Chapter 20 Presentation

Promotional StrategyMKT4230

Regulation of Advertisement and

Promotion

Patricia Knowles, Ph.D.

Associate ProfessorClemson University

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2Promotional StrategyMKT4230 2

Advertising ControlsThese are the various levels at which advertising and promotion are regulated.

TextbookPages 682 - 683

Self Regulation

State Regulation

Federal Regulation


Self-Regulation of AdvertisingThese 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



Local, State, and Federal RegulationThis 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)

TextbookPage 683


Self-Regulation by Advertisers and AgenciesThis 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

TextbookPage 684


Self-Regulation by Trade AssociationsThis 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

TextbookPages 684 - 685 / Exhibit 20 - 2

Attorneys at Law


Liquor Advertising on TVThe 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.

TextbookPages 686 - 687 / IMC Perspective 20 - 1

60 million underage viewers


Liquor Advertising on TVThis 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.

TextbookPages 686 - 687 / IMC Perspective 20 - 1


Self-Regulation by BusinessesThis 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)



The National Advertising Review CouncilThis visual shows a page from the web site of the National Advertising Review Council.

TextbookPages 688 – 689 / Exhibit 20 - 3


CARU ActivitiesThis 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

TextbookPages 690


Mission of the ERSPThis is the mission of the Electronic Retailing Self-Regulation Program (ERSP).

TextbookPages 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


Self-Regulation by Advertising AssociationsThis chart shows the advertising associations that actively monitor and police advertising practices.

TextbookPage 690 - 691

Actively Monitoring and Policing Advertising Practices

American Association of Advertising Agencies

American AdvertisingFederation

Advertisers

Agencies

Media

Advertising Clubs


Self-Regulation by MediaThis visual shows a Benetton ad that many magazines refused to run.



TV Network Guidelines for Children’s AdsThis is a sampling of the TV networks’ guidelines for children’s advertising.

TextbookPages 692 / Figure 20 - 3


Appraising Self-RegulationThe two opposing views of advertising self-regulation.


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

These are the various federal agencies involved in the regulation of advertising and promotion.


Federal Regulation of Advertising

TextbookPages 694

Federal Communications Commission (FCC)

Food and Drug Administration (FDA)

U.S. Postal ServiceBureau of Alcohol Tobacco, and Firearms

Federal Trade Commission (FTC)


Advertising and the First AmendmentThese are the key points about free speech and advertising.


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


Federal Trade CommissionHere is an overview of the Federal Trade Commission.

TextbookPage 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)


The Concept of UnfairnessThese are the basis for determining unfairness.

TextbookPages 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


PufferyThis visual defines and shows some examples of puffery.

TextbookPage 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”


Deceptive AdvertisingThese are the key elements of deceptive advertising.


Perspective of reasonable consumer

Likelihood of misleading consumer

Materiality – misrepresentation orpractice is likely to affect consumers’purchase decision


Ways the FTC Handles Deceptive AdsThese are the ways in which FTC deals with deceptive advertising.


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


Advertising SubstantiationThis visual presents an ad with weight-loss claims.

TextbookPage 703 / Exhibit 20 - 12

Weight-loss marketers must substantiate their claims


Federal Regulation by the FTCThis is a brief timeline of federal regulation by the FTC.


1970’s

FTC is powerful, active regulator

FTC becomes less active

1980’s and 1990’s

Focus on telemarketingand Internet privacy

2000 to 2009

Asks for increasedpowers to protectconsumers against

financial fraud

2010 to Present


Additional Federal Regulatory AgenciesThese are some of the other federal regulatory agencies and departments that regulate advertising and promotion.


Federal Communications Commission

Food and Drug Administration

U.S. Postal ServiceBureau of Alcohol, Tobacco,

and Firearms

Additional federal regulatory agenciesand departments that regulate

advertising and promotion


Test Your KnowledgeThe _____ 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


The Nutrition Labeling and Education ActThis visual shows the nutrition facts on the label of a jar of peanut butter.

TextbookPages 710 – 712 / Exhibit 20 – 15

Labels must be easy for consumers to

understand


The U.S. Postal ServiceThis is a list of the types of advertising messages over which the U.S. Post Service has regulatory jurisdiction.

TextbookPages 712

The U.S. Postal Service has control over ads that involve…

Lotteries

Obscenity

Fraud


Bureau of Alcohol, Tobacco, and FirearmsThis is a list of the roles and responsibilities of the Bureau of Alcohol, Tobacco, and Firearms (BATF).

TextbookPages 712

Enforces liquor laws

Develops regulations

Collects taxes on liquor sales

Regulates liquor advertising

Imposes sanctions

The BATF…


Suing Competitors Under the Lanham ActThis is a list of the elements that must be proven to win a false advertising suit under the Lanham Act.


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


Suing CompetitorsThis visual shows a comparative ad involving the Prego and Ragu brands of spaghetti sauce that resulted in a lawsuit.

TextbookPage 713 / Exhibit 21 - 17


State RegulationsThis visual introduces the fact that state and local entities involve themselves in advertising regulation.

TextbookPage 716


Regulation of Sales PromotionThis are the three forms of sales promotion that are highly regulated.


Cannot misrepresent their value

Cannot be a lottery Rules & details must be fully disclosed

Care must be taken with special audiences

Contests/Sweepstakes

Premiums


Regulation of Trade AllowancesThese are the regulations of trade allowances.


Must not violate any stipulations of the Robinson-Patman Act

Co-op funds must be equal and non-discriminatory

Trade Allowances


Regulation of Direct MarketingThis is a summary of the regulation of direct marketing.


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


Protecting Consumers from Unwanted CallsThese 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.


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


Internet Marketing IssuesThese are some of the new areas of concern for regulators.


Privacy Issues Marketing to Children Unsolicited Emails (SPAM)


Children’s Online Privacy Protection ActThis visual relates to the Children’s Online Privacy Protection Act and summarizes the characteristics of this piece of legislation.


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


Regulation of Social MediaThis 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

TextbookPage 724


Anti-Spamming LegislationThis 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


Chapter 20 Presentation

Marketing

regulation of advertising

advertising textbook

advertising associations

fair advertising

advertising controls

advertising campaign

hard liquor advertising

police advertising practices