2. Ethics and Taste in Advertising Why should this be a significant issue of concern ?

3. Four Fundamental Assumptions of the Free Market 1. Self Interest – want more for less 2. Many buyers and sellers 3. Complete Information 4. Absence of externalities (social costs)

4. Central Issues of Ethics Advocacy Accuracy Acquisitiveness

5. Criticisms of Advertising Short-term manipulative arguments  Focusing on style of advertising Long-term macro arguments  Focus on the social or environmental impact of advertising Complete information Deception Absence of externalities Social costs

6. Deceptive Considerations Puffery  If taken literally  Excluded from deception generally because it is assumed consumers do not believe it anyway!  Used to enhance images Pepsi - the choice of the new generation

7. Puffery advertising or other sales presentations which praise the product to be sold with subjective opinions, superlatives, exaggerations, or vaguely - generally stating no specific facts

8. Deceptive Considerations Subliminal Advertising A message transmitted in such a way that the receiver is not consciously aware of it. Problems  Distance  Individual Differences (Perceptual Thresholds)  Effect of Recognizable Material

9. Deceptive Advertising* False Promises Incomplete Description  Stating some but not all of the product’s contents  Solid oak furniture (only desktop solid) Misleading Comparisons, visual distortions False Testimonials, false demos Partial Disclosures  Kraft cheese slices made with 5 oz of milk but omit the processing loses about 2 oz of the milk Small-Print Qualifications Bait and Switch *as defined by the courts

10. Ethics vs. Social Responsibility Ethical advertising  Doing what is the advertiser and advertising peers believe is morally right in a given situation Social responsibility  Doing what society views as best for the welfare of people in general

11. Style Considerations Stereotypi ng  presenting one group in an unvarying pattern that lacks individuality Offensiveness in Advertising

12. Racial and Ethnic Stereotypes Portrayals of groups in subservient or unflattering lights Example  Southerners portrayed as dumb or hicks

13. Offensiveness in Advertising What is viewed in bad taste by some is quite acceptable to others … in other words, taste is subjective and individual..  Taste is also affected by locale European ideals of sexuality vs. U.S. Advertisements more overtly sexual in Europe

14. Advertising and the Law Agencies Involved  FTC, FCC, FDA Problem Areas  Deceptive Advertisements Misrepresent, mislead, omit Bait Advertisements Endorsers  Unfair Advertising Unjustifiably injured or violate public policy Inadequacy of complete disclosure or other externality

15. Agency Roles FDA  Monitors drugs, cosmetics, food products  Labels, packaging, branding of these products its domain  Seeks complete information for consumers  Requires warning labels  Monitors terms such as “low fat,” “fat-free,” etc.  Nutritional labels

16. Agency Roles - FCC Maintains jurisdiction over radio, TV, telephone, satellite, the Internet and the cable industry Indirect impact on advertising as it enforces cease and desist orders Monitors profanity and obscenity issues

17. First Amendment Protections There is a distinction between “speech” and “commercial” speech in the court system Twenty year history favors significant protection for truthful advertising under free speech, hence use of advertising by professionals such as attorneys and physicians

18. Bait Advertising Attractive but insincere effort to sell something Example: See the Eckerd’s Sunday Flier for a great promotional price, not available when you get there. Bait and Switch - not available and try to sell up!

19. Corrective Advertisements If lingering effects known - cease and desist or consent decree not sufficient or agreed upon must correct the false impression made that consumers use for future purposes Examples: Listerine, Ocean Spray

20. Guidelines to Ethical Advertising Truthful Substantiate Claims Refrain from False Comparisons no bait! explicit guarantees no false price claims competent witnesses tasteful and decent

21. Arguments against advertising to children Children, especially young ones, are vulnerable to advertising because they lack the necessary experience and knowledge to understand and evaluate the purpose of persuasive advertising appeals. Children cannot differentiate between commercials and television programs, do not perceive the selling intent of commercials, and cannot distinguish between fantasy and reality. Children must be able to understand how advertising works and develop a skeptical or critical attitude to defend themselves against it. Advertising to children is inherently unfair or deceptive. © The McGraw-Hill Companies, Inc., 1998 Irwin/McGraw-Hill Slide 22-2

22. Arguments in favor of advertising to children: Advertising is a part of life and children must learn to deal with it as part of the consumer socialization process of acquiring the skills needed to function in the marketplace. Studies have shown that children are capable of perceiving persuasive intent and the inability to perceive such intent does not necessarily lead to incorrect beliefs about a product. Parents should be involved in helping children interpret advertising and can refuse to purchase products they feel are undesirable for their children. Advertisers have a right under the First Amendment to communicate with consumers who make up their primary target audience © The McGraw-Hill Companies, Inc., 1998 Slide 22-3

23. Arguments For Advertiser Control of the Media The media's dependence on advertising revenue can make them susceptible to advertisers because advertisers can influence the media by: exerting control over editorial content  biasing editorial opinion  limiting coverage of controversial issues © The McGraw-Hill Companies, Inc., 1998 Irwin/McGraw-Hill Slide 22-6

24. Arguments Against Advertiser Control of the Media It is in the best self-interest of the media to report the news fairly and accurately and not be perceived as biased to retain public confidence. It can be argued that advertisers need the media more than the media need any individual advertiser. © The McGraw-Hill Companies, Inc., 1998 Irwin/McGraw-Hill Slide 22-7

25. Proposed Restrictions on Use of the World Wide Web Banning unsolicited e-mail that cannot automatically be screened out. Disclosing fully and prominently both the marketer’s identity and the use for which information is being gathered. Giving consumers the right to bar marketers from selling or sharing any information collected from them and to review the personal information collected. © The McGraw-Hill Companies, Inc., 1998 Irwin/McGraw-Hill Slide 21-6