Advertising Society

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 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

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

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 latt from Starbucks? How does advertising affect the way that you spend your money?

Some Economic Questions:

Can ads make people buy things they dont want or need? Can ads make people more materialistic? Are the benefits of advertising worth the annoyance?

An Ethical Debate
Ads destroy freedom of choice Ads destroy democracy/media Advertising warps social values Ads give consumers more choices

Ads = freedom of speech Ads simply reflect the real world

3 Ethical 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 2) Decency 3) Stereotyping 4) Children "Nothing beats a Bud Sexual innuendo, violence Housewives, women, seniors, racial groups Violence, dangerous acts, unhealthy habits, overall materialism Condoms, alcohol, fashion consumer credit

5) Controversial Products

An Ethical Thought:

All of us who professionally use the mass media are shapers of society. We can
brutalize it. Or we can help
it onto a

lift

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

QuickTime and a H.264 decompressor are neede d to see this picture.

Stereotyping as Context
Dove Real Beauty

QuickTime and a H.264 decompressor are neede d to see this picture.

Social Tension Gets Attention

Nike If You Let Me Play

QuickTime an d a Sorenson Video 3 decompre ssor are need ed to see this p icture .

The Story Behind Truth

The Tobacco Industrys Dont Smoke Ad Campaign was

Legal agreement said Ads cant

be effective strategy. CP+B got the account - and

Dont smoke till youre an adult. Whats a big reason teens smoke? Right. Pretty clever, hm?

vilify the tobacco industry. The tobacco industry knew this could

The Story Behind Truth

Truth Bodybags

QuickTime an d a Sorenson Video 3 decompre ssor are need ed to see this p icture .

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Ads for Discussion:

Regulation - 2 Main Purposes Regulation - 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 wont buy it again

5 FTC Concerns:
1) Deception Must lead to "material injury

2) Comparisons
3) Endorsements 4) Demonstrations 5) Bait & Switch

Must substantiate with statistically significant data

Must be qualified, must use product Must be accurately depicted Product must be available

4 Possible Remedies for Deceptive Ads:

1) Consent Decree 2) Cease & Desist FTC asks advertiser to stop FTC gets court order to force advertiser to stop FTC mandates new ads to correct false perceptions FTC mandates reimbursement

3) Corrective Ads

4) Consumer Redress

6 Government Regulatory Groups:

1) FDA 2) FCC Packaging and labeling Broadcast advertising

3) Postal Service
4) ATF 5) Patent Office

Magazines, direct mail

Liquor labeling, advertising Trademarks Copyrights

6) Library of Congress

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 - gentlemens 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?
QuickTime an d a Cinepak decompressor are need ed to see this p icture .

Think.