advertising class baruch college week 2

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Chapter 2:Chapter 2:Economic, Social & Economic, Social & Regulatory Aspects Regulatory Aspects

of Advertisingof Advertising

Advertising’s Advertising’s ControversiesControversies

Advertising’s Controversy Cause for consumer distrust. People will say ANYTHING to sell stuff. People don’t rely exclusively on

advertisers for information, product comparisons, facts, features & benefits.

Expands/fosters/creates MATERIALISM. US Advertising 2% GDP highest in world. Makes products cost more? Or less??? Reduces competition?

Economic ImpactEconomic Impact

““Abundance”Abundance” PrinciplePrinciple

In an economy that produces more goods and services than can be

consumed, advertising plays 2 crucial roles: 1) Keeps consumers informed of

their alternatives (complete information) and: 2) Allows companies

to compete more effectively for consumer dollars (self-interest.)

Abundance Principle

Social ImpactSocial Impact

PufferyPuffery

From pyffanpyffan, old English word meaning “blow in short bursts” or “to

inflate; make proud or conceited.”

Puffery

“Advertising, by its

very nature, is not complete information. It is biased in favor of

the advertiser.”

Puffery

Subliminal Subliminal AdvertisingAdvertising

Subliminal Advertising Placing hidden messages in ads to

influence consumer behavior at a subliminal (subconscious) level.

Fear that advertisers mess with our heads.

Wilson Bryan Key: to seduce consumers, advertisers intentionally create ads with sexual messages hidden in the illustrations.

Social ImpactSocial Impact

Social Impact Advertising lowers our collective values

by promoting hedonistic, materialists way of life.

Continuous proliferation in ad messaging that bombards consumers.

Per Nielsen, 16-21 minutes of an hour’s TV programming is advertising.

Stereotypes played out through insensitivity to women, minorities, the disabled, elderly, and others.

Social Impact Advertising’s negative impact on

CHILDREN.

Yeah Perhaps Yeah Perhaps But…But…

Don’t consumers Don’t consumers have the FINAL say have the FINAL say

in whether in whether advertising is advertising is successful?successful?

Social Responsibility & Ads Laws control what advertisers say but

there’s a large amount of leeway. Ethics and corp. social responsibility play

a role.

What ETHICALWhat ETHICALOrganizationsOrganizations

Look LikeLook Like

How How NOTNOT to Act to Act

Hall of ShameHall of Shame

Advertiser Responsibilities Participate in civic events. Support local enterprises. Improve local, regional and national

economies. 4A & Ad Council.

Regulatory Regulatory ConsiderationsConsiderations

Regulatory Factors Supreme Court distinction between FREE FREE

speech & “CommercialCommercial” speech. 1980 Supreme Court case: “Central Hudson

Gas…” presented 4 key considerations for advertising:• Does the commercial speech at issue concern a

lawful activity?• Will the restriction of commercial speech serve

the asserted Gov’t interest substantially?• Does the regulation directly advance the Gov’t

interest asserted?• Is the restriction no more than necessary to

further the interest asserted?

Regulatory FactorsThe current Supreme Court is EXTREMELY

PRO-business.

The Regulators FCC. FTC. FDA. USPTO. Library of Congress.

Terms DECEPTION: Any ad that contains a

misrepresentation, omission or any other practice that can mislead a significant # of reasonable consumers to their detriment

UNFAIRNESS: Occurs when a consumer is “unjustifiably injured” or there is a “violation of public policy.”

Self-Regulation Advertising agencies regulate

themselves. Most have “In-house” legal counsel. 4A, Amer. Advertising Federation, Assn.

of National Advertisers and the BBB.

ResourcesResources

Resources