Unicef suggested the obsession with consumer goods was an underlying cause of last month's riots and looting.
Parents trapped their children in a cycle of "compulsive consumerism" by showering them with toys and designer-label goods instead of spending time with them.
Children were much happier in Spain and Sweden where the obsession with consumerism was far less embedded and family time prioritised.
The report called on the Government to emulate Sweden, which introduced a ban on television advertising aimed at children under the age of 12, in 1991. But Bailey said: "Parents told me they could cope with conventional advertising and didn't want a ban. It's the online behaviour, which bypasses parental influence, that they didn't understand. It's that pressure which comes from advertising around web search engines."
He agreed with the Unicef analysis, saying: "Parents do lack confidence in their parenting skills and they give their children goods and toys as a substitute for giving them their time. Parents are loath to allow their child to be singled out for bullying because they haven't got the right brands or the latest iPad."
Children's Minister Sarah Teather said she shared Unicef's concerns about the rise of consumerism, and was working to implement Bailey's recommendations, including restricting outdoor adverts containing sexualised imagery where children can see them.
A ban on junk food advertising on programmes aimed at children under 16 was imposed in 2007, and regulators say this reduced children's overall exposure to such advertising by 37 per cent.
Introducing the Swedish ban would prohibit advertising before, during and after programmes aimed at under-12s.
But the watchdog Office of Communications said it had no plans to extend the ban because research showed "television has a relatively modest impact on children's food preferences".
The Government is looking at ways to strengthen child protection on the internet but is seeking co-operation with Google, You Tube and other major web players before threatening legislation.
Marketing expert Dr Agnes Nairn, who wrote the Unicef report, said: "While children would prefer time with their parents to heaps of consumer goods, parents seem under tremendous pressure to purchase a surfeit of material goods for their children."
- Independent