Advertising is a very powerful institution and has been the target of considerable criticism regarding its social and economic impact. The criticism of advertising concerns the specific techniques and methods used as well as its effect on societal values, tastes, lifestyles, and behavior. Critics argue that advertising is deceptive and untruthful; that it is often offensive, irritating, or in poor taste; and that it exploits certain groups, such as children. Many people believe advertising should be informative only and advertisers should not use subjective claims, puffery, embellishment, or persuasive techniques.

Advertising often offends consumers by the type of appeal or manner of presentation used; sexually suggestive ads and nudity receive the most criticism. Advertisers say their ads are consistent with contemporary values and lifestyles and are appropriate for the target audiences they are attempting to reach. Advertising to children is an area of particular concern, since critics argue that children lack the experience, knowledge, and ability to process and evaluate persuasive advertising messages rationally. Although an FTC proposal to severely restrict advertising to children was defeated, it remains an issue.

The pervasiveness of advertising and its prevalence in the mass media have led critics to argue that it plays a major role in influencing and transmitting social values. Advertising has been charged with encouraging materialism; manipulating consumers to buy things they do not really want or need; perpetuating stereotypes through its portrayal of certain groups such as women, minorities, and the elderly; and controlling the media.

Advertising has also been scrutinized with regard to its economic effects. The basic economic role of advertising is to give consumers information that helps them make consumption decisions. Some people view advertising as a detrimental force that has a negative effect on competition, product costs, and consumer prices. Economists' perspectives regarding the effects of advertising follow two basic schools of thought: the advertising equals market power model and the advertising equals information model. Arguments consistent with each perspective were considered in analyzing the economic effects of advertising.