Advertising is a relatively new producer service and this is crucial to its selection here. It is a central factor in the creation of a new framework for capitalism that we call American hegemony. With US advances in manufacturing building upon British industrial hegemony to create new mass production, a need was generated for a complementary mass consumption. The advertising industry developed in the 1920s to meet this need ‘to speed the flow of goods through the national market place’ (Marchand 1986, 2). This was the ‘American speciality’ industry (Mayer 1991, xv) that created a ‘consumer modernity’ as the cultural face of American hegemony (Taylor 1999). Advertisers were the arch agents of modernity, the promoters of new fashions and ideas in the ‘new American tempo’ (Marchand 1986, 4): ‘they brought the good news about progress’ (p.1). No longer so American-dominated but still ‘selling modernity’, advertising’s contemporary role can be seen as speeding the flow of goods through the global world market.
But this is a naïve interpretation of advertising. Although it would peddle itself as the consumer’s ‘ambassador’ providing information on goods to buy, in reality advertising practitioners operated as ‘consumption engineers’ (Marchand 1986, 29). Their purpose was never simply to expand markets, they operated on behalf of their clients to create partial monopoly rents through the branding of commodities. By developing and maintaining brands, advertisers added value to products allowing their clients either to sell more at the same price or sell about the same at a higher price (Mayer 1991, xi-xii). Trademarks, like patents and copyrights, provide monopoly powers but in this case without the time limits. Thus American hegemony has created ‘a world of brandscapes’, to extend Mayer’s (1991, 27) evocative description geographically to contemporary globalization.
Initially, when US producers in the 1920s were concerned about overproduction, advertisers were hailed as ‘guardians of uninterrupted growth’ (Marchand 1986, 2), as the solution, no less, to capitalism’s propensity for disruptive economic cycles. Obviously this accolade only lasted to the next severe downturn but the 1930s in no way eclipsed advertising. By now the industry was embedded into the new social matrix that was American capitalism. This is reflected today, ironically given the 1920s beliefs, in advertising’s particular sensitivity to cyclical changes. In fact this illustrates the industry’s continued centrality to modern capitalism: it is commonly used as an indicator of either signs of rise or decline in both national economies and in the world-economy. This is a particularly salient reason for the choice of advertising as a contemporary leading industry.
Finally the size of the industry and its organisational concentration are important considerations. Advertising is dominated by a few global ‘holding companies’ that own all the major agencies across the world. In 2001the gross income of the largest group (WPP) was over $8 billion.
There will be three levels of data: industry-wide organisations, directories of firms, and at the level of the firm.
Initial searches on all sources will be through websites.
A report detailing data sources and evaluating them in terms of providing data to assess the aggregate global profit rate for the industry.
Marchand, R (1986) Advertising the American Dream: Making Way for Modernity, 1920-1940. Berkeley: University of California Press
Mayer, M (1991) Whatever Happened to Madison Avenue? Boston: Little, Brown
Taylor P J (1999) Modernities: a Geohistorical Perspective. Cambridge: Polity
For results of this project, see GaWC Research Bulletin 195.