3New Brand (1)

&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 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?

Ads destroy freedom of choice

Ads give consumers more choices

An Ethical Debate

Ads simply reflect the “real world”

Ads = freedom of speech

Ads destroy democracy/media

Advertising warps social values

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, violence3) Stereotyping Housewives, women,seniors, racial groups4) Children Violence, dangerous acts, unhealthy habits, overall materialism5) Controversial Condoms, alcohol, fashionProducts 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 lift

it onto a 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”

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Truth “Bodybags”

Ads for Discussion:

Regulation - 2 Main PurposesRegulation - 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 withstatistically 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

2) Cease & Desist

4) Consumer Redress FTC mandates reimbursement

FTC asks advertiser to stop

FTC mandates new ads to correct false perceptions

3) Corrective Ads

FTC gets court order toforce advertiser to stop

6 Government Regulatory Groups:1) FDA Packaging and labeling 2) FCC Broadcast advertising3) Postal Service Magazines, direct mail

4) ATF Liquor labeling, advertising5) Patent Office Trademarks6) 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.

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