ADVERTISING_20GROUP_201_20_5BAutosaved_5D edited 123.pptx

1. CHAPTER 3: THE BIG PICTURE:
ECONOMY AND REGULATORY
ASPECTS
Name of Presenter
ALVAREZ, KRIZIA MAE
ATENDIDO, DARRAH LEEN
BAROGA, JESELL M.
BULALAYAO, KATE
COLLEGE OF BUSINESS ADMINISTRATION
Laguna State Polytechnic University
SINILOAN CAMPUS
FEBRUARY 13,2025
Insert Venue Here

2. CONTENTS:
 Controversies About Advertising
 Economic Impact Of Advertising
 Social Impact on Advertising
 Social responsibility and advertising ethics
 Consumer privacy
 Comparative advertising
 The patent and trademark office and the
library congress

3. Advertising is a very public part of business.
Companies can get into trouble if their ads
upset people or their products are bad.
Some people think that because of this,
advertised products are better because
companies work harder to keep their
promises. But advertising is also praised
and criticized for how it affects sales, the
economy, and society as a whole. For a
long time, people have blamed advertising
for many problems, some true and some
not.
The Many Controversies about Advertising

4. The Economic Impact of Advertising
Advertising in the U.S. typically accounts
for 1 to 2 percent of the country's
economy (GDP), which is relatively small.
However, the U.S. spends the most on
advertising per person, averaging about
$567 in 2014. In comparison, people in
the UK spend around $362, while those in
China spend only $35. There’s a trend
showing that higher advertising spending
per person is linked to greater personal
wealth.

5. Effect on the Value of Products
Advertising enhances brand
preference by creating added
value and positive images,
leading consumers to choose
brands like Coca-Cola or
iPods. It implies quality,
which can justify higher
prices for advertised
products, even when they
are similar to unadvertised
ones.

6. Effect on the Value of Products
Advertising also educates
consumers on new product uses
and appeals to emotional and
psychological needs, influencing
their choices and identity. In terms
of our economic framework, by
adding value to products,
advertising helps both the
consumer and the
advertiser. It also contributes to the
number of sellers. That increases
competition, which also serves the
consumer’s self-interest.

7. Effect on Prices
If advertising adds value to
products, it follows that
advertising also increases
prices, right? And if companies
stopped advertising, products
would cost less, right?

8. Effect on Prices
The relationship between advertising
and prices is complex. While some
think advertising directly increases
prices, it's not that simple. Some
advertised products cost more, but
others cost less than unadvertised
ones. Government and court rulings
suggest advertising actually lowers
prices by boosting competition.

9. Effect on Competition
Some believe advertising restricts
competition because small
companies can’t compete with the
immense advertising budgets of
large firms. Conversely, small firms
often rely on advertising to inform
consumers about their brands’
unique benefits. If new brands could
not be promoted, how would
consumers learn about choices that
might better serve their needs and
wants?

10. Effect on Competition
Intense competition can reduce the
number of businesses in an
industry.
High costs may inhibit the entry of
new competitors in industries that
spend heavily on advertising.
Advertising by big companies often
has only a limited effect on small
businesses because a single
advertiser is rarely large enough to
dominate the whole country.

11. Effect on Consumer Demand
While advertising influences
overall consumer spending, its
effect is relatively small
compared to broader social and
economic factors like
technological advancements,
education levels, population
growth, income increases, and
lifestyle changes.

12. Effect on Consumer Choice
Manufacturers create diverse
products (e.g., many car models,
numerous cereal brands) to attract
different consumers. The ability to
advertise encourages innovation:
new brands emerge, existing brands
improve, and better products
eventually replace market leaders.
This competitive environment,
fueled by advertising, ultimately
provides consumers with a wider
variety of choices.

13. THE SOCIAL IMPACT OF ADVERTISING
• SHORT TERM MANIPULATIVE CRITICISM
A particular ad has harmed a particular
consumer at a specific point in time.
• LONG TERM MACRO CRITICISM
Ones that deal with the broad impact of many
ads on many people over long periods of time.

14. THE SOCIAL IMPACT OF ADVERTISING

15. DECEPTIVE ADVERTISING

16. DECEPTIVE ADVERTISING
Marketing practice that uses
misleading or false information to
influence consumers.

17. PUFFERY ADVERTISING
Exaggerated, subjective, claims that cant
be proven true or false.

18. Deceptive practices in
Advertising

19. Deceptive practices in
Advertising
 False promises- making an advertising promise that
cannot be kept, such as “restores youth” “prevents
cancer”.
 Incomplete description- stating some but not all of
a products contents.
 False and Misleading comparisons- making false
comparison, either explicitly or by implications.

20. Deceptive practices in
Advertising
 Bait-switch offers- advertising an item at an unusually low price
to bring people into the store and then “switching” them to a
higher price model by claiming that advertised product is out of
stock or poorly made.
 Visual distortions or false demonstration- using trick
photography or computer manipulation to enhance a products
appearance.
 False testimonial- implying that a products has the
endorsement of a celebrity or an authority who is not bona fide
user, or implying that endorsers have a certain expertise that in
fact they don’t.

21. Deceptive practices in
Advertising
 Partial disclosure- stating certain facts about the
advertised product but omitting other material
information.
 Small print qualifications- making a statement in
large print, such as Beneficial’s “Instant tax Refund”.

22. SOCIAL RESPONSIBILITY AND
ADVERTISING ETHICS
Ethical means doing what is morally right in a
given situation.
Social responsibility doing what society views
as best for the welfare of people in general or
for a specific community of people obligation
of advertisers.

23. ADVERTISER’S SOCIAL
RESPONSIBILITY
The foundation of any human society is
peaceful and respectful relationships
among its members.

24. ETHICS ADVERTISING
Ethics are built on two foundational elements:
societal custom which represent traditional behavior,
and societal principles which are philosophical rules
justifying past actions and guiding future ones.
When societal norms and personal values clash,
individuals must navigate the responsibility of
decision making .

25. How government regulates advertising
• Many laws govern what
advertisers can and cannot
do. These laws are passed
by legislatures, enforced by
the executive branch, and
interpreted by the judiciary.
This system is repeated at
the state and local levels.

26. The Issue of Advertising to Children
Advertising to children presents
different challenges. Kids aren’t
sophisticated consumers. Their
conceptions of self, time, and
money are immature. This
makes it likely that child-
oriented advertising can lead to
false beliefs or unrealistic
product expectations.

27. The second major regulatory
issue facing advertisers is
privacy. With the increased use
of wireless devices, mobile
phones, and the Internet, all of
which can be used for
advertising, the issue of privacy
rights is in the news
Consumer Privacy

28. The FTC defines
deceptive advertising
as any ad that contains
a representation,
omission, or practice
that is likely to mislead
the consumer.
Defining Deception

29. Unfair advertising occurs
when a consumer is
“unjustifiably injured” or there
is a “violation of public policy”
(such as other government
statutes).
Defining Unfairness

30. Comparative Advertising
Advertisers use comparative
advertising to claim superiority
to competitors in some aspect.

31. If a non-celebrity
endorser is paid,
the ad must
disclose this on-
screen.
Endorsements or testimonials

32. Their product’s limitations
or deficiencies: for
example, EPA mileage
ratings for cars, pesticide
warnings, and statements
that saccharin may be
hazardous to one’s
health.
Affirmative disclosure

33. Remedies for Unfair or Deceptive
Advertising
Consent decree is a document the
advertiser signs agreeing to stop
the objectionable advertising
without admitting any wrongdoing.
Cease-and-desist order prohibiting
further use of the ad.
The FTC may also require
corrective advertising for some
period of time to explain and correct
offending ads.

34. The Food and Drug Administration
(FDA)
A division of the Department of
Health and Human Services, the
Food and Drug Administration
(FDA) enforces the Federal
Food, Drug, and Cosmetic Act
and several other health laws.

35. The U.S. government plays a crucial role in
fostering economic growth by safeguarding
intellectual property. This protection is achieved
through patents, trademarks, and copyrights.
Patents: example invent a new type of bicycle
that's super efficient. A patent would give you the
right to be the only one who can sell that bike for
a certain number of years. This encourages you
to invest time and money in your invention,
knowing you'll have a chance to make it
successful.
The Patent and Trademark office and
the Library Congress

36. Trademarks:
Example at the grocery store and you want to buy a
certain brand of cereal. You see several boxes with
similar names and designs. The trademark on the
box you're looking for helps you quickly identify the
right product and avoid buying something you didn't
intend to.
Copyrights:
Example writing a novel. Copyright protects your
right to decide who can publish it, who can adapt it
into a movie, and how it's used. It's like having a
legal fence around your creation, preventing others
from using it without your permission.
The Patent and Trademark office and the
Library Congress

37. The Power of Coordinated Action
State-Level Cooperation: A Powerful
Force
Discuss the example of the tobacco
industry facing numerous lawsuits
from various states. Highlight how
unified state action can significantly
impact industries with deceptive
advertising practices.
The Patent and Trademark office and
the Library Congress

38. Local Government Oversight
Local Regulations: Protecting Consumers at
the Community Level
Cities and counties utilize consumer
protection agencies to enforce local
advertising rules.
.
Example: Briefly describe the Orange County
case to illustrate local enforcement actions
against false advertising.
The Patent and Trademark office and
the Library Congress

39.  Media outlets often act as
gatekeepers, rejecting ads
deemed objectionable, even
if not explicitly deceptive.
 Public perception often
views media self-regulation
as more effective than
government oversight.
Regulation by the Media

40. Internet Advertising
Key players (IAB, AAAA) provide guidelines for ethical online
advertising.
Focus Areas: Ethical online advertising focuses on:
○ Data Privacy: Protecting user information.
○ Transparency: Clearly disclosing how data is collected.
○ Consumer Control: Giving users control over their data.
Regulation by the Media

41. Television Advertising
TV networks maintain
rigorous review processes
for commercials.
Advertisers must submit
materials for review and
adhere to broadcast
standards.
Regulation by the Media

42. Radio Advertising
Radio networks, unlike TV,
have less control over
affiliate stations' advertising.
Standards vary widely
depending on the station and
its audience.
Regulation by the Media

43. Magazine Advertising
National magazines carefully
review ads, particularly from new
advertisers or for new products.
Reputable magazines often have
strict guidelines and may reject
ads lacking substantiation.
Examples of such magazines
include Time, Newsweek, and
publications with a "Seal of
Approval."
Regulation by the Media

44. Newspaper Advertising
Larger newspapers employ
dedicated clearance staff to
review ads.
Smaller newspapers often
rely on advertising managers
or proofreaders for ad review.
Regulation by the Media