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- 1. Promotional Strategy MKT4230 Regulation of Advertisement and Promotion Patricia Knowles, Ph.D. Associate Professor Clemson University 1
- 2. 2 Promotional Strategy MKT4230 2 Advertising Controls These are the various levels at which advertising and promotion are regulated. Textbook Pages 682 - 683 Self Regulation State Regulation Federal Regulation
- 3. 3 Promotional Strategy MKT4230 3 Self-Regulation of Advertising These are the gatekeepers in charge of regulating advertising and promotions, and the goals they hope to achieve. • Gatekeepers • Advertising industry • Businesses • Media • Trade associations • Goals • Maintain consumer trust and confidence • Limit government interference • Protect all parties from litigation Textbook Pages 682 - 684
- 4. 4 Promotional Strategy MKT4230 4 Local, State, and Federal Regulation This is a list of some of the local, industry, and governmental agencies that are involved in regulating advertising and promotions. Local and Industry Groups • Better Business Bureau (BBB) • National Advertising Review Council (NARC) • Distilled Spirits Council (DISCUS) • American Medical Association (AMA) State and Federal Agencies • Federal Trade Commission (FTC) • Federal Communications Commission (FCC) • Food and Drug Administration (FDA) • U.S. Postal Service (USPS) Textbook Page 683
- 5. 5 Promotional Strategy MKT4230 5 Self-Regulation by Advertisers and Agencies This is a list of the methods by which advertisers and agencies protect themselves. Protective measures • Company guidelines, standards, policies • Corporate attorneys • Substantiating ad claims • Agency-client contracts • Creative review boards • Specialized lawyers Textbook Page 684
- 6. 6 Promotional Strategy MKT4230 6 Self-Regulation by Trade Associations This are the the types of products and services that are self-regulated by trade associations. Affected products and services • Liquor & alcoholic beverages • Pharmaceuticals • Products for children • Legal & medical services Textbook Pages 684 - 685 / Exhibit 20 - 2 Attorneys at Law
- 7. 7 Promotional Strategy MKT4230 7 Liquor Advertising on TV The ad shown here was developed by The Center on Alcohol Marketing and Youth. It calls for the alcohol industry to responsibly market its products, since its use is illegal for 60 million underage Americans. Textbook Pages 686 - 687 / IMC Perspective 20 - 1 60 million underage viewers
- 8. 8 Promotional Strategy MKT4230 8 Liquor Advertising on TV This is an ad that was run in a northeast edition of the New York Times in the form of an open letter sent to Seagram CEO Edgar Bronfman, Jr. criticizing the company’s decision to break the 48 year voluntary ban against hard liquor advertising on television. Textbook Pages 686 - 687 / IMC Perspective 20 - 1
- 9. 9 Promotional Strategy MKT4230 9 Self-Regulation by Businesses This is an overview of the various test points that occur during the development of an ad or an advertising campaign. Better Business Bureau (BBB) • Promotes fair advertising and selling practices across all industries • Handles consumer complaints • Supported by dues of the member firms • Uses negative publicity to curb abuses BBB national investigative arms • National Advertising Division (NAD) • Children’s Advertising Review Unit (CARU) • Electronic Retailing Self-Regulation Program (ERSP) Textbook Pages 686 - 688
- 10. 10 Promotional Strategy MKT4230 10 The National Advertising Review Council This visual shows a page from the web site of the National Advertising Review Council. Textbook Pages 688 – 689 / Exhibit 20 - 3
- 11. 11 Promotional Strategy MKT4230 11 CARU Activities This is a list of some of the roles and responsibilities of the Children’s Advertising Review Unit. • General activities • Review and evaluate child-directed advertising in all media • Oversee online privacy issues that affect children • Advise advertisers and agencies • Maintain self-regulatory guidelines for children’s advertising Textbook Pages 690
- 12. 12 Promotional Strategy MKT4230 12 Mission of the ERSP This is the mission of the Electronic Retailing Self-Regulation Program (ERSP). Textbook Pages 690 Discourage advertising and marketing in the electronic retailing industry that contains unsubstantiated claims Enhance consumer confidence in electronic retailing Demonstrate a commitment to meaningful and effective self-regulation
- 13. 13 Promotional Strategy MKT4230 13 Self-Regulation by Advertising Associations This chart shows the advertising associations that actively monitor and police advertising practices. Textbook Page 690 - 691 Actively Monitoring and Policing Advertising Practices American Association of Advertising Agencies American Advertising Federation Advertisers Agencies Media Advertising Clubs
- 14. 14 Promotional Strategy MKT4230 14 Self-Regulation by Media This visual shows a Benetton ad that many magazines refused to run. Textbook Pages 691 - 693
- 15. 15 Promotional Strategy MKT4230 15 TV Network Guidelines for Children’s Ads This is a sampling of the TV networks’ guidelines for children’s advertising. Textbook Pages 692 / Figure 20 - 3
- 16. 16 Promotional Strategy MKT4230 16 Appraising Self-Regulation The two opposing views of advertising self-regulation. Textbook Pages 693 - 694 Can be more stringent standards than those imposed by legislation Encourages truthful, ethical, responsible advertising Effective regulatory mechanism Preferable to government intervention Advertisers, Agencies, Media Takes too long to resolve complaints Problems with budgeting and staffing Lack of power or authority Self-serving to advertiser and media Critics
- 17. These are the various federal agencies involved in the regulation of advertising and promotion. 17 Promotional Strategy MKT4230 17 Federal Regulation of Advertising Textbook Pages 694 Federal Communications Commission (FCC) Food and Drug Administration (FDA) U.S. Postal Service Bureau of Alcohol Tobacco, and Firearms Federal Trade Commission (FTC)
- 18. 18 Promotional Strategy MKT4230 18 Advertising and the First Amendment These are the key points about free speech and advertising. Textbook Pages 694 - 695 Speech promoting a commercial transaction is protected but must be truthful Freedom of speech or expression is the most basic federal law that governs advertising and promotion Speech must be balanced against competing interests such as advertising of harmful products
- 19. 19 Promotional Strategy MKT4230 19 Federal Trade Commission Here is an overview of the Federal Trade Commission. Textbook Page 695 - 697 / Exhibit 20 - 9 Three Major Divisions • Consumer Protection • Economics • Competition Wheeler Lea Amendment (1938) Made Deceptive Practices Unlawful Created By FTC Act (1914)
- 20. 20 Promotional Strategy MKT4230 20 The Concept of Unfairness These are the basis for determining unfairness. Textbook Pages 697 Could not reasonably be avoided by consumers Causes substantial physical or economic injury to consumers Must not be outweighed by countervailing benefits to consumers or competition
- 21. 21 Promotional Strategy MKT4230 21 Puffery This visual defines and shows some examples of puffery. Textbook Page 698 Bayer “The wonder drug that works wonders” BMW “The ultimate driving machine” Nestlé “The very best chocolate” Snapple “Made from the best stuff on earth”
- 22. 22 Promotional Strategy MKT4230 22 Deceptive Advertising These are the key elements of deceptive advertising. Textbook Pages 699 - 700 Perspective of reasonable consumer Likelihood of misleading consumer Materiality – misrepresentation or practice is likely to affect consumers’ purchase decision
- 23. 23 Promotional Strategy MKT4230 23 Ways the FTC Handles Deceptive Ads These are the ways in which FTC deals with deceptive advertising. Textbook Pages 700 - 707 FTC programs to prevent deceptive advertising Affirmative Disclosure Advertising Substantiation FTC programs to deal with deceptive advertising after it occurs Cease-and-Desist Orders Consent Orders Corrective Advertising
- 24. 24 Promotional Strategy MKT4230 24 Advertising Substantiation This visual presents an ad with weight-loss claims. Textbook Page 703 / Exhibit 20 - 12 Weight-loss marketers must substantiate their claims
- 25. 25 Promotional Strategy MKT4230 25 Federal Regulation by the FTC This is a brief timeline of federal regulation by the FTC. Textbook Pages 707 - 709 1970’s FTC is powerful, active regulator FTC becomes less active 1980’s and 1990’s Focus on telemarketing and Internet privacy 2000 to 2009 Asks for increased powers to protect consumers against financial fraud 2010 to Present
- 26. 26 Promotional Strategy MKT4230 26 Additional Federal Regulatory Agencies These are some of the other federal regulatory agencies and departments that regulate advertising and promotion. Textbook Pages 709 - 712 Federal Communications Commission Food and Drug Administration U.S. Postal Service Bureau of Alcohol, Tobacco, and Firearms Additional federal regulatory agencies and departments that regulate advertising and promotion
- 27. 27 Promotional Strategy MKT4230 27 Test Your Knowledge The _____ is a federal agency that was founded in 1934 to regulate broadcast communications that include the radio, television, telephone, and telegraph industries. A. Federal Trade Commission B. Federal Communications Commission C. Fairness Doctrine D. U.S. Postal Service E. National Association of Broadcasters
- 28. 28 Promotional Strategy MKT4230 28 The Nutrition Labeling and Education Act This visual shows the nutrition facts on the label of a jar of peanut butter. Textbook Pages 710 – 712 / Exhibit 20 – 15 Labels must be easy for consumers to understand
- 29. 29 Promotional Strategy MKT4230 29 The U.S. Postal Service This is a list of the types of advertising messages over which the U.S. Post Service has regulatory jurisdiction. Textbook Pages 712 The U.S. Postal Service has control over ads that involve… Lotteries Obscenity Fraud
- 30. 30 Promotional Strategy MKT4230 30 Bureau of Alcohol, Tobacco, and Firearms This is a list of the roles and responsibilities of the Bureau of Alcohol, Tobacco, and Firearms (BATF). Textbook Pages 712 Enforces liquor laws Develops regulations Collects taxes on liquor sales Regulates liquor advertising Imposes sanctions The BATF…
- 31. 31 Promotional Strategy MKT4230 31 Suing Competitors Under the Lanham Act This is a list of the elements that must be proven to win a false advertising suit under the Lanham Act. Textbook Pages 712 - 723 Must be proven to win a false advertising suit Ad deceived a substantial segment of the audience Deception was “material” or meaningful and is likely to influence purchasing decisions Falsely advertised products or services are sold in interstate commerce You were, or likely will be, injured as a result of the false statements (loss of sales or loss of goodwill) False statements have been made about the advertiser’s product or your product
- 32. 32 Promotional Strategy MKT4230 32 Suing Competitors This visual shows a comparative ad involving the Prego and Ragu brands of spaghetti sauce that resulted in a lawsuit. Textbook Page 713 / Exhibit 21 - 17
- 33. 33 Promotional Strategy MKT4230 33 State Regulations This visual introduces the fact that state and local entities involve themselves in advertising regulation. Textbook Page 716
- 34. 34 Promotional Strategy MKT4230 34 Regulation of Sales Promotion This are the three forms of sales promotion that are highly regulated. Textbook Pages 717 - 718 Cannot misrepresent their value Cannot be a lottery Rules & details must be fully disclosed Care must be taken with special audiences Contests/Sweepstakes Premiums
- 35. 35 Promotional Strategy MKT4230 35 Regulation of Trade Allowances These are the regulations of trade allowances. Textbook Pages 718 - 719 Must not violate any stipulations of the Robinson-Patman Act Co-op funds must be equal and non-discriminatory Trade Allowances
- 36. 36 Promotional Strategy MKT4230 36 Regulation of Direct Marketing This is a summary of the regulation of direct marketing. Textbook Pages 719 - 721 Telephone Consumer Protection Act Pay-per-call Rule FTC “Do-not-call” Registry Telemarketing faces increased regulation FTC & US Postal Service police direct-response ads closely Self-regulation occurs through various industry groups
- 37. 37 Promotional Strategy MKT4230 37 Protecting Consumers from Unwanted Calls These are the characteristics of the national “do-not-call” registry, which was created by the FTC to deal with the problems of unwanted calls consumer receive from telemarketers. Textbook Pages 720 - 721 Created by the FTC to allow consumers to limit the calls they receive from telemarketers Excludes calls from political organizations, charities, telephone surveyors, or companies with which the consumer has an existing relationship Companies calling consumers on the registry subject to fine of up to $11,000 per incident
- 38. 38 Promotional Strategy MKT4230 38 Internet Marketing Issues These are some of the new areas of concern for regulators. Textbook Pages 721 - 730 Privacy Issues Marketing to Children Unsolicited Emails (SPAM)
- 39. 39 Promotional Strategy MKT4230 39 Children’s Online Privacy Protection Act This visual relates to the Children’s Online Privacy Protection Act and summarizes the characteristics of this piece of legislation. Textbook Pages 722 - 723 Places restrictions on collecting information from children via the Internet Enacted to protect the privacy of children when they are using the Internet Privacy policies must be on home page and area where data is collected
- 40. 40 Promotional Strategy MKT4230 40 Regulation of Social Media This is a list of some of the new guidelines established by the FTC: • Safeguarding of personal information • Guidelines for online endorsements • Online endorsers and bloggers must disclose any material connection to company or brand • Paid endorsers posting on social media and e-commerce sites • Must identify themselves as such Textbook Page 724
- 41. 41 Promotional Strategy MKT4230 41 Anti-Spamming Legislation This list presents the CAN-SPAM Act’s general requirements for commercial emails: • CAN-SPAM Act of 2003 email rules • Conspicuous notice of the right to opt-out • A functioning Internet-based mechanism that a recipient may use to opt out of future commercial e-mail messages • Clear and conspicuous identification that the message is an advertisement • A valid physical postal address for the sender Textbook Pages 724 - 725