Promotional StrategyMKT4230
Regulation of Advertisement and
Promotion
Patricia Knowles, Ph.D.
Associate ProfessorClemson University
1
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
3Promotional StrategyMKT4230 3
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
TextbookPages 682 - 684
4Promotional StrategyMKT4230 4
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
5Promotional StrategyMKT4230 5
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
6Promotional StrategyMKT4230 6
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
7Promotional StrategyMKT4230 7
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
8Promotional StrategyMKT4230 8
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
9Promotional StrategyMKT4230 9
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)
TextbookPages 686 - 688
10Promotional StrategyMKT4230 10
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
11Promotional StrategyMKT4230 11
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
12Promotional StrategyMKT4230 12
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
13Promotional StrategyMKT4230 13
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
14Promotional StrategyMKT4230 14
Self-Regulation by MediaThis visual shows a Benetton ad that many magazines refused to run.
TextbookPages 691 - 693
15Promotional StrategyMKT4230 15
TV Network Guidelines for Children’s AdsThis is a sampling of the TV networks’ guidelines for children’s advertising.
TextbookPages 692 / Figure 20 - 3
16Promotional StrategyMKT4230 16
Appraising Self-RegulationThe two opposing views of advertising self-regulation.
TextbookPages 693 - 694
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.
17Promotional StrategyMKT4230 17
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)
18Promotional StrategyMKT4230 18
Advertising and the First AmendmentThese are the key points about free speech and advertising.
TextbookPages 694 - 695
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
19Promotional StrategyMKT4230 19
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)
20Promotional StrategyMKT4230 20
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
21Promotional StrategyMKT4230 21
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”
22Promotional StrategyMKT4230 22
Deceptive AdvertisingThese are the key elements of deceptive advertising.
TextbookPages 699 - 700
Perspective of reasonable consumer
Likelihood of misleading consumer
Materiality – misrepresentation orpractice is likely to affect consumers’purchase decision
23Promotional StrategyMKT4230 23
Ways the FTC Handles Deceptive AdsThese are the ways in which FTC deals with deceptive advertising.
TextbookPages 700 - 707
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
24Promotional StrategyMKT4230 24
Advertising SubstantiationThis visual presents an ad with weight-loss claims.
TextbookPage 703 / Exhibit 20 - 12
Weight-loss marketers must substantiate their claims
25Promotional StrategyMKT4230 25
Federal Regulation by the FTCThis is a brief timeline of federal regulation by the FTC.
TextbookPages 707 - 709
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
26Promotional StrategyMKT4230 26
Additional Federal Regulatory AgenciesThese are some of the other federal regulatory agencies and departments that regulate advertising and promotion.
TextbookPages 709 - 712
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
27Promotional StrategyMKT4230 27
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
28Promotional StrategyMKT4230 28
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
29Promotional StrategyMKT4230 29
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
30Promotional StrategyMKT4230 30
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…
31Promotional StrategyMKT4230 31
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.
TextbookPages 712 - 723
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
32Promotional StrategyMKT4230 32
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
33Promotional StrategyMKT4230 33
State RegulationsThis visual introduces the fact that state and local entities involve themselves in advertising regulation.
TextbookPage 716
34Promotional StrategyMKT4230 34
Regulation of Sales PromotionThis are the three forms of sales promotion that are highly regulated.
TextbookPages 717 - 718
Cannot misrepresent their value
Cannot be a lottery Rules & details must be fully disclosed
Care must be taken with special audiences
Contests/Sweepstakes
Premiums
35Promotional StrategyMKT4230 35
Regulation of Trade AllowancesThese are the regulations of trade allowances.
TextbookPages 718 - 719
Must not violate any stipulations of the Robinson-Patman Act
Co-op funds must be equal and non-discriminatory
Trade Allowances
36Promotional StrategyMKT4230 36
Regulation of Direct MarketingThis is a summary of the regulation of direct marketing.
TextbookPages 719 - 721
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
37Promotional StrategyMKT4230 37
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.
TextbookPages 720 - 721
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
38Promotional StrategyMKT4230 38
Internet Marketing IssuesThese are some of the new areas of concern for regulators.
TextbookPages 721 - 730
Privacy Issues Marketing to Children Unsolicited Emails (SPAM)
39Promotional StrategyMKT4230 39
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.
TextbookPages 722 - 723
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
40Promotional StrategyMKT4230 40
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
41Promotional StrategyMKT4230 41
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
TextbookPages 724 - 725
Top Related