The arguments against advertising refer to its negative economic and social impact and centre around: the inappropriate size of advertising expenditures, given the scarce economic resources of developing countries; the stimulating of demand for goods that are not appropriate, given the income and demand structure; and their contribution to a cultural standardization among countries.
Advertising has both a social and economic impact. Its socio-cultural effects relate to whether advertising creates or reflects the values and life-styles of members of society. Advertising can have adverse effects when it persuades consumers to buy things they do not absolutely need, when the differences among competing producers are slight or non-existent, and when it induces false beliefs in the consumer about the capabilities of particular products. Criticism of the economic effects of advertising is generally based on the resultant misallocation of economic resources, since consumers spend more than they would if they had a genuine choice. This is particularly the case with products characterized by high advertising-to-sales ratios and a low level of informational content.
Institutional and commercial advertising may be powerfully suggestive in their use of motivational psychology. Advertisements can affect voting behaviour, purchasing habits, styles of dress, speech and mannerisms, family and social relations, use or non-use of stimulants, and many other aspects of life. Advertising can thus create, destroy or change values. The power of advertising is abused when it is intentionally deceptive and when it withholds information needed for informed judgement. In the health area, advertising may have harmful effects on nutritional intake; on recovery from illness; on occurrence of accidents and some crimes; and on emotional and mental health.
One of the most lucrative sectors of the communication industry is advertising, with national and transnational ramifications and channels. Although the colossal size and ever-growing extent of advertising firms in the USA creates the impression that it is primarily an American phenomenon, it has become an enormous world-wide activity. At the beginning of the 1990s, annual expenditure on advertising was approximately $64 billion a year. More than half of this was spent in the USA, but several other countries - the UK, France, Germany, Japan, and Canada - accounted for over one billion dollars each. The dependence of the mass media on advertising is also growing; few newspapers in the world of private enterprise could survive without it. As for radio and television, advertising provides virtually the sole revenue for the privately-owned broadcasting companies which are dominant in the USA and in Latin America and is an important source of financing in various other countries.