It All Starts With Ethical Advertising

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ethical advertising

“Advertising is only evil when it advertises evil things.” – David Ogivly

When did an advertisement last make you cry? The emotions conveyed by ‘ethical advertising’ are raw, deep, memorable. Ethical advertising is used by large companies to promote ideology, charity and social change; to have a positive social impact.

Some big companies, like Nike and Dove, have become renowned for inspirational, ethical advertising. Their practices and products, however, are far from sin-free. So how should we respond as consumers, or investors?

Social Justice Meets Commercial Advertising

Consumers today have an unprecedented range of product choices, and brands face the scrutiny of millions of ethical buyers. This is a complex landscape for companies to navigate – social media means mistakes go viral just as quickly as successes. On top of this, heightened social justice awareness and a world of research resources at our fingertips means brands either have to prove themselves or hide their dark sides really, really well.

The average consumer is a lot faster on the uptake than in the heyday of “mad men” advertisers, and resents being lied to – raw, authentic social good is the opposite end of this spectrum. The 99% and millennials have no interest in overpriced cigars or self-esteem shattering magazines, and so we have seen the rise of this “anti-advertising” – or ethical advertising – to go with counter-cultural consumerism.

Big companies have realised this, and try to mimic the feel-good videos of sites like Upworthy by finding out what inspires their demographic. Two fantastic examples of a company targeting their product’s demographic while engaging in ethical advertising are Guinness’ Made of More campaign and Always’ #LikeAGirl. These advertisements create “movements” for social responsibility while identifying and marketing to the target consumer.

Forbes suggests that the key to a good reputation is a good product, good financials, and local engagement. All three of these might suggest why no financial institution is on the Reputation Institute’s list.

Ethical advertising asks brands to take a stand: to be authentic, honest, and socially responsible. A brand that engages in ethical advertising is seen to be socially responsible, even if its practices and products are not. In this sense, ethical advertising can be misleading, a capitalist distortion of activism.

Are They Actually Ethical?

Not-for-profit advertising is nearly always for a brand that actually is ethical. Of course, campaigns like It’s Time by the Australian activist group GetUp! have arguably easier material to work with than sweatshop-produced trainers.

When thinking of ethical advertising, I’m sure the first campaign that comes to mind for most will be Dove’s Campaign for Real Beauty. This campaign has been going for over a decade, dishing up its message of empowerment and real beauty with such viral success that it’s seen a more than 150% sales increase since it launched.

Here, experience ethical advertising by watching Evolution, the first video in Dove’s campaign. It was released in 2006, only a year after YouTube went online. You’ll probably recognise it – it went viral before viral before viral was a thing.

Dove, however, is owned by Unilever – a company that also owns Lynx, a deodorant with aggressively sexist marketing, and Fair & Lovely. Unilever also has a bad track record of testing on animals. The simple bar of soap marketed by these ads is not ethically special in any way. The only ethical “product” of Dove is, in fact, its campaign.

Similarly, Nike is a company famous for its inspirational, socially responsible advertising: see their videos Parallel Journeys and The Jogger. However, there have been many questions asked over the years of how ethical the supply chain and manufacturing process for these products is.

The Reputation Institute, while not an indicator of ethical practices or advertising, suggests which brands consumers find most ‘reputable’. This can help us identify which brands are perceived as ethical. For example, after the homophobic Barilla debacle saw the company drop dramatically in reputability, we could conclude that reputation is linked to ethical perception. The Institute lists Walt Disney and Google as the number one most reputable brands.

So being perceived as ethical doesn’t equal being ethical. The question must be asked: even if these brands do not do all they can to be socially responsible, could ethical advertising alone be enough to make them socially responsible companies? Is it possible to be ethical by degrees?

We recognises how subjective these issues are, and organise the companies in their index by shades of green.

Is it better to have an ethical image or ethical practices?

As an exercise, compare Dove and The Body Shop. Both are big, well known brands. The Body Shop’s product speaks for itself, and they devote comparatively little marketing to brand identity. In contrast, Dove has spent the past few years cultivating a new identity based on empowerment and self-esteem. In 2014, The Body Shop saw a growth in sales of 4.6; Dove saw a growth of 2.7%, nearly half as much.

Ethical advertising only draws in consumers – it doesn’t keep them. These statistics are only a snapshot of the companies, and their successes are due to many, many factors. However, we can at least draw from this that a good product is – as noted earlier – a better way to build brand loyalty.

So which companies should I invest in?

Investing in ethical companies without help is that much more difficult because ethical advertising can be so misleading. Ethical indices like the Dow Jones Sustainability and FTSE4Good ones can help you identify companies with socially responsibly practices.

Of course, ethical advertising isn’t all misleading – and even when Unilever and Nike make mistakes, their campaigns can do some real social good. Maybe sometimes the perception of ethics is enough to change the world. Female empowerment and LGBT rights as the star themes of hugely popular advertisements are radical even without a product to go with them. Supporting these companies could support decades of these socially responsible campaigns.

Ultimately, even if you haven’t got an ethical product advertising can do plenty of social good. Once you have profits and a campaign following, you can take the criticism you will without doubt receive and use it to inform your practices. Ethical advertising is the first step to providing investors with a successful ethical choice.

If you’d like reliable investment advice based on our in depth industry knowledge and insight, we’ll be more than happy to help.

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