Regulation of Advertising and Promotion

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Advertising is regulated through

Self Regulation

Federal Regulation

State Regulation
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ASCI Advertising Standards Council of India

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Self-regulation of Advertising
Advertisers and Agencies Industry Trade Associations

Voluntary self regulation by the advertising industry, business, and media to maintain consumer trust and confidence and limit government interference

Business (BBB) NARB

Media

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Appraising Self-Regulation
Encourages truthful, ethical and responsible advertising

Perspective of Advertisers, Agencies and Media

Effective regulatory mechanism Preferable to government intervention Often results in more stringent standards than those imposed by legislation

Takes too long to resolve complaints Problems with budgeting and staffing Lack of power or authority Self-serving to advertiser and media
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Perspective Of Critics

Deceptive Advertising: Key Elements

Likelihood of misleading consumer

Perspective of reasonable consumer

Materiality misrepresentation or practice is likely to affect consumers purchase decision

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Puffery: Some Examples

Advertising or other sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts
Bayer The wonder drug that works wonders BMW The ultimate driving machine

Nestle The very best chocolate

Snapple Made from the best stuff on earth

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Regulation of Direct Marketing

Self-regulation occurs through various industry groups

FTC and US Postal Service police direct-response advertising closely

Telemarketing faces increased regulation including the Telephone Consumer Protection Act of 1991

Pay-per-call Rule

Development of Do-not-call Registry by FTC

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The FTC Protects Consumers From Unwanted Calls

Created by the Federal Trade Commission to allow consumers to limit the calls they receive from telemarketers Does not cover calls from political organizations, charities, telephone surveyors, or companies with which the consumer has an existing relationship Took effect in October 2003. Over 90 million consumers registered Companies calling consumers on the registry subject to a fine of up to $11,000 per incident
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Issues Regarding Marketing on the Internet

Banning unsolicited emails (SPAM)

Privacy issues such as profiling and collecting personal information information

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Protecting children when they are online