DISCUS Code

of

Responsible Practices

Foundation of

Guidance, Standards,

Enforcement

Over 78 Years of Advertising Self-Regulation

Components of Effective Self-Regulation

• Responsible Content: 34 provisions

• Responsible Placement: 8 provisions – Detailed industry media buying guidelines

– No college or university advertising or marketing

– No outdoor ads within 500 ft. of schools/places of worship

• Internal Compliance Review System - Training programs for employees

- Separate review of ads outside marketing department

• Code Review Board – Operating for over three decades

– Charged with reviewing/deciding complaints promptly

• Outside Advisors – Prevetting, third-party guidance, tie-breaking votes

• Semi-Annual Code Report – Full public transparency

– Compliance and education tool

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A Responsive, Tough, Active Code

• Decades of a strict advertising Code

– Standards higher than mandated by law or regulation

– Higher than government could set due to 1st Amendment constraints

• Decades of compliance and enforcement

– 100% compliance by DISCUS members

– Overwhelming compliance by non-DISCUS members

• Decades of quick action

– Members: less than a week from complaint receipt to resolution

– Non-DISCUS members: average time less than 60 days

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Scope of Code’s Provisions: All Inclusive

• All activities related to advertising and marketing

– Brand advertising/consumer communications

– Promotional events

– Packaging and labeling

– Distribution and sales materials

• Every type of print and electronic media

– TV, radio, magazines, newspapers, outdoor

– All on-line communications, including blogs, internet banners

• Every type of promotional or marketing activity

– Product placements

– Sponsorships and on-premise promotions

– Paraphernalia (no branded items intended for use by those under 21)

4

Coverage of Code:

Significant Compliance and Enforcement Reach

• All spirits, wine, beer brands marketed by DISCUS members

– Reaches over 1,400 brands marketed by member companies

– Same principles apply across beverage alcohol categories

– Only industry code bringing all products under one tent

– DISCUS represents over 65% of U.S. spirits sales

• Non-DISCUS member spirits brands

– Historically nonmembers have followed Code and abided by decisions

– Companies with small portfolios, large portfolios and new entrants

• Supported and endorsed by other trade associations

– Kentucky Distillers’ Association and Presidents’ Forum

– New York Wine & Grape Foundation, with its over 100 winery members representing

over 90 percent of New York’s total wine production, and many individual companies

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Strong Voluntary Code in Place Since 1934:

Revised as social mores and technology change

• Core principle steadfast:

– To market our products to adults 21

years of age and older in a responsible

and appropriate manner

• Code updated in 1996 to include

broadcast advertising

• Code updated in 1998 to include

websites and Internet advertising

• Brand website addresses available

to parents/“net nanny” companies

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2003:

• 70% 21 years of age and older demographic

• All ad models over 25

• More explicit provisions prohibiting use of sex

and depictions of excessive drinking

• Distinguished external advisory panel

• Transparency – Semi-Annual reports

Among the Key Changes:

Code Enhanced Again in 2003, 2009 and 2011

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2009:

• Product placement guidelines for music videos, video games, more

• No supplier-sponsored promotions in college licensed establishments

• Rules on website downloadable advertising content

• No drinking games rewarding excessive consumption

• Code compliance seminars for members and non-members

2011:

• 71.6 % 21 years of age and older demographic

• Social media marketing guidelines

Summary of the Code’s Content Provisions

1. Adult Audiences/

Underage

Provisions

8. Alcohol

Content

2. Websites

6. Promotional

Events

4. Good

Taste

5. Sexual

Prowess and

Success

3. Social

Responsibility

9. Responsible

Drinking

Statements

Same Content

Standards Apply

Regardless of

Placement

7. Product

Placements

8

Detailed Media Placement Buying Guidelines

• Specific criteria for placement in each medium

– Place ad based on prior two quarters of data

– Nielsen, Arbitron, Consolidated MRI 12+, comScore

(digital uses most recent three-month site average)

• Semi-annual random post audits

• Post audits to verify past placement met standard

• Same tough content standards regardless of medium/placement

9

Magazine Special Binding Initiative

Effective July 1, 2006

• Special bindings (remove alcohol ads) for school library subscription

copies of:

– Newsweek, People, Sports Illustrated, Time, U.S. News & World Report

– Magazines most commonly subscribed to by school libraries

• Voluntarily refrain from placing ads on inside/back covers if they

cannot be segregated

Page 10

10

“Unmeasured Magazine Initiative”

Effective October 1, 2006

• Initiative developed after a publisher provided

conflicting demographic data to advertisers for

an unmeasured magazine

• Requires third-party demographic survey by

publisher before ad placement

• Applies to magazines intended for general

circulation not measured by a syndicated data

source

– Covers “national consumer print” publications, local consumer

print publications with a subscription base, military publications

– Excludes trade publications (such as ABC journals), alumni

publications, free local newspapers without a subscription base

11

Proactively Addressing the New Media Landscape

• Connecting to your constituents

• Connecting to your licensees

• Connecting to your community

and

• Connecting to your customers

12

Social Media: A New Way to Connect

Strong Voluntary Code Revised as Social Mores and

Technology Change

• Core principles steadfast:

– To market our products to adults 21 years of age

and older in a responsible and appropriate manner

• Proactively engage digital media experts

• Responsible content/placement provisions

• Detailed media “buying” guidelines

• Consult with online demographic data sources

• Regular meetings with social media cos.

Establishing Code compliant tools 13

New Media -- Same Principles

New Internet/Digital Media Buying Guidelines

• Issued internet buying guidelines used across

entire industry: effective Jan. 1, 2008

• Applies to all forms of digital media

– Videos, pop-ups, blogs, and more

• Use Nielsen or comScore data to place ads

• Requires independent demographic survey

for unmeasured digital media

• Post audits to verify Code compliance

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Results of Proactive Outreaches

Constantly Evolving to Address the Future

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Pioneering Social Media Tools

The Facebook Page Terms require that all content on a Page that is advertising in nature (such

as commercial content) must comply with the Advertising Guidelines, which include the

Facebook minimum age targeting for alcohol ads and Alcohol-Related Page & Application

Settings:

Anyone of Legal Drinking Age (as determined by Page Settings) will be able to see their

friends’ engagement with Beverage Alcohol Brands. Anyone under Legal Drinking Age will

not be able to see their friends’ engagement with Beverage Alcohol Brands.

This is addressed in Facebook Page Terms: http://www.facebook.com/terms_pages.php

Facebook Pages: Alcohol Settings

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A21+:

Registered & Logged In

Sees Omlie’s Gin Brand Channel

Ad

Types in www.YouTube.com/

Omlie’sGin

<21:

Registered & Logged In

Will not see Omlie’s Gin Ads

Types in www.YouTube.com/

Omlie’sGin

User Flow Brand Channels for Non-Customized Gadgets

A21+:

Registered & Logged In

Clicks on PV ad driving to watchpage

Clicks on PV ad driving to channel

<21:

Registered & Logged In

Clicks on PV ad driving to watchpage

Clicks on PV ad driving to channel

User Flow Example: Promoted Videos

Effective September 30, 2011

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DISCUS Social Media Marketing Guidelines

About the Digital Marketing Guidelines

• Important supplement to the DISCUS Code

• Scope:

– Social networking sites, blogs, mobile communications, apps, websites

• Basic principles:

– 71.6% 21+ placement standard for all communications

– 21+ “age gating” before direct dialogue between an advertiser/consumer

– Regular monitoring and removal of inappropriate user-generated content

– Privacy policies to protect collection and use of personal information

– Clearly identify brand marketing as such in blogs, etc.

– Procedures for forwarding downloaded digital content only to 21+

• Developed with EU counterparts

– Digital media easily transcends geographical boundaries

• Guidelines will be reviewed regularly and updated as needed

– Recognition that new technology trends are likely to occur rapidly

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Responsible Digital Marketing Communications Guidelines

DISCUS

BASIC

PRINCIPLES

Intended for LPA

Media site should be

71.6% LPA

Direct interaction w/

user = Age Affirmation

(mm/dd/yyyy)

User-Generated

Content must be monitored

and moderated on regular basis

Instructions to “Not Forward Downloaded Content to

Under LPA”

Respect User Privacy

Transparent as brand

marketing

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Basic Principle 1: Intended for Adults LPA+

Foundation of the DISCUS Code

Over 78 Years of Advertising Self-Regulation 22

Basic Principle 2: 71.6% Placement Standard

71.6% LPA+

Compliant

Less Than 71.6% LPA - No Placement 23

Basic Principle 3: Age Affirmation Before Direct Interaction

on Controlled Sites (Month/Day/Year)

• Direct interaction is a two-way communication between the user and brand

advertiser on a social media site or web page controlled by the advertiser

• Occurs when the user affirmatively interacts with the brand advertiser, such as

responding to a direct communication from the brand advertiser

– User sends content (posts comment, personal information, text, video, rich

media, etc.) to a brand controlled site

– Advertiser sends content to an individual user (e-mail, custom content, etc.)

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Social Media Site Website Controlled by Advertiser User Signs Up, Age Gate Again Social Media Site

24

Under LPA: Redirect to a Responsibility Site centurycouncil.org/acceptresponsibility.org

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Age Affirmation Page

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After the Age Gate

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Basic Principle 4: Monitor/Moderate User-Generated Content

• User-generated content (UGC) on a site or web page controlled by

the advertiser must be monitored and moderated on a regular basis

• UGC on a site controlled by a brand should be monitored each

business day or, at a minimum, every 5 business days

• If content is inappropriate, material should be removed promptly

• Notify users that all inappropriate content will be removed

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What do we delete?

• Offensive comments

• Sexually explicit language

• Comments regarding overconsumption and/or illegal activity of any kind

• Comments that degrade or demean the human form, image or status of women, men

or the members of any group based on race, religion, ethnic background, sexual

orientation, or any other minority status

• Language or images that also are inconsistent with other provisions of the Code

Overconsumption References to Drugs

Basic Principle 4: Monitor/Moderate User-Generated Content

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Basic Principle 4: Monitor/Moderate Photos and Videos

Overconsumption

Underage in Video Posted by LPA user Provocative Content

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What do we delete?

Basic Principle 5: Do Not Forward to Those Underage

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Basic Principle 6: Privacy

• The handling and protection of sensitive personal information that

individuals provide in the course of every day transactions

• The exchange or use of data electronically or by any other means,

including telephone, fax, written correspondence, and even direct

word of mouth

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What Does Privacy Involve:

• User information collected from LPA+ only

• Opt-in before receiving a direct digital marketing communication

and opt-out to discontinue receiving those communications

• No information collected will be sold nor shared with third parties

unrelated to the brand advertiser

• Privacy policy prominently displayed and simple to understand

• Consumers know who to contact if they have any questions/concerns

What We Do Under Our Guidelines:

Basic Principle 6: Privacy

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jackdaniels.com

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Basic Principle 7: Transparency of Brand Marketing

• Consumers must know they are reading/viewing brand

advertising

– Brand pages

– Blogs: whose blog is it?

• FTC’s 2009 Guides Concerning the Use of Endorsements and

Testimonials in Advertising [FTC.gov]

– Be careful when soliciting endorsements; disclosure is

important

• Key: clearly identify communication by any employee or

anyone hired by brand

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How the Code Review Process Works

• Each complaint given identical consideration and priority status

• Complaint sent to advertiser for response

– DISCUS members respond forthwith

– Non-members – 15 business days to respond

• Code Review Board convenes

• Advertiser invited to participate

• Board deliberates and issues decision

• Advertiser notified of decision

• Public report on complaint decisions and advertiser’s response

– Board decisions also posted on DISCUS website pre-publication

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Outside Advisory Board Members:

Guidance, Ad Prevetting, Tie-Breakers

• Dr. Deno Curris – Distinguished Educator – Former President of the American Association of State Colleges

and Universities, former President of Clemson, Murray State and

Northern Iowa Universities, with 42 years of service in higher

education and actively engaged in addressing alcohol abuse

among college students

• Ms. Jodie Bernstein – Distinguished Public Servant – Former Director of Consumer Protection Bureau of the FTC,

leader in creating the National Advertising Review Council of the

Better Business Bureaus, appointed to review self-regulatory

guidelines for CARU, and recipient of the BBB International

Trade Torch award for Consumer Leadership for significantly

advancing marketplace trust through consumer advocacy and

leadership in the area of advertising self-regulation

• Mr. Rick Gitter – Distinguished Advertising Executive – Former NBC Vice President of Advertising Standards and

Program Compliance with 30 years of experience overseeing

network advertising compliance 37

Transparency: Semi-Annual Reports

First Public Complaint Reports Issued by Industry Trade Group

• Self-regulatory process more visible,

transparent and understandable

• Over 1,000 copies of each report distributed

– Federal and State Officials

– Attorneys General

– Advocacy and Consumer Groups

– University and College Presidents

– Federal and State Agencies

– Industry Members

• Positive response from all sectors

– Commended by Industry Critics

– Winner - Best Business Ethics Communications

– Finalist - Best Corporate Social Responsibility Program 38

Inside the Report

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Transparency Commended by Industry Critics

• Jim O’Hara, Executive Director, The Center on Alcohol Marketing and Youth

• “Today’s report by the Distilled Spirits Council of the United States (DISCUS) on how well liquor companies have complied with the DISCUS marketing code is a step in the right direction. It shows DISCUS has heard the need for transparency, as recommended by the Federal Trade Commission in 1999.” (March 2005)

• Robert I. Reynolds, Director, Alcohol Policy Initiatives, PIRE

• “The inaugural DISCUS Code Report contributes to building public trust in the integrity of alcohol industry self-regulation…. DISCUS is to be congratulated for recognizing the need for public disclosure of its process for handling complaints regarding violations of its voluntary advertising code and the findings of its review panel.” (March 2005)

THE CENTER ON

ALCOHOL MARKETING AND Youth

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Distillers as a Model of Effective Self-Regulation

“DISCUS member companies had a 100% compliance rate in addressing ad

standard violations. The DISCUS approach to revealing all its policing

actions is a breath of fresh air that food companies might consider…”

“Other industry groups are starting to copy the

Council’s approach to self-policing…”

“The fabulous thing about self-regulation is that they can address things

that couldn’t be touched by a government agency because of the First

Amendment. This is a far step above and beyond what other companies are

doing.” -- Janet Evans, Federal Trade Commission

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• Buying for Radio

• Buying for Television – Broadcast and Cable

• Buying for Print – Magazine and Newspaper

• Product Placements in Cinema and Broadcast

• Buying for Digital Media

• Social Networking Sites: Demographic Tools & Beyond

• Emerging Marketing Platforms (smartphones and more)

2006, 2008, 2010, 2011, 2012 Best Practices Media Summits

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Fifth Annual DISCUS Best Practices Media Summit

• Full-day session focusing on social media and Code compliant tools

• 110 attendees: all sectors, media experts, FTC, TTB

• Top executives speakers from social media platforms and disciplines

– Facebook, Google/YouTube, Twitter, Evidon, DEI Worldwide, Nielsen, comScore

• FTC officials presented and commended DISCUS for leading the way

• Partnerships continue with leading experts to ensure effective self-regulation

“DISCUS Media Summits are the place to go for companies of all

sizes and from all sectors to learn and share best practices in self-

regulation.” (Janet Evans, FTC) November 2012

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DISCUS Best Practices Media Summit Award

DISCUS Honored for Exemplary Program within the Beverage Alcohol Industry;

Only Private Sector Group Recognized by NCSLA for Best Practices

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• Link to the Code for rapid consideration of any questions/complaints

• Educate constituents about the Code and its review process

• Utah/Nevada Attorneys General link to the DISCUS Code along

with 15 State ABCs, the FTC, NCSLA, and NABCA

For more about the Code: http://www.discus.org/responsibility/code/

Linking to the DISCUS Code

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