Social, Ethical, and Regulatory Aspects of Advertising: All Rights Reserved

Chapter 4
Social, Ethical,
and Regulatory
Aspects of
Advertising
Copyright © 2006 Thomson Business and Economics.

All rights reserved.
Social 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
Copyright © 2006 Thomson Business and Economics. All rights reserved. 4–2
Critics of advertising feel
that advertising is
superficial because
many ads carry little
actual product
information.
Do you think advertising
is superficial?
Advertising Affects
Happiness 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
promotes materialism
Advertising:
Demeaning and Deceitful,
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
perpetuates
stereotypes?
Advertising’s Powerful Effect on
Mass 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 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 Advertising
• Areas of advertising regulation:

– Deception and unfairness
• Competitive issues
– Vertical cooperative advertising
– Comparison advertising
– Monopoly power
• Advertising to children
Key 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 Agents–FTC
• 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)
• Industry Self-Regulation
– National Advertising Review Board (NARB)
• State and Local Better Business Bureaus
• Ad Agencies and Associations
• Media Organizations
• 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.
• Consumers as Regulatory agents

– Consumerism: Grass roots consumer
movements
• Consumers Organizations
– Consumer Federation of America
– Consumers Union
– Consumer Alert
– Commercial Alert
Regulation of Other
Promotional Tools
• Direct Marketing and • Sales Promotion
e-Commerce – Premiums, Trade
– Privacy, Contests, Allowances, Contests
Telemarketing • Public Relations
– Spam=10 million – Privacy, Copyright
messages/minute Infringement,
worldwide Defamation (slander
and libel)

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Chapter 4

Copyright © 2006 Thomson Business and Economics.

• Advertising educates consumers

• Ethics are the moral standards against

• Advertising Controversial Products

• Areas of advertising regulation:

• FTC Programs and Remedies

• Consumers as Regulatory agents

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