ADPR 3100 Exam 3

What brand in 1976 was forced by the FTC to spend $10 million on corrective advertising?

Listerine

What car company campaign claimed their diesel cars were "clean"/"environmentally friendly" from 2008 to 2015?

VW/AUDI

What brand claimed its product improved concentration and reaction speeds saying "it gives you wings" and was fined?

Red Bull

What store claimed its store brand boosted immunity system and was fined?

Walgreen Pharmacies

What company claimed it provided absolute protection against I.D. theft and was fined?

LifeLock

What company/brand claimed it could prevent colds and was fined?

Airborne

What is a pseudo claim?

we are not told how

What is a comparison with unidentified other?

nothing to actually compare it to

What is an irrelevant comparison?

could be that this is the only car in its class

Examples of measurable claims:

"Crest fights cavities"

"Windex has better cleaning action"

"Apple is new and improved"

"Pontiac G6 coupe has the most head room in its class"

"4 out of 5 dentists recommend Scope"

Difference between deception and puffery:

Deceptions is actionable, puffery is not actionable.

A lie likely to mislead, a consumer acting reasonably, "material"

Deception

An advertiser's opinion of a product that is considered a legitimate expression of biased opinion, exaggeration or overstatement, expressed in broad, vague language, not misdescriptions or false representations of specific characteristics.

Puffery

Created in 1914 to prevent unfair competition ... and to monitor and deter false, fraudulent, misleading, or deceptive advertising.

The Federal Trade Commission (FTC)

The FTC (1983) uses a 3-part test to evaluate deceptive or untruthful advertising:

1) There must be a representation, omission, or practice that is likely to mislead the consumer.

2) The act or practice must be evaluated from the perspective of a reasonable consumer.

3) The representation, omission, or practice must be material - that is, likely to affect a consumer's choice or use of a product or service.

Impactful to behaviors, attitudes, and beliefs.

Ex: Brand X claims it does ____ --> I might go buy it because of that specific reason

Material

What kind of constitutional protection is artistic expression/speech given?

Highest

What kind of constitutional protection is political expression/speech given?

Highest

What kind of constitutional protection is commercial and corporate expression/speech given?

Middle

What kind of constitutional protection is slander/hate expression/speech given?

Limited/ No Pretection

Product placement has historically been treated as a form of what kind of expression? (Cain 2011)

Artistic

How does the FTC become aware of deceptive practices?

A range of sources, including consumers, other advertisers, or FTC staff.

How does the FTC begin its investigations?

With the collection of substantiation from advertisers.

A document that does not admit to deception, yet acknowledges that the advertiser will stop running the sanctioned ad.

Consent Decree

What is the next step for the FTC if the advertiser doesn't sign a consent decree, breaks it, or continues to run the advertising?

The FTC has the power to issue a "cease and desist" order- $10,000 a day fine if they do not sign the decree.

Mandate for the advertiser to start running corrective advertisements - done to counteract the effect of previous deceptive advertising.

If an agreement is not reached with the FTC, the case can go to Federal Court - asked to pay consumers back.

What are 2 main problems with advertising today?

1) Consumers have become increasingly skeptical of most forms of communication

2) Advertisers and marketers have, by necessity, crafted more entertaining, interesting, and meaningful advertising executions.

- Which, as a by product, has obfuscated what is and what isn't advertising.

- In other words...it is getting harder to tell what is advertising and what isn't

The process of using marketing techniques to persuade consumers to adopt the behaviors advocated by a social cause.

Social Marketing

Using traditional advertising messages to promote behaviors such as stopping smoking, obesity prevention, or recycling is an example of what type of marketing?

Social Marketing

What kind of advertising requires an agreement between a non-profit (or cause) and a for-profit (advertiser) ... and the deal is struck to maximize perceived benefits to each partner?

Socially Responsible Advertising

In socially responsible advertising, the for-profit (advertiser) partner wants to:

Associate its product with a perceived social good, boosting its appeal to a market segment that shares that perception

Increase a broader market segment's perceptions of the enterprise as socially-engaged and responsible

Derive bottom line benefits from increasing market share in the targeted segment!

What benefits to non-profits get by joining forces with corporations to develop advertising campaigns?

Direct financial support

Increased awareness

Validation

Possibility of gaining volunteer workers since corporate employees may be encouraged to donate their time to supported causes

What is the primary difference between social marketing and socially responsible advertising?

The messaging

EX:

An advertising campaign that used social marketing might include a TV spot to encourage people to recycle.

A socially responsible advertising campaign might involve a TV spot promoting a product or brand by using a message that the product was built with 100% recycled parts.

Advertisers can demonstrate they are socially responsible using 3 different types of advertising messages:

Social issues linked with products

Social issues linked with corporations

Corporate donations to social issues

What type of messaging does the advertiser use the product or service to draw consumers into the ad and then... The socially responsible message becomes associated with the specific product, creating a valuable link in the minds of consumers?

Social issues linked with specific products

Ex:

Toms "One for One"

What type of messaging does the advertiser use messages featuring social issues linked to companies, but without a link to a specific product or service?

These messages position the company as one that cares about and is involved with a particular issue.

Social Issues Linked With Corporations

Ex:

GE and "Wind Energy",

Pharmaceuticals - "Pfizer"

Subaru and Environment

- Subaru and the National Parks Service

What type of messaging does the advertiser use when advertisers donate a percentage of their profits to a specific cause ... and this contribution may be the focus of the advertising message or one of several attributes featured in the message?

This is the most commonly occurring type of socially responsible advertising because most companies already have some type of donation policy in place.

Corporate Donations to Specific Issues

Ex:

Ben & Jerry's contributes $1.8 million of their pretax profits to a number of different charities, including environmental concerns and groups battling forced child labor

What is the most commonly occurring type of socially responsible advertising?

Corporate Donations to Specific Issues

What has over 50 advertising and media agencies and consists of individual employees that volunteer their time and skill set to create free advertising for social causes?

Ad Council

The American Association of Advertising Agencies (AAAA) has blamed this lack of respect on 3 main areas:

1) Pressures for short-term earnings

- as advertising with a short-term focus may use questionable messages and imagery to break through the clutter

2) Client pressures!

3) Pressures to get and keep new business, which can cause agencies to treat other agencies with a lack of respect

What percent of Americans in 2016 found "advertising practitioners" to be fairly unethical and untrustworthy?

40%

What percent of Americans found "advertising practitioners" to be on the up-and-up?

11%

a phenomenon in which members of a specific group (e.g., advertisers) face choices in which selfish, individualistic, or uncooperative decisions seem rational by virtue of short-term benefits, yet produce undesirable long-term consequences for the group as a whole

"Commons" dilemma

T/F

Advertising can be legal, but still unethical

True

Deception v. Manipulation

Not "What can we get away with?"

But "What is the right thing to do?"

Moral Conduct

Promoting knowingly destructive products, despite their being legal

Ethical Dilemmas

Areas of Ethical Concern:

1) Advertising of ethically questionable products or services

- EX: alcohol, tobacco, food and beverages, gambling, lottery, prescription drugs

2) Ethically questionable advertising practices

- EX: Targeting specific populations, sensitive subjects

Who did Coke make a contract with in 1991 agreeing that PepsiCo product "shall [not] be permitted to advertise, operate or transact business" in this company's venues?

Athletic Association

What percentage of commission does UGA make on their sales due to a contract with Coke as their sole soft drink provider?

48%

When was Channel One founded?

1989

Who conducted 51 interviews with 29 agencies in 8 different cities with varying departments, ages, genders, experience, types/size of agencies, and billings?

Drumwright and Murphy

In what year did Drumwright and Murphy conduct their research?

2004

What two types of ethics in the workplace did Drumwright and Murphy come up with?

Ethically active v. ethically impaired

("seeing & talking" practitioners)

Agencies that openly encourage ethical decisions and actions

Some norms for acting ethically in certain agencies

Recognize moral issues

Talk about the issues with co-workers and with clients

Ethically active

Advertising people can't see ethical problems

See primarily as only affecting themselves

"Anyone stealing my ideas?"

Ethical problems at other levels not seen

Organizational (agency/ client) & Societal levels

Ethically impaired

"A distortion of moral vision ranging from shortsightedness to near blindness, which affects an individual's perception of an ethical dilemma"

(nearsightedness)

Moral myopia

"The absence of communicating moral concerns in settings where such communication would be fitting"

Bird (1996)

"Either not voicing moral concerns or communicating in ways that obscure moral beliefs and/ or concerns"

Bird (2002)

(Silence)

Moral Muteness

What type of thinking is saying "Even if I tried to put out an unethical ad, no consumer would be dumb enough to believe it, consumers are smart" or "all we do is reflect society back to itself" or "it's really hard to be unethical in this business; we have to run everything by our lawyers" or "wow could I develop a code of ethics for my agency? It would go against the First Amendment" or "if I succeed, my clients succeed, too. So it doesn't feel like stretching the truth is doing anything wrong" or "I don't have a lot of time to sit and think about if the people who make this thing are really evil"?

Moral myopia

The feeling that you don't have time to sit around and think about if the people who make these things are really evil.

the ostrich syndrome

The characteristics of moral myopia: (6)

1) Consumers are smart.

2) Passing the buck.

3) What is legal, is ethical.

4) The First Amendment misunderstanding

5) Going native

6) The ostrich syndrome

What type of thinking is saying "I'm just providing a service to my clients. But, on a personal level, I sometimes find what they want to do very offensive" or "if I want to stay in business, I need to give my clients what they want" or "ethical advertising means bland, ineffective work" or "if we got bent out of shape over every ethical issue, we couldn't get anything done"?

Moral Muteness

Separating one's work life from one's personal life and personal convictions. Also involves separating the client's business standards from one's own standards.

Compartmentalization

The idea that once you start, you can't ever go back, and it gets out of control.

Pandora's Box syndrome

Characteristics of moral muteness: (4)

1) Compartmentalization

2) The client is always right.

3) Ethics is bad for business.

4) Pandora's Box syndrome

The 4 characteristics of the idea of "Seeing & Talking":

1) Recognition

2) Communication

3) Saying no

4) Moral imagination

When untrue or misleading advertising is disseminated, the implied relationship between the consumer and the advertiser is violated, creating....

market failure

3 basic constraints on advertising:

1) Laws and regulations of legally constituted bodies such as Congress and the FCC

2) Control by the media through advertising acceptability guidelines

3) Self-regulation by advertisers and agencies using various trade practice recommendations and codes of conduct

Latin for "Let the buyer beware"; represents the notion that there should be no government interference in the marketplace

Libertarian notion/classical economic concept - buyers and sellers have equal information and it assumed that both groups, being rational, would make correct economic choices, without government interference

Caveat Emptor

What was the Federal Trade Commission's primary focus in their early years?

to protect local retailers from unfair pricing practices by large national chains

Legal case in 1922 that the Supreme Court held that false advertising was an unfair trade practice

FTC v. Winsted Hosiery Company

In 1938, this passage broadened the original mandate in 1922 to include the principle that the FTC could protect consumers as well as businesses from deceptive advertising

Wheeler-Lea Amendments

The key to FTC enforcement is that advertisers must be able to prove the claims made in their advertising

substantiate

To counteract the past residual effect of previous deceptive advertising, the FTC may require the advertiser to devote future space and time to disclosure of previous deception, began around the late 1960's.

corrective advertising

If an advertiser refuses to sign a consent decree, the FTC may issue this order that can carry a $10,000-per-day fine.

cease-and-desist order

List 3 examples of formal FTC industry rules

1) The Telemarketing Sales Rule

2) The Used Car Rule

3) The Contact Lens Rule

List 7 examples of FTC industry centric rules

1) Environmental Claims

2) The Term "Free" in Advertising

3) Made in the U.S.A.

4) Advertising as a Contract

5) Fact v. Puffery

6) Testimonials

7) Warranties and Guarantees

The Central Hudson Four-Part test:

1) Is the commercial expression eligible for First Amendment protection? That is, is it neither deceptive nor promoting an illegal activity? No constitutional protection can be provided for commercial speech that fails this test.

2) Is the government interest asserted in regulating the expression substantial? This test requires that the stated reason for regulating the advertisement must be of primary interest to the state rather than of a trivial, arbitrary nature.

3) If the first two tests are met, the Court then considers if the regulation of advertising imposed advances the cause of the governmental interest asserted. That is, if er assume that an activity is of legitimate government concern, will the prohibition of commercial speech further the government's goals?

4) If the first three tests are met, the Court must finally decide if the regulation is more extensive than necessary to serve the government's interest. That is, is there a less severe restriction that could accomplish the same goals?

When was the National Advertising Review Council (NARC) founded?

1971

What was founded in response to the many different consumer movements pushing for more stringent government regulation of advertising and concerns among major advertisers that advertising honesty was not being given enough attention within the industry?

Primary purpose was to "develop a structure which would effectively apply the persuasive capacities of peers to seek the voluntary elimination of national advertising which professionals would consider deceptive"

The National Advertising Review Council (NARC)

Which major advertising organizations came together to form the NARC?

The AAF, the 4 A's, and the ANA approached the CBBB

Who is the primary investigative unit of the CBBB, the primary investigative unit of the NARC self-regulation program?

The National Advertising Division (NAD)

Who provides an advertiser with a jury of peers if it chooses to appeal a NAD decision?

The National Advertising Review Board (NARB)

What was created in 1974 to review the special advertising concerns of advertising directed towards children?

The Children's Advertising Review Unit (CARU)

What was established in 2004 to examine advertising claims in direct-response advertising, including infomercials?

The Electronic Retailing Self-Regulation Program

T/F

NAD is not the appropriate forum to address concerns about the 'good taste' of ads, moral questions about products that are offered for sale or political or issue advertising.

True

What are the largest source of NAD cases?

competitor challenges

What are the 6 primary areas that provide most of the challenges brought to the NAD?

1) Product testing

2) Consumer perception studies

3) Taste/sensory claims

4) Pricing

5) Testimonial/anecdotal evidences

6) Demonstrations

The NAD/NARB cannot:

- Order an advertiser to stop an ad

- Impose a fine

- Bar anyone from advertising

- Boycott an advertiser or a product

Effective in 2000, what act sought to protect the privacy of children younger than 13 by requiring parental consent for the collection or use of any personal information by marketers?

The Children's Online Privacy Protection Act (COPPA)

Who announced a review of the "Guidance for Food Advertising Self-regulation" section in 2006?

CARU, led by Joan Z. (Jodie) Bernstein

Who were 2 of the most vocal detractors of food marketing?

Senator Tom Harkin of Iowa and the Institute of Medicine (IOM)

What initiative was launched in 2006 by the CBBB to provide transparent and accountable self regulatory guidelines for companies that advertise foods and beverages to children?

The Children's Food and Beverage Advertising Initiative (CFBAI)