Ethics & Regulation

1. Ethics & Regulation Chapters 8 & 7 and Chapter 5, Global Issues

2. Ad Copy Hall of Fame-er says • “To explain responsibility to advertising people is like trying to convince an eight-year-old that sexual intercourse is more fun than a chocolate ice-cream cone.” • Other quotes next slide

3. Quotes about advertising & ethics • What is the difference between unethical and ethical advertising? Unethical advertising uses falsehoods to deceive the public; ethical advertising uses truth to deceive the public. • Univ. of Texas web site (good reference) • http://advertising.utexas.edu/research/quotes/ • Pithy, pointed, important, maintained by Jef Richards • http://www.workinghumor.com/quotes/advertising.shtml • http://www.quotationspage.com/subjects/advertising/

4. Professionals reactive & proactive • Federal Trade Commission [govt regulations] • Food & Drug Administration [govt regulations] • National Advertising Review Board • Ad Council • American Association of Advertising Agencies

5. Is self regulation sufficient? • Yet advertising which exists at the intersection of industry, communication, group interactions comes under attack from any of these perspectives • Industry, i.e. marketing practices • Communication, i.e. mass media • Group interactions, i.e. stereotypes

6. 1. Advertising rationalized mostly by assumptions at classical liberal end of neo liberal continuum. This means Accepting classical liberal version of people = consumer sovereignty & adv as mirror, socially passive force Farther to neo-liberal would see consumers as open to manipulation & Adv. as a shaper of behavior, a socially influential force Seven areas of ethical conflict, 1

7. 2. Adv. is essentially 1 sided communication, Inherent potential of deception by omission Thus, adv. Sacrifices value free info for convenience Advertisers contend that since it’s openly corporate, consumer accepts it It creates climate of pluralism Because “interested” ethics tangled Seven areas of ethical conflict, 2

8. 3. Purpose of adv. is to cause us to think, act in accordance with advertiser intent Advertising sets the consumption agenda & perhaps values Specific areas of concern: Advertising of cigarettes & Alcohol Seven areas of ethical conflict, 3

9. 4. Often advertising seeks out individual instead of individual seeking it. Text mentions several examples Currently wireless and other technologies allow even more aggressive adverts Seven areas of ethical conflict, 4

10. 5. Advertising is a controversial 3rd party in the media – audience relationship Remember the Disney ownership chart The free press is free from government influence but What about corporate influence Seven areas of ethical conflict, 5

11. Seven areas of ethical conflict, 6 • 6. Agency commission system rewards media buys over advertising content (more is good, most even better) • However, various contemporary instances including “integrated marketing communication model,” newer technologies, and new agency structure leading to change

12. Uncertainty of the outcome of advertising process leaves it wide open for differing interpretations of the same event Ask critic & supporter to assess such topics as adv. to kids, adv. of cigarettes Meshing of self interest between buyer & seller in a voluntary relationship, or unprincipled manipulation of a crafty professional communicator & a hapless audience Seven areas of ethical conflict, 7

13. Do advertisers have principles • Personal criteria of individuals • A level of formal principles vis a via professional organizations (195-6) • The National Advertising Review Board (see next chapter’s slides) • However, such codes are general and adherence is voluntary • Exist within business world (of which adv. is one part) in which ethics, strained

14. Text authors offer guidelines • Their guidelines are proposals; they suggest: • Action at the individual firm level offers-- • Less abstractness, more flexibility • Also firms could create an “ethical ombud” whose function would be to represent consumer in transactions

15. Regulation of Adv. Chapter 7 Chapter 5, Global Issues

16. What, how, when, by whom? • Chapter’s question: “What forces should be allowed to regulate the institution of advertising? • Among choices: natural market forces, organized market forces (consumerism), self-regulation, governmental forces, media forces • Are these mutually exclusive or synergistic?

17. Natural market & consumerism • At the Classical Liberal end of the continuum, natural market forces suffice • Consumerism “puts the buyer on an equal footing with the seller.” (163-8) • Consumerism assumes active role for audience

18. Self-regulatory forces • The National Advertising Division & the National Advertising Review Board & the Children’s Advertising Review Unit • See pages 168-175 and also • http://www.caru.org/index.asp • http://www.nadreview.org/ • http://www.narcpartners.org/aboutnarb.asp

19. Brief description, NAD/NARB/CARU • NAD/NARB system focuses on truth & accuracy in advertising • CARU reviews advertising in loco parentis for children, i.e. assesses whether children’s ads are “fair”

20. Government regulation 1/2 • The Federal Trade Commission (FTC) enforces federal antitrust and consumer protection laws. http://www.ftc.gov/ftc/mission.htm. • The FTC maintains a number of Advertising Policy Statement and Guidance publications at its website. http://www.ftc.gov/bcp/guides/guides.htm • Examines claims advertisier’s make

21. Government regulation 2/2 • Food and Drug IndustryThe Food and Drug Administration regulates the labeling and safety of food and cosmetic products through its Center for Food Safety and Applied Nutrition (CFSAN) • For others; see among other web sites, International Business Law Services, e.g. • http://www.uslaw.ibls.com/uslaw/home.htm

22. Outside the U.S. [5, GI] • These authors categorize national political economies into 5 different systems • In each advertising regulations also differ • The 5 categories: libertarian/capitalist (US), socialist/capitalist (UK), authoritarian/capitalist (Brazil), sectarian/authoritarian/capitalist (Iran) and communist/planned economies(Vietnam)

23. National & international regulations • Within each system, regulation is driven by social paradigm • There may be stringent laws or loose guidelines • Developments in corporate globalization & in technology, suggest that international organizations may become increasingly determining

24. One example: Gulf Cooperation Council • The GCC, 6 member countries: Saudi Arabia, Qatar, Kuwait, Oman, UAE, and Bahrain • Forge common consumer & trade policies • Likewise in marketing environment, religion tends takes precedence

25. Sharia/Islamic legal code • Legislation occurs within the framework of the Islamic legal code • Sharia governs duties, morals, behaivor of all Muslims in all areas of life including commerce • Strict taboos toward alcohol, gambling, immodest exposure • Fraud may occur if seller fails to deliver everything promised, ads should thus be facutal

26. For example, in Saudi Arabia • No specific governmental agency controls advertising behavior • Companies tend to self-comply, self-regulate • The point in terms of international advertising/global messages is: advertisers must acquire cultural knowledge

27. Finally, the ICC • International Chamber of Commerce, established in 1919 • Developed the ICC Code of Advertising Practice • States that all advertisers have an overall duty to be “decent, honest, legal and truthful” [end]