Mc Graw-Hill Irwin 2004 The Mc Graw-Hill Companies

Mc. Graw-Hill/Irwin © 2004 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Chapter 3 The Economic, Social, and Regulatory Aspects of Advertising Identifies and explains the economic, social, ethical, and legal issues advertisers must consider

Objectives Classify the two main types of social criticisms of advertising Employ an economic model to discuss advertising’s effects Explain the difference between social responsibility and ethics Understand how governments regulate advertising here and abroad Discuss court rulings that affect advertisers’ freedom of speech Define the roles state and local governments play in ad regulation Describe how federal agencies regulate advertising Discuss self-regulation

The Many Controversies About Advertising make us buy things we don’t need? Does advertising. . . make us more materialistic? affect product value? affect us subliminally? affect art? discourage competition? influence consumer choice? increase prices? affect demand? debase language?

The Many Controversies About Advertising Economic Societal make us buy things we don’t need? make us more materialistic? affect product value? affect art? affect us subliminally? discourage competition? increase prices? affect demand? influence consumer choice? debase language?

Economic Impact of Advertising

Economic Impact of Advertising Effects on. . . prices competition demand value of products

Economic Impact of Advertising Effects on. . . Primary demand Secondary demand Consumer choice Business cycle

Abundance Principle: The Economic Impact of Advertising in Perspective Complete information Self-interest Abundance Principle

Social Impact of Advertising Short-term manipulative arguments Deception in advertising Subliminal advertising myth

Social Impact of Advertising Long-term macro arguments Proliferation of advertising Offensive ads Use of stereotypes in ads Advertising’s social impact in perspective Effect of advertising on values

Social Responsibility and Advertising Ethics Ethical advertising Social responsibility Advertiser’s social responsibility Ethics of advertising

How Government Regulates Advertising Federal Legislative Executive Judicial State Legislative Executive Judicial Local Legislative Executive Judicial

Government Restraints on International Advertisers Children Puffery Tobacco Premiums and product placements

Current Regulatory Issues Affecting U. S. Advertisers Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council Freedom of commercial speech Central Hudson Gas v. Public Service Commission

Current Regulatory Issues Affecting U. S. Advertisers Tobacco advertising Consumer Privacy Advertising to children

Federal Regulation of Advertising in North America Federal Trade Commission (FTC) Defining deception Comparative advertising Defining unfairness Investigating violations

Federal Regulation of Advertising in North America Federal Trade Commission (FTC) Defining deception Comparative advertising Defining unfairness Investigating violations Substantiation Endorsements Affirmative disclosure

Federal Regulation of Advertising in North America Federal Trade Commission (FTC) Defining deception Comparative advertising Defining unfairness Investigating violations Remedies for unfair or deceptive advertising Consent decree Cease-and-desist order Corrective advertising

Federal Regulation of Advertising in North America Food and Drug Administration (FDA) Federal Communications Commission (FCC) Patent and Trademark Office and Library of Congress Trademark Copyright U. S. Patent and Trademark Office Nutritional Labeling and Education Act

State and Local Regulation by state Regulation by governments local governments

Nongovernment Regulation Better Business Bureau National Advertising Review Council (NARC) NAD NARB Regulation by media Newspapers Magazines Radio TV Regulation by consumer groups Self-regulation by advertisers Self-regulation by agencies and associations Agencies AAAA AAF ANA