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Copyright © 2006 Thomson Business and Economics. All rights reserved.

Chapter 4Chapter 4

Social, Ethical, and Regulatory Aspects of Advertising

4–2Copyright © 2006 Thomson Business and Economics. All rights reserved.

Social Aspects of AdvertisingSocial Aspects of Advertising

• 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


Critics of advertising Critics of advertising feel that advertising is feel that advertising is superficial because superficial because many ads carry little many ads carry little actual product actual product information. information.

Do you think Do you think advertising is advertising is superficial?superficial?

Critics of advertising Critics of advertising feel that advertising is feel that advertising is superficial because superficial because many ads carry little many ads carry little actual product actual product information. information.

Do you think Do you think advertising is advertising is superficial?superficial?


Advertising Affects Advertising Affects Happiness and Well-BeingHappiness 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.


Critics feel advertising Critics feel advertising promotes materialismpromotes materialismCritics feel advertising Critics feel advertising promotes materialismpromotes materialism


Advertising: Advertising: Demeaning and Deceitful, Demeaning and Deceitful, or Liberating and Artful?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


Do you think this ad Do you think this ad perpetuates perpetuates stereotypes?stereotypes?

Do you think this ad Do you think this ad perpetuates perpetuates stereotypes?stereotypes?


Advertising’s Powerful Effect on Advertising’s Powerful Effect on Mass MediaMass Media

• Pro: Ads foster a diverse and affordable mass media that provide information

• Con: Advertising affects and controls programming.– “Advertainment” has made matters worse


Ethical Aspects of AdvertisingEthical 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



• Truth in Advertising– Deception is making false or misleading

statements.– Puffery (commercial exaggeration) is legal.– Cannot legislate against emotional appeals



• 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?



• Advertising Controversial Products– Critics question the “targeting” of 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?


Regulatory Aspects of AdvertisingRegulatory Aspects of Advertising

• Areas of advertising regulation:– Deception and unfairness

• Competitive issues– Vertical cooperative advertising– Comparison advertising– Monopoly power

• Advertising to children


Key Regulatory AgentsKey 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


Key Regulatory AgentsKey Regulatory Agents––FTCFTC

• FTC Programs and Remedies– Advertising Substantiation Program– Consent Order– Cease and Desist Order– Affirmative Disclosure– Corrective Advertising– Control of Celebrity Endorsements


Key Regulatory Agents (cont’d)Key Regulatory Agents (cont’d)

• 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 address consumers’ complaints.

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