1. 1 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 1 Social, Ethical, and Regulatory Aspects of Advertising and Promotion 4 1 ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

2. 4 2 Social Aspects of Advertising Advertising Educates Consumers PRO Advertising informs CON Advertising is superficial and intrusive Advertising improves living standards PRO Ads lower the costs of products (How can this be?) CON Ads are wasteful and help only some Is there “information” in this ad? © Courtesy Apple Computers Inc.; Ad Agency TBWA Chiat Day,LA; Photographer: Matthew Welch, Model Emory Livers/LA Models

3. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 4 Social Aspects of Advertising Advertising Affects Happiness and Well-Being CON Ads create needs PRO Ads address a wide variety of basic human needs CON Ads promote materialism PRO Ads reflect society’s priorities

4. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 6 Social Aspects of Advertising Advertising: Demeaning and deceitful, or liberating and artful? CON Ads perpetuate stereotypes PRO Advertisers are more sensitive now CON Ads are often offensive PRO Ads are a source of liberation CON Ads deceive via subliminal stimulation PRO Advertising is art

5. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 9 Social Aspects of Advertising Advertising has a Powerful Effect on the Mass Media PRO Ads foster a diverse and affordable mass media that provides information and exposure on important issues. CON Advertising affects and controls programming. “Branded Entertainment” blurs entertainment and persuasion. And, controversial issues do not attract advertisers.

6. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 10 Ethical Aspects of Advertising Ethics are the moral standards against which behavior is judged. Key areas of debate regarding ethics and advertising are: Truth in advertising Advertising to children Advertising controversial products –Remember “primary demand?” (Chapter 1) –How has food become a “controversial product” in advertising?

7. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 11 Ethical Aspects of Advertising Deception is making false or misleading statements, but puffery (commercial exaggeration) is legal. Cannot legislate against emotional appeals Truth in Advertising

8. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 12 Ethical Aspects of Advertising Advertising promotes superficiality and materialism in children Children are inexperienced and easy prey Persuasion to children creates child-parent conflicts But, what does the literature say about kid’s abilities to process persuasive information relative to the claims above? Advertising to Children – Issues

9. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 13 Ethical Aspects of Advertising Critics question “targeting” minorities –Aren’t there positive aspects of targeting? Tobacco, alcohol, gambling and lotteries are product categories of greatest concern –How does the concept of “primary demand” provide insights here? –What does the literature say about advertising’s impact on these product categories? –Doesn’t the government advertise gambling through state lotteries? Advertising Controversial Products

10. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 14 Regulatory Aspects of Advertising Areas of advertising regulation: Deception and unfairness o Representation or omission that can mislead o Judged from perspective of consumer o Misrepresentation must be “material” Competitive issues o Vertical cooperative advertising o Comparison advertising o Monopoly power Advertising to children

11. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 15 Key Regulatory Agents Federal Trade Commission (FTC) –Wide range of regulatory programs and remedies Federal Communications Commission (FCC) Food and Drug Administration (FDA) U.S. Postal Service Bureau of Alcohol, Tobacco, and Firearms Government Regulation

12. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 16 Key Regulatory Agents Advertising Substantiation Program Consent Order Cease and Desist Order Affirmative Disclosure Corrective Advertising Control of celebrity endorsements, testimonials, and now blogging Government: FTC Programs and Remedies

13. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 17 Key Regulatory Agents No extensive policing powers Most ads and promotions are “inter-state” not “intra-state” State Attorney Generals office is main office for regulation States rely mainly on federal agencies for regulation of advertising and promotion Government: State Regulation

14. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 18 Key Regulatory Agents National Advertising Review Board (NARB) State and Local Better Business Bureaus Ad Agencies and Associations Media Organizations Industry Self-Regulation

15. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 19 Key Regulatory Agents No industry-wide trade association has emerged to date, exceptions: Anti-spam COPPA Some international organizations Global Business Dialogue on Electronic Commerce (GBDe) is emerging as a governing body Little progress has been made to address consumers’ complaints on on privacy (e.g. Facebook) Internet Self-Regulation

16. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 20 Key Regulatory Agents Consumerism: Grass roots consumer movements Consumers Organizations o Consumer Federation of America o Consumers Union o Consumer Alert o Commercial Alert Consumers as Regulatory agents

17. ©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 21 Regulation of Other Promotional Tools Direct/Mobile Marketing and e-Commerce Privacy –Behavioral targeting, GPS tracking Spam = 30 million messages/minute, 100 billion/day worldwide –“Phishing” as insidious spam Contests/Sweepstakes Telemarketing Sales Promotion Premiums, Trade Allowances Contests/Sweepstakes Product/Brand Placement Public Relations Privacy Copyright Infringement Defamation (slander and libel)