Download - Regulation of Advertising and Promotion
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Copyright © 2012 McGraw-Hill Companies, Inc., All right reversedMcGraw-Hill/Irwin
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Regulation of Advertisingand Promotion
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Local, State, and Federal Regulation
• Local and Industry Groups• Better Business Bureau (BBB)• National Advertising Review Council (NARC)• Distilled Spirits Council (DISCUS)• American Medical Association (AMA)
• State and Federal Agencies• Federal Trade Commission (FTC)• Federal Communications Commission (FCC)• Food and Drug Administration (FDA)• U.S. Postal Service (USPS)
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Self-Regulation by Businesses
• Better Business Bureau (BBB)• Promotes fair advertising and selling
practices across all industries• Handles consumer complaints• Supported by dues of the member firms• Uses negative publicity to curb abuses
• BBB national investigative arms• National Advertising Division (NAD)• Children’s Advertising Review Unit (CARU)• Electronic Retailing Self-Regulation
Program (ERSP)20-3
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Self-Regulation by Advertising Associations
Actively Monitoring and Policing
Advertising Practices
American Association of Advertising Agencies
American AdvertisingFederation
Advertisers
Agencies
Media
Advertising Clubs
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TV Network Guidelines for Children’s Ads
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Advertising and the First Amendment
Speech promoting acommercial transactionis protected but must
be truthful
Freedom of speech orexpression is the most basic
federal law that governsadvertising and promotion
Speech must bebalanced against competinginterests such as advertising
of harmful products
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The Concept of Unfairness
Could not reasonably be avoided by consumers
Could not reasonably be avoided by consumers
Causes substantial physical or economic injury to consumers
Causes substantial physical or economic injury to consumers
Must not be outweighed by countervailing
benefits to consumersor competition
Must not be outweighed by countervailing
benefits to consumersor competition
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Puffery
Bayer – “The wonder drug that works wonders”
BMW – “The ultimate driving machine”
Nestlé – “The very best chocolate”
Snapple – “Made from the best stuff on earth”
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Deceptive Advertising
Perspective of reasonable consumer
Likelihood of misleading consumer
Materiality – misrepresentation orpractice is likely to affect consumers’purchase decision
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Ways the FTC Handles Deceptive Ads
FTC programs to prevent deceptive
advertising
AffirmativeDisclosure
Advertising Substantiation
FTC programs to deal with deceptive
advertisingafter it occurs
Cease-and-Desist Orders
ConsentOrders
CorrectiveAdvertising
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Suing Competitors Under the Lanham Act
Ad deceived a substantial segment of the audience
Deception was “material” or meaningful andis likely to influence purchasing decisions
Falsely advertised products or servicesare sold in interstate commerce
You were, or likely will be, injured as a result of the false statements (loss of sales or loss of goodwill)
False statements have been made about the advertiser’s product or your product
Must be proven to win a false advertising suit
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Regulation of Sales Promotion
Cannot misrepresent their value
Cannot be a lotteryRules & details must
be fully disclosed
Care must be taken with special audiences
Contests/SweepstakesContests/Sweepstakes
PremiumsPremiums
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Regulation of Trade Allowances
Must not violate any stipulations of the
Robinson-Patman Act
Co-op funds must be equal and non-discriminatory
Trade AllowancesTrade Allowances
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Regulation of Direct Marketing
Telephone Consumer Protection Act
Pay-per-call Rule
FTC “Do-not-call” Registry
Telemarketing facesincreased regulation
FTC & US Postal Service police direct-response ads closely
Self-regulation occurs through various industry groups
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Regulation of Social Media
• Safeguarding of personal information• Guidelines for online endorsements
• Online endorsers and bloggers must disclose any material connection to company or brand
• Paid endorsers posting on social media and e-commerce sites• Must identify themselves as such
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