Advertising Principles

and Practices

Advertising
and Society
 Questions We’ll Answer
• What kind of power does advertising
have in society, and what are its
limitations?
• Why and how is advertising regulated?
• What guides ethical behavior in
advertising?

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Top 20 Socially and Environmentally Responsible Companies

1. Microsoft 11. Johnson & Johnson

2. Whole Foods Market 12. Procter & Gamble
3. Kellogg’s 13. Kimberly-Clark
4. McDonald’s 14. Lowe’s
5. The Home Depot 15. Target
6. Walt Disney 16. Ford
7. UPS 17. Apple
8. Coca-Cola 18. Dell
9. Starbucks 19. H.J. Heinz
10. PepsiCo 20. Eastman Kodak

Source: National Marketing Institute, 2006.

Prentice Hall, © 2009 3-3

Advertising’s Role in Society:
Demand Creation Debate
• Critics say advertising creates demand,
driving consumers to buy products
unnecessarily.
– Do some products improve consumers’ lives?
• Proponents say companies invest in research
to find out what consumers want.
• Audiences can refuse to buy products they
don’t need.

Prentice Hall, © 2009 3-4

Advertising’s Role in Society:
Shape vs. Mirror Debate
• 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.
• Advertisers say they spot
trends and develop messages
that connect with them.
• Advertising both mirrors and
shapes.
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Advertising’s Role in Society:
Overcommercialization Debate
• Does advertising make people materialistic?
– Critics say advertising abuses its influence on
vulnerable groups like children and teenagers.
• Critics say the lines between advertising and
news and entertainment are blurred.
– How do you know sponsors aren’t influencing
content and how their product is perceived
– Does product placement change how we view
programming?

Prentice Hall, © 2009 3-6

 Other Social Responsibility
Issues: An Overview
• Poor taste and offensive advertising
• Stereotyping
• Body and self-image problems
• Targeting strategies
• Problems with advertising claims and other
message strategies
• The issues surrounding the advertising of
controversial products

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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, and the context
• Creating general guidelines is difficult because
people’s idea of “good taste” varies.
• What is considered “offensive” changes over time.

Principle:
Testing is needed to find the right balance
when one group that sees the advertisement finds the
message offensive, even through the primary target
market may think the message is appropriate.

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 Advertising Ethics
Poor Taste/Offensive
• Advertisers and media outlets
must try to be sensitive to
consumer objections
• Creating guidelines for good
taste is difficult
• Sex in advertising

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 Sex in Advertising
• It’s becoming more blatant, especially when it’s
not relevant to the product.
– Paris Hilton’s “soft-core porn” ad for Carl’s Jr.
restaurants
• Should sex be used to sell pizza, tacos, and truck
parts?
– Should sex only be used to advertise products purchased
for sexual reasons, like clothes or exercise equipment.
– Does it, in fact, distract or hinder the communication or
persuasion to the target?
– Does sex really sell?

Prentice Hall, © 2009 3-10

 Portraying Diverse People
• A stereotype is a representation of a cultural group
that emphasizes a trait or traits that may or may not
communicate an accurate representation.
• Common problems include:
– Gender stereotypes
– Body image and self-image
– Racial and ethnic stereotypes
– Cultural differences in global advertising
– Age-related stereotypes
– Advertising to children

Principle:
Stereotyping is negative when it reduces
a group of people to a caricature.
Prentice Hall, © 2009 3-11
 Message-related Issues
• False advertising is a message that is untrue.
• Misleading claims are grossly exaggerated claims
made by advertisers about products.
• Puffery is “advertising or other sales representations,
which praise the item to be sold with subjective
opinions, superlatives, or exaggerations, vaguely and
generally, stating no specific facts.”
Principles:
Advertising claims are unethical if they are false,
misleading, or deceptive.
Puffery may be legal, but if it turns off the target audience
then nothing is gained by using such a message strategy.

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 Message-related Issues
• Comparative advertising is a legitimate message
strategy, regulations govern those uses that are
challenged as misleading.
– The Lanham Act permits awards of damages from an
advertiser who “misrepresents the nature, characteristics,
qualities, or geographic origin in comparative
advertising.”
• An endorsements or testimonial is any advertising
message that consumers believe reflects the
opinions, beliefs, or experiences of an individual,
group, or institution.
– It’s misleading if the endorser doesn’t use the product or
if consumers can reasonably ascertain that a message
does not reflect the announcer’s opinion.

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 Message-related Issues
• Demonstrations should not mislead the consumer.
• It’s difficult for some food products so these are
evaluated by the FTC on case-by-case basis.
– Shooting ice cream under hot lights
– Milk looks gray on TV so a water and glue mixture
is used
• Some advertisers use disclaimers or “supers” to
indicate exceptions.
• Advertising controversial products like firearms,
gambling, condoms, etc. reflects the client’s ethics.

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 Product-related Issues
• Unhealthy or dangerous products—agencies must
consider if they can honestly promote these products
including fast food, tobacco, liquor, or beer.
• In 1997, the FDA loosened controls on drug
companies, and prescription drug ads skyrocketed.

Principle:
The ethical responsibility for selling a
controversial or unsafe product lies with the
marketing department; however, advertising is
often in the spotlight because it is the
visible face of marketing.

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 Reactions to Concerns about
Unhealthy or Dangerous Products
– McDonald’s and Disney both added healthier choices to
their menus.
– In 1996, the FDA restricted tobacco advertising within
1,000 feet of a school, and said ads in publications with
55% readership under age 18 could only run black and
white text ads.
– The FDA’s Master Settlement Agreement required the
tobacco industry to pay $206 billion over 25 years to 46
states, half of which supports antismoking ads targeting
children.
– Tobacco companies voluntarily curbed ads to youth.
– Liquor companies and television networks have
voluntarily reduced alcohol advertising.
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How is advertising regulated?
The following monitor and regulate advertising:
• Laws
• Government regulations and regulatory bodies
• Media
• Industry self-regulation
• Professional oversight groups
• Public/community organizations

Prentice Hall, © 2009 3-21

Organizations That Oversee Advertising

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 Legal Environment
Trademark Protection
• A trademark is a brand, corporate or store
name, or a distinctive symbol that identifies
the seller's brand and thus differentiates it
from the brands of other sellers.

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 Legal Environment
Copyright Protection
• A copyright gives an organization the
exclusive right to use or reproduce original
work, such as an advertisement or package
design, for a period of time.
– Copyright infringement is when a product is
used in an ad without proper permission.
– Ads that use another ad’s message (copycat) can
be subject to copyright infringement charges.

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 Legal Environment
International Laws and Regulations
• Pricing and distribution laws and regulatory
restrictions vary by country.
• Some countries ban ads for certain product
– Thailand, Hungary, Hong Kong, and Malaysia
have bans on certain types of tobacco
advertising
– Truthful ads can be banned for the public good
– Federal ban on junk faxes is valid
• Contests, promotions, and direct mail are
illegal in somePrentice
countries.
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 Regulatory Environment
The FTC and Children’s Advertising
• The 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.
– 10.5 minutes per hour on weekends
– 12 minutes per hour on weekdays
– Ads clearly separated from programs
• As of 1996, all stations must air 3 hours per
week of educational programming.
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 Regulatory Environment
Regulating Deception
• Deceptive advertising intends to mislead
consumers by making false or by failing to
fully disclose important facts, or both.
• Current policy contains three elements:
– Misleading—representation, omission, practice
– Reasonableness—“reasonable consumer”
– Injurious—must cause material injury
• Deception is difficult to prove due to vague
and hard-to-measure criteria.

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 Regulatory Environment
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 of the false claims
– Degree of reliance on the claims by consumers
– Type and accessibility of evidence available for
making the claim
– Injurious—must cause material injury

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 Regulatory Environment
Remedies for Deception and Unfair Advertising
• Consent decrees
– Advertiser agrees to stop the deceptive practice
• Cease and desist order
– 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 or return property,
pay for damages, or public notification
• Ad agency legal responsibility
– Agency is liable along with advertiser and subject to the
same penalties
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 Regulatory Environment
Food and Drug Administration (FDA)
• Regulatory division of the 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
• Watchdog for drug advertising, specifically
direct-to-consumer ads for prescription drugs

Prentice Hall, © 2009 3-30

 Regulatory Environment
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
• Responds to complaints but doesn’t initiate
actions
• Works closely with FTC to eliminate false
and deceptive advertising

Prentice Hall, © 2009 3-31

 Regulatory Environment
Other Regulatory Bodies
• The Bureau of Alcohol, Tobacco, and
Firearms (BATF) within the Treasury
Department regulates deception in advertising
and establishes labeling requirements for the
liquor industry.
• The U.S. Postal Service regulates direct mail
and magazine advertising including the areas
of obscenity, lotteries, and fraud.
• The States’ Attorneys General regulates
advertising at the state level.
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Media Review of Advertising
• The media screens and
rejects advertising that
violate their standards of
truth and good taste.
• The First Amendment lets
publishers refuse to run ads.
• The FTC pressures
magazines and newspapers
to stop running misleading
weight loss ads.
• CBS refused to run an anti-
Bush ad endorsed by the
MoveOn organization.
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Three Types of Self Regulation
• self-discipline
• Industry self-regulation
• Self-regulation by public and
community groups

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 Self-Discipline
• Organizations exercise self-discipline when
they develop, use, or enforce norms within
its own practices.
• Most major advertisers and advertising
agencies have in-house ad review
procedures.
• Several U.S. companies have their own
codes of behavior and criteria for
acceptability of advertising.

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 Industry Self-Regulation
• National Advertising Review Council (NARC)
– Negotiates voluntary withdrawal of deceptive
advertising
– National Advertising Division (NAD) consists of ad
industry people who monitor advertising and review
complaints. If they can’t resolve the issue, they send it
to the NARB.
– National Advertising Review Board (NARB) is a 50-
member group of ad industry people who hear the case
and try to resolve an issue. If unresolved, they can:
• Publicly identify the advertiser; share facts about the case
• Refer the complaint to a government agency like the FTC

Prentice Hall, © 2009 3-36

NARB Appeal Process

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 Self-Regulation by Public
and Community Groups
• Local groups like the Better Business Bureau advise
local businesses on legal aspects of advertising.
– Also receives and investigates complaints, maintains
files on violators, and assists law enforcement officials
in prosecuting violators.
• Consumer Activist Groups
– Action for Children’s Advertising monitors
advertising to children and files complaints.
– Public Citizen group pushed for warnings on print ads
for nicotine products.
– Cultural Environment Movement is a nonprofit
coalition focused on fairness, diversity, and justice in
media communications.

Prentice Hall, © 2009 3-38

What guides ethical behavior?
• Ethics
– “shoulds” and “oughts”;
the “right thing to do”
• Morals
– Frameworks for right
actions often based in
religion

Principle:
Decisions about ethics are made based on laws and
regulations, professional codes, but more importantly, on
an internal moral compass that senses when something is
right or wrong.

Prentice Hall, © 2009 3-39

What guides ethical behavior?
• Personal Ethics
– Ethical decisions are complex and involve conflicting forces—strategy vs. ethics, costs vs. ethics,
effectiveness vs. ethics.
• Professional Ethics
– In Gallup poll, advertising practitioners ranked just above HMO managers and car salesmen
– The American Association of Advertising Agencies publishes a code of standards
• International Standards and Codes
– Singapore, Malaysia, the Netherlands, and Sweden all have standards of professional behavior

Prentice Hall, © 2009 3-40