&
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
Market Information
 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
 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 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?
An Ethical Debate
 Ads destroy
freedom of choice
 Ads give consumers
more choices
 Ads destroy
democracy/media
 Ads = freedom of
speech
 Advertising warps
social values
 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
"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
Products
Condoms, alcohol, fashion
consumer credit
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”
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Stereotyping as Context
 Dove “Real Beauty”
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Social Tension Gets Attention
 Nike “If You Let Me Play”
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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”
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Ads for Discussion:
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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 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
3) Corrective Ads
FTC mandates new ads to
correct false perceptions
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?
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Think.