& AdvertisingSociety • Today, we can discuss and debate the material in Chapter 3. • Economics • The effect of advertising on our economy • Ethics • The effect of advertising on our society • Regulation • Our attempts to manage those effects
The American Economy - Three Unique Influences: • “Caveat Emptor” • Commerce is a two-way street • Tolerance • Philadelphia Quakers • Immigration of people and ideas • The Marketplace of Ideas • Competition is OK • This includes the media
Power or Information? Market Information • Advertising • Increased consumer knowledge • More substitute products consumers can consider • Lower barriers to entry by new brands • Reduced market power for any individual brand • Better pricing/distribution more product innovation • Optimal brand profits, consumer choice, and price benefits Market Power • Advertising • Persuades consumer to purchase one brand over another more often • Excess brand profits • Higher barriers to entry and more market power • More advertising leads to greater brand loyalty • Reduce quality/raise price • Reduced consumer sovereignty • Monopoly
What do you think? • Advertising = Market Power • Advertising = Market Information • Or both?
Some Economic Questions: • How does advertising affect the price of a new car? • How does advertising affect the price of a latté from Starbucks? • How does advertising affect the way that you spend your money?
Some Economic Questions: • Can ads make people buy things they don’t want or need? • Can ads make people more materialistic? • Are the benefits of advertising worth the annoyance?
Ads destroy freedom of choice Ads give consumers more choices An Ethical Debate • Ads destroy democracy/media • Ads = freedom of speech • Advertising warps social values • Ads simply reflect the “real world”
3Ethical Issues: 1) Advocacy • What does the advertising advocate? 2) Accuracy • How accurate is the advertising? • Some of this depends on susceptibility of the audience (i.e., children) 3) Acquisitiveness • What is the overall effect? • Does it make us more materialistic? • No single ad, but ads overall.
5 Controversial Issues: 1) Puffery "Nothing beats a Bud” 2) Decency Sexual innuendo, violence 3) Stereotyping Housewives, women, seniors, racial groups 4) Children Violence, dangerous acts, unhealthy habits, overall materialism 5) Controversial Condoms, alcohol, fashion Products consumer credit
An Ethical Thought: “All of uswho professionally usethemass mediaareshapersof society. We can brutalize it. Orwecan help liftit onto a higher level.” -Bill Bernbach
Controversy as Opportunity • Puffery vs. Irony • Stereotyping as Context • Social Tension gets Attention • Anti-Tobacco Marketing • The Story Behind “Truth”
Puffery vs. Irony • HULU - “Alec Baldwin”
Stereotyping as Context • Dove “Real Beauty”
Social Tension Gets Attention • Nike “If You Let Me Play”
The Story Behind “Truth” • The Tobacco Industry’s “Don’t Smoke” Ad Campaign was… • “Don’t smoke ‘till you’re an adult.” • What’s a big reason teens smoke? • Right. Pretty clever, hm? • Legal agreement said “Ads can’t vilify the tobacco industry.” • The tobacco industry knew this could be effective strategy. • CP+B got the account - and…
The Story Behind “Truth” • Truth “Bodybags”
Regulation - 2 Main PurposesRegulation - 3 Main Areas • Purpose for advertising regulation • To protect competition • To protect consumers from economic or physical harm • Regulations are concerned with • Deceptive or unfair content • How advertising is delivered • Protection of susceptible groups (kids, etc.)
Regulatory Power From Low to High: 5. Private Policy • Companies regulating their own behavior 4. Governmental Regulation • States, FTC, Legislation, Supreme Court 3. Media/Self-Regulatory Forces • Media Forces, NAB, Industry Groups 2. Organized Market Forces • Boycotts, bad publicity, media pressure 1. Natural Market Forces • If no good, consumers won’t buy it again
5 FTC Concerns: 1) Deception Must lead to "material injury” 2) Comparisons Must substantiate with statistically significant data 3) Endorsements Must be qualified, must use product 4) Demonstrations Must be accurately depicted 5) “Bait & Switch” Product must be available
4 Possible Remedies for Deceptive Ads: 1) Consent Decree FTC asks advertiser to stop 2) Cease & Desist FTC gets court order to force advertiser to stop FTC mandates new ads to correct false perceptions 3) Corrective Ads 4) Consumer Redress FTC mandates reimbursement
6 Government Regulatory Groups: 1) FDA Packaging and labeling 2) FCC Broadcast advertising 3) Postal Service Magazines, direct mail 4) ATF Liquor labeling, advertising 5) Patent Office Trademarks 6) Library of Congress Copyrights
2 Industry Watchdogs 1) NAD (National Advertising Division) - Part of Better Business Bureau 2) National Advertising Review Board - Represents advertisers and agencies - A division of the NAD • Compliance is strictly voluntary
Questions on Regulation • Does regulating advertising mitigate the negative effects it has on our economy? • On our society? • Did the TV ban on liquor have a positive effect? • 1996 - “gentlemen’s agreement” ended • Now, broadcast media looking for more revenue • Does regulating advertising extend the benefits it has on our economy? • On our society? • Who should do the regulating?
Big Questions • What do you think is the biggest benefit of advertising? • What do you think is the biggest problem with advertising? • What do you think is the best example of bad advertising? • What do you think is the best example of good advertising?
One More Question… • What do you think of this advertising?