1
Social, Ethical, andRegulatory Aspectsof Advertising
Chapter 4
© 2006 Thomson/South-Western
Ch 4: Ethics & Regulation 2
Social Aspects ofAdvertising
• Advertising Educates Consumers– Pro: Advertising informs– Con: Advertising is superficial
• Advertising improves living standards– Pro: Ads lower the costs of products– Con: Ads are wasteful and help only some
© 2006 Thomson/South-Western
Critics of advertisingfeel that advertising issuperficial becausemany ads carry littleactual productinformation. Do youthink advertising issuperficial?
© 2006 Thomson/South-Western
2
Advertising AffectsHappiness and Well-Being
Con: Ads create needsPro: Ads address a wide variety of basic
human needsCon: Ads promote materialismPro: Ads reflect society’s priorities
Ch 4: Ethics & Regulation 4© 2006 Thomson/South-Western
Critics feel advertisingpromotes materialism
© 2006 Thomson/South-Western
Advertising: Demeaning anddeceitful, or liberating and artful?
Con: Ads perpetuate stereotypesPro: Advertisers are more sensitive now
Con: Ads are often offensivePro: Ads are a source of liberation
Con: Ads deceive via subliminal stimulationPro: Advertising is art
Ch 4: Ethics & Regulation 6© 2006 Thomson/South-Western
3
Do you think this adperpetuates stereotypes?
© 2006 Thomson/South-Western
Advertising has apowerful effect on
mass media
Pro: Ads foster a diverse and affordablemass media that provides
informationCon: Advertising affects and controls
programming. “Advertainment” hasmade matters worse
Ch 4: Ethics & Regulation 8© 2006 Thomson/South-Western
Ethical Aspects ofAdvertising
Ethics are the moral standards againstwhich behavior is judged. Key areasof debate regarding ethics andadvertising are:
• Truth in advertising• Advertising to children• Advertising controversial products
Ch 4: Ethics & Regulation 9© 2006 Thomson/South-Western
4
Ethical Aspects of Advertising
Truth in Advertising• Deception is making false or misleading statements,
but puffery (commercial exaggeration) is legal.
• Cannot legislate against emotional appeals
Ch 4: Ethics & Regulation 10© 2006 Thomson/South-Western
Ethical Aspects of Advertising
Advertising to Children—Issues• Advertising promotes superficiality and materialism in
children• Children are inexperienced and easy prey• Persuasion to children creates child-parent conflicts• What does the literature say about kid’s abilities to
process persuasive information?
Ch 4: Ethics & Regulation 11© 2006 Thomson/South-Western
Ethical Aspects of Advertising
Advertising Controversial Products• Critics question “targeting” minorities• 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?
Ch 4: Ethics & Regulation 12© 2006 Thomson/South-Western
5
Regulatory Aspects ofAdvertising
Areas of advertising regulation:• Deception and unfairness• Competitive issues
– Vertical cooperative advertising– Comparison advertising– Monopoly power
• Advertising to children
Ch 4: Ethics & Regulation 13© 2006 Thomson/South-Western
Key Regulatory Agents
Government Regulation• 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
Ch 4: Ethics & Regulation 14© 2006 Thomson/South-Western
Key Regulatory Agents--FTC
FTC Programs and Remedies• Advertising Substantiation Program
• Consent Order
• Cease and Desist Order
• Affirmative Disclosure
• Corrective Advertising
• Control of Celebrity Endorsements
Ch 4: Ethics & Regulation 15© 2006 Thomson/South-Western
6
Key Regulatory Agents (con’t)
Industry Self-Regulation• National Advertising Review Board
(NARB)• State and Local Better Business
Bureaus• Ad Agencies and Associations• Media Organizations
Ch 4: Ethics & Regulation 16© 2006 Thomson/South-Western
Key Regulatory Agents (con’t)
Internet Self-Regulation• No industry-wide trade association has
emerged to date
• Global Dialogue on Electronic Commerce(GBDe) is emerging as a governing body
• Little progress has been made to addressconsumers’ complaints
Ch 4: Ethics & Regulation 17© 2006 Thomson/South-Western
Key Regulatory Agents (con’t)
Consumers as Regulatory agents• Consumerism: Grass roots consumer
movements
• Consumers Organizations– Consumer Federation of America– Consumers Union– Consumer Alert– Commercial Alert
Ch 4: Ethics & Regulation 18© 2006 Thomson/South-Western
7
Regulation of OtherPromotional Tools
• Direct Marketing and e-Commerce– Privacy, Contests, Telemarketing– Spam=10 million messages/minute
worldwide
• Sales Promotion– Premiums, Trade Allowances, Contests
• Public Relations– Privacy, Copyright Infringement,
Defamation (slander and libel)Ch 4: Ethics & Regulation 19© 2006 Thomson/South-Western