Advertising Management - ch03

Part 1
Principle: Back to Basics
Copyright © Pearson Education Limited 2015
3-1

1. What is the social impact of brand
communication?
2. What ethical and social responsibilities do
communicators bear?
3. Why and how is advertising regulated?
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3-3

Demand Creation
 Some critics charge that
advertising creates demand,
driving consumers to buy
products unnecessarily.
 Proponents say companies
invest in research to find out
what consumers want.
 Audiences can refuse to buy
products they don’t need.
Copyright © Pearson Education Limited 2015 3-4

Shaping versus mirroring
 Does advertising create or reflect social
values?
 Critics say advertising abuses its influence
on children and teenagers.
 Critics say advertising creates social trends,
dictating how people think and act.
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 Advertisers say they spot trends and develop
messages that connect with them.
 The answer to the debate may simply be that
advertising both mirrors and shapes values.
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 Does advertising lead people to be too materialistic?
 Critics say advertising heightens expectations.
 Marketing to youth is controversial because children
are seen as vulnerable.
As a class:
What is your response to these criticisms?
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Diversity and stereotypes
As a class:
What is a stereotype? How would you define it?
Answer:
A stereotype is a representation of a cultural group
that emphasizes a trait or traits that may or may not
communicate an accurate representation.
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“Color Blind”
This ad was created by the
Carson/Roberts agency in
1964 during debate over the
Civil Rights Voting Guarantee
Bill.
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Sex appeals and body image
 Advertising that portrays people as sex objects is
considered demeaning.
 Playing on consumers’ insecurities about their
appearance can lead to dangerous practices.
 Responsible advertisers now use models of
normal size and weight to reduce pressure on
young people.
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Poor taste and offensive advertising
 Viewer reaction may be affected by sensitivity
to:
◦ the product category
◦ the timing
◦ whether the viewer is alone or with others
◦ the context
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Poor taste and offensive advertising
 Creating guidelines is difficult because
“good taste” varies.
 What is considered “offensive” changes over
time.
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 False advertising
 Misleading claims
and puffery
 Comparative advertising
 Endorsements and
demonstrations
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Dunkin Donuts hopes to convince
coffee drinkers to switch from
Starbucks based on results from a
national taste test.

Advertising claims are unethical if they are
false, misleading, or deceptive.
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These days, Ronald McDonald is slimmer and more active
to help convey the importance of making healthier
choices.
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3-16

Ethical decisions involve complex, conflicting
forces:
 strategy versus ethics
 costs versus ethics
 effectiveness versus ethics
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 In a Gallup poll, advertising practitioners ranked just
above HMO managers and car salesmen.
 The American Association of Advertising Agencies
publishes a code of standards.
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 Singapore, Malaysia, the Netherlands, and
Sweden have all established standards of
professional behavior.
As a class:
For added perspectives on the issue of ethics, read
and discuss “A Matter of Practice: Advertising Gets
No Respect!”
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Professional codes of ethics
 Codes of ethics can help guide your actions.
 However, they are only broad statements, and do
not explain how to handle every situation.
 You must develop a strong personal and
professional sense of right and wrong.
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Key advertising legislation:
1. Pure Food and Drug Act (1906)
2. Federal Trade Commission Act (1914)
3. Wheeler-Lea Amendment (1938)
4. Lanham Act (1947)
5. Magnuson-Moss Warranty/FTC Improvement Act (1975)
6. FTC Improvement Act (1980)
7. The Telemarketing and Consumer Fraud Act
and Abuse Protection Act (1994)
How have each of these acts impacted the advertising industry?
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Trademark protection
 A trademark is a brand, corporate or store name, or
a distinctive symbol identifying a seller’s brand and
differentiating it from other brands.
◦ Registering through the Trademark Office
provides exclusive use, as long as it’s for a
specific product.
◦ The Lanham Trademark Act of 1947 protects
unique trademarks from infringement.
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Copyright protection
 A copyright gives organizations exclusive rights to
use or reproduce an ad or package design, for a
period of time.
 Copyright infringement occurs when a product is
used in an ad without proper permission, including
copycat ads.
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Brand communication and the
First Amendment
 First Amendment protection extends to commercial
speech, but not on an absolute basis.
 The Supreme Court permits some restrictions on
commercial speech.
 Only truthful speech is protected – not misleading
or deceptive statements.
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International laws and regulations
 Legal and regulatory restrictions vary by country.
 Some countries ban ads for certain products.
 Thailand, Hungary, Hong Kong, and Malaysia have
bans on certain types of tobacco advertising.
 Contests, promotions, and direct mail are illegal in
some countries.
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Federal Trade Commission (FTC)
 Regulates deceptive and misleading advertising,
focusing on:
◦ Unfairness
◦ Deception
◦ Violations
 The FTC also oversees advertising involving weight
loss products, children and elderly people,
telemarketing, and the entertainment industry.
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Food and Drug Administration (FDA)
 Regulatory division of the U.S. Department of Health
and Human Services.
 Oversees package labeling, ingredient listings,
and advertising for food and drugs.
 Determines the safety and purity of foods, cosmetics.
 The FDA also acts as a watchdog for drug advertising.
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Federal Communications Commission (FCC)
 Regulates radio and television broadcast
communications (media, not advertisers).
 Can issue and revoke licenses, ban deceptive
messages or those in poor taste.
 It responds to complaints but doesn’t initiate actions.
 Works closely with FTC to eliminate false and
deceptive advertising.
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Other regulatory bodies
 Bureau of Alcohol, Tobacco, and Firearms (BATF)
Regulates deception in advertising and establishes
labeling requirements for the liquor industry.
 U.S. Postal Service regulates direct mail and magazine
advertising including the areas of obscenity, lotteries,
and fraud.
 The States’ Attorneys General regulate advertising at
the state level.
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The FTC and children’s advertising
 Children’s Advertising Review Unit (CARU)
evaluates ads to children under 12.
 The Children’s Television Advertising Practice Act
(1990) placed ceilings on ads during TV programs.
 As of 1996, all stations must air three hours per
week of educational programming.
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Regulating deception
 Deceptive advertising misleads consumers by making
false claims, failing to fully disclose important facts,
or both.
 Current FTC policy contains three elements:
1. Misleading: representation, omission, practice
2. Reasonableness: “reasonable consumer”
3. Injurious: must cause material injury
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Regulating substantiation
 Does the advertiser have a reasonable basis to make a
claim about product performance?
 Factors considered:
◦ Type and specificity of claim made
◦ Type of product
◦ Possible consequences
◦ Degree of reliance
◦ Type and accessibility of evidence
◦ What substantiation is reasonable
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Remedies for deception and unfair advertising
 Cease and desist orders
A process similar to court trial precedes the order.
 Corrective advertising
Advertiser runs messages correcting the false
impressions.
 Consumer redress
Cancel or reform contracts, refund money, return
property, pay for damages, or public notification.
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Remedies for deception and unfair advertising
A question for you……
Can the ad agency be held liable along with
advertiser?
Answer:
Yes, when the agency is an active participant in
preparing the ad and knows it is false or
deceptive.
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 The media screens and rejects advertising
that violate standards of truth, good taste.
 The First Amendment allows publishers to
refuse to run ads.
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Self-Discipline
 Organizations develop and use their own norms
 Major advertisers and agencies utilize in-house
procedures.
 Several U.S. companies have their own codes of
behavior and criteria for acceptable advertising.
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Industry Self-Regulation
 National Advertising Review Council (NARC)
 National Advertising Division (NAD)
 National Advertising Review Board (NARB)
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Self-Regulation by Public and Community Groups
 Better Business Bureau
Advises local businesses on legal aspects of
advertising.
 Consumer activist groups
◦ Action for Children’s Advertising
◦ Public Citizen
◦ Cultural Environment Movement
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In Part II, we will:
 Explore the basics of brand communication
planning with chapters on:
◦ The consumer audience
◦ Strategic research
◦ Strategy and planning
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“The truth wins out in the end”
 The truth® campaign has won more than 300 creative
awards.
 But winning creative awards doesn’t necessarily mean
that the campaign was effective.
 A campaign may fail to address the critical question of
effectiveness: Did the campaign work for the client?
3-41

“The truth wins out in the end”
Evidence of campaign effectiveness:
 A tracking study showed an 8 percent increase among the
truth® audience in negative attitudes toward big tobacco
from the previous year.
 All truth® (Internet) properties increased engagement nearly
20 percent from the previous year.
 The effort increased engagement with social media.
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Advertising Management - ch03

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Editor's Notes