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Economic, Social, and Regulatory Aspects of Advertising
Chapter 3 Economic, Social, and Regulatory Aspects of Advertising Identifies and explains economic, social, ethical, and legal issues advertisers must consider Chapter Title
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Chapter 3 Objectives Classify two main types of social criticisms
Employ an economic model to discuss effects Explain social responsibility and ethics Understand how governments regulate here and abroad Discuss court rulings that affect freedom of speech Define the regulatory roles of state and local governments Describe how federal agencies regulate Discuss self-regulation
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Controversies Does advertising . . . Economic Societal
affect product value? influence consumer choice? make us buy things we don’t need? make us more materialistic? affect us subliminally? discourage competition? debase language? increase prices? affect art? affect demand?
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Economic Impact: Principles
Self-interest Complete information Many buyers & sellers Absence of externalities
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Economic Impact: Global
Bleustein-Blanchet: Advertising expenditure is directly proportional to standard of living Insert ex. 3-1, p. 58 Per capita ad spending Position = 2.9” horiz., 1.5 vertical Size = 4.6” TALL Resolution: 300 dpi
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Economic Impact: Billiards Model
Insert ex. 3-2, p. 59, Advertising billiards Position = centered horiz., 1.5” vertical Size = 4.6” TALL Resolution: 300 dpi
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Economic Impact: Four Affected Areas
Product Value -Communicates brand image -Educates customers -Associates w/ desirable image
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Economic Impact: Four Affected Areas
Product Value Prices & Competition -Communicates brand image -Educates customers -Associates w/ desirable image Increase: -Branding -Ad costs Decrease: -Competition -Efficiency
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Economic Impact: Four Affected Areas
Product Value Prices & Competition Consumer Demand -Communicates brand image -Educates customers -Associates w/ desirable image Increase: -Branding -Ad costs Decrease: -Competition -Efficiency Primary: -Product Category Secondary: -Particular Brand
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Economic Impact: Four Affected Areas
Product Value Prices & Competition Consumer Demand Consumer Choice -Communicates brand image -Educates customers -Associates w/ desirable image Increase: -Branding -Ad costs Decrease: -Competition -Efficiency Primary: -Product Category Secondary: -Particular Brand Product differentiation
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Economic Impact: Abundance Principle
In an economy that produces more goods & services than can be consumed, advertising: Allows more-effective competition Self-interest Complete information Absence of externalities Many buyers & sellers Keeps consumers informed Stimulates competition Self-regulates to keep market free & open
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Social Impact: Two Types of Criticism
Short-term manipulative arguments Deception: puffery, nonproduct facts, bias, inaccuracy Subliminal myth Long-term macro arguments Proliferation Stereotyping Offensive Social impact Impacts values
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Social Responsibility and Ethics
Public service announcement from Abbott Mead Vickers BDDO Insert photo 3.9, p.66 “Think! Slow down” PSA Position = 2.7” horiz., 1.5” vertical Size = 4.6” TALL Resolution = 300 dpi
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Social Responsibility and Ethics
Ethical: morally right Socially Responsible: what society views as best Promote well-being Promote harmony & stability Influence elections Draw crowds to events Responsible advertising can . . .
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Social Responsibility and Ethics
Public service announcement from the Brain Injury Association of America Insert photo 3.13, p. 71 Towel snowboarding ad Position = 2.9” horizontal, 1.5” vertical Size = 5.7” WIDE Resolution = 300 dpi
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Ethics of Advertising Insert ex. 3.3, p. 73
Levels of Ethical Responsibility Position = 0.4” horizontal, 1.5 vertical Size = 8.2” WIDE Resolution = 300 dpi
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How Government Regulates
National: Legislative, Executive, Judiciary State: governor, attorney general, departments Municipal: mayor, city manager, police chief
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International Regulation
Ad from Air Tahiti Nui Insert photo 3.14, p. 77 Air Tahiti line drawing ad Position = 2.9“ horizontal, 1.5“ vertical Size = 5.7” WIDE Resolution = 300 dpi
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Current U.S. Regulatory Issues
Supreme Court: “speech” or “commercial speech” Tobacco Controversy Consumer Privacy Advertising to Children
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Federal Regulation: Agencies
FTC FDA FCC Patent & Trademark Office Library of Congress Deceptive, unfair, & comparative ads Nutritional Labeling & Education Act (NLEA) Broadcast media licensing Intellectual property Copyrights “works of authorship”
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Federal Regulation: FDA Disclosure
This ad for Revolution, a topical Parasiticide for Dogs and Cats, has a long disclosure Insert photo 3.19a Relpax woman Position = 2.8” horiz., 1.5” vertical: Size = 2.75 WIDE Resolution = 300 dpi Insert photo 3.19b Relpax disclosure Position: 5.9” horiz., 1.5” vertical Size = 2.75 WIDE Res = 300 dpi
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State & Local Regulation
“Little FTC” consumer protection acts National marketers comply with states’ laws Local govt. regulation: city & county consumer protection agencies
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Nongovernment Regulation
Better Business Bureau (BBB) National Advertising Review Council (NARC) National Advertising Division (NAD) National Advertising Review Board (NARB) Regulation by the media Regulation by consumer groups
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Self-Regulation: Agencies & Associations
Agency Responsibilities Research and verify claims & comparative data before use Liable for misleading or fraudulent claims Some maintain in-house legal counsel Industry-Wide Associations American Association of Advertising Agencies (AAAA) American Advertising Federation (AAF) Association of National Advertisers (ANA)
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Self-Regulation: AAF Principles
Insert ex. 3-6, p. 93, AAF Advertising Principles Position = 0.4” horizontal, 1.5” vertical Size = 8.2” WIDE Resolution = 300 dpi
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