Journalism Chapter 20 Homework It is likely that distilled spirits are at a competitive disadvantage to beer and wine since the latter two products can be advertised on radio and television.

Chapter 20 – Regulation of Advertising and Promotion

There is a need for regulation of advertising and other IMC tools as consumers rely on the

information provided by marketers to make consumption decisions. If this information is false and/or

misleads the consumer then, the advertising and other forms of promotion are not fulfilling this basic

function. Consumers also have a right to know that the claims made in advertising and other forms of

promotion such as the efficacy, performance, quality or safety of a product can be supported by the

companies that make them and also should be aware of any consequences, conditions and/or

3. Discuss the role the National Advertising Review Council plays in the self-regulation of advertising.

Do you view self-regulation as an effective way o protecting consumers from misleading or deceptive

advertising? (L02)

The National Advertising Review Council was formed by the three leading advertising industry

associations (AAF, 4As, ANA) along with the Council of Better Business Bureaus to sustain high

standards of truth, accuracy, and social responsibility in national advertising. The CEOs of three

other major marketing associations – the Direct Marketing Association, Electronic Retailing

Association and the Interactive Advertising Bureau- joined the NARC Board of Directors. For many

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4. IMC Perspective 20-1 discusses the debate over hard liquor companies advertising on television. Do

you agree with the DISCUS argument that hard liquor companies are at a competitive disadvantage

against beer and wine marketers if they cannot advertise on television? Evaluate the decision by

NASCAR to drop its long-standing ban on sponsorships by hard liquor companies as well as the

decision by professional sports leagues such as the NBA to allow spirits advertising within camera

view. (L02)

The decision by the Distilled Spirits Council of the United States (DISCUS) to overturn the self-

imposed ban on broadcast advertising has been very controversial. DISCUS has argued that marketers

of distilled spirits want to break down the public perception that spirits are stronger or more

It is likely that distilled spirits are at a competitive disadvantage to beer and wine since the latter two

products can be advertised on radio and television. This is particularly true in today’s media

environment as narrowcasting is now possible through television, which means distilled spirits

marketers can target their advertising to specific segments of the adult population. Moreover, image

advertising is very common in the marketing of alcoholic beverages and television is an excellent

medium for creating brand images. It will be interesting to follow the developments surrounding the

advertising of distilled spirits as the major broadcast and cable networks have thus far refused to

accept these ads.

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The decision by NASCAR to drop its long-standing ban on sponsorships by hard liquor companies in

2005 has raised concern among may critics. It is not surprising that the liquor companies would want

to sponsor NASCAR as it has become one of the most popular spectator sports in America.

Moreover, the NASCAR fan profile matches very well with the target audience for hard liquor.

However, critics object to having liquor ads on the race cars for several reasons. The American

5. What are the three essential elements required to prove deception under the definition used by the

Federal Trade Commission? (L03)

In 1983 the FTC put forth a new definition of deception which states that “the commission will find

deception if there is a misrepresentation, omission, or practice that is likely to mislead the consumer

acting reasonably in the circumstances to the consumer’s detriment. The first element in this

6. Find several examples of advertising claims or slogans that are based on puffery rather than

substantiated claims. Discuss whether you feel these advertising claims can be defended on the basis

of puffery. (L03)

Puffery has been defined as “advertising or other sales presentations which praise the item to be sold

with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific

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7. Ethical Perspective 20-1 discusses the issue of direct–to-consumer advertising of prescription drugs.

Evaluate the new authority the Food and Drug Administration has been given to regulate DTC drug

advertising. Do you think the FDA needs more authority to regulate advertising in this area? (L03)

In 1997, the Food and Drug Administration (FDA) issued new guidelines making it easier for

pharmaceutical companies to advertise their prescription drugs directly to consumers. Reasons given

for easing the restrictions are that increased advertising will help educate consumers by providing

them with more information about their options and encourage people to see doctors about

argue that the ads will drive up the costs of health care since advertising is expensive and is added to

the costs of drugs and encourages consumers to request higher-cost brand names rather than less

expensive generic alternatives. Concerns over DTC drug advertising escalated in late 2004 when

Merck had to pull its popular Vioxx medication from the market after it was determined that the drug

increased the risk of heart attack in some people. This led critics to call for a moratorium on the DTC

advertising of new drugs following their approval until the product is in the marketplace long enough

for the FDA to have confidence that it is as safe as thought to be when it was approved. The

argument for an even longer moratorium gained momentum recently after it was announced that

Merck and Schering-Plough, which co-market Vytorin, delayed for 21 months the results of a study

hat showed the cholesterol medication did not reduce plaque buildup in arteries as claimed.

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8. Discuss the Lanham Act and how it affects advertising. What elements are necessary to win a false

advertising claim under the Lanham Act? (L03)

The Lanham Act is a very important piece of legislation as it provides companies with a basis for

suing competitors for making false or misleading advertising claims. The Lanham Act makes it

possible for a company to take civil action against a competitor who might be engaging in deceptive

9. Discuss how the Do-Not-Call” Registry developed by the Federal Trade Commission is impacting the

direct marketing industry. What arguments might direct marketers use in trying to have this program

rescinded? (L04)

Congress approved the FTC’s proposal for the formation of a national Do-Not-Call registry in

February 2003 and this program contained nearly 192 million phone numbers by the end of 2009.

Marketers face penalties of $11,000 per incident for calling someone on the list. The new federal rules

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The primary arguments direct marketers can use in trying to implement this program is that it violates

their First Amendment rights and that such a program is not needed. The Direct Marketing

Association, which is the primary trade group for the direct marketing industry, has argued that

consumers already have a number of do–not-call options. They can already ask to be excluded from

an individual company’s telemarketing list at the same time they can sign up with state lists or pay $5

10. IMC Perspective 20-3 discusses how a number of states are considering legislation that would create

Do Not Mail list registries, which would allow consumers to keep unsolicited direct mail out of their

mailboxes. Discuss the arguments for and against legislation that would prohibit marketers from

sending direct mail to consumers. (L04)

There are several arguments in favor of legislation that would create Do Not Mail list registries. The

typical American household receives nearly 40 pounds of direct mail each year, most of which is

unsolicited, never opened and rarely responded to. The response rate for direct mail solicitations is

only about 2 percent which makes this a very inefficient process that as well as one that most

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The creation of Do Not Mail registries is opposed by marketers as well as the Direct Marketing

Association which is the primary trade organization for the direct marketing industry. The DMA

11. Do you agree with the new guidelines from the Federal Trade Commission requiring bloggers and

endorsers to disclose any material connection to an advertiser?” How might this impact companies

that use social media in their IMC programs? (L04)

Marketing on the Internet is not yet subject to any formal government regulations as Internet industry

leaders have encouraged the FTC to allow the industry to regulate itself. However, the Federal Trade

Commission has been active in the regulation of fraud and misleading advertising though this new

medium. With the growth of social media and the explosion in the number of blogs, the FTC has

become concerned over endorsers using these platforms to promote a product or service without

making consumers aware that they are being paid to do so. The FTC guidelines notes that its new

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Additional Discussion Question (not in text)

12. Discuss the role the media play in the self-regulation of advertising. Do you view self-regulation as an

effective way of protecting consumers from offensive or misleading advertising? (L02)

The media are an important self-regulatory mechanism in the advertising industry. Most major media

have some type of review process for advertising and can reject ads they find objectionable. Some

media exclude ads for an entire product class such as Reader’s Digest’s ban on tobacco and liquor ads.

Many magazines and newspapers have standards regarding the type of advertising they will accept.

However, these standards vary depending on the nature and size of the publication. Large established

13. The texts discusses the decision by the California Supreme Court in the Nike v Kasky case to view

statements about a company’s labor policies or operations in ads or press releases as commercial,

rather than political in nature and thus not subject to First Amendment protection. Do you agree or

disagree with this ruling? Discuss how this ruling might affect various forms of integrated marketing

communications used by Nike and other companies in California? (L01))

Freedom of speech or expression is the most basic federal law governing advertising in the United

States. For many years, freedom of speech protection did not include advertising and other forms of

Chapter 20 – Regulation of Advertising and Promotion

In the case involving Nike, the California Supreme Court reversed the decisions of two lower courts

and ruled that Nike’s public relations campaign defending its labor policies and working conditions

inside its factories in Asia should be considered commercial speech, even though it was not talking

punishment through its public relations efforts, then any company could use the First Amendment to

make false statements about its products or practices with the intent of increasing sales. It is

important to note that the California Supreme Court did not decide whether Nike really was guilty of

abusing workers or misleading consumers, leaving these issues for an eventual trial court.

The U.S. Supreme Court heard oral arguments and reviewed 34 briefs regarding the case but

14. What is meant by advertising substantiation? Should advertisers be required to substantiate their

claims before running an ad or only be required to provide documentation only if their advertising

claims are challenged? (L03)

Advertising substantiation is a FTC program which requires advertisers to have supporting

documentation for their claims and to be able to prove that they are truthful before running their ads.

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15. IMC Perspective 20-2 discusses the legal battle between Pizza Hut and Papa John’s over the latter’s

use of the tagline “Better Ingredients. Better Pizza.” Which company do you side with in this

controversy and why? (L03)

The battle between Pizza Hut and Papa John’s involved whether the latter’s use of this tag line in a

comparative context could be considered puffery. Puffery has been defined as “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.” Defenders of puffery argue that it

represents a form of “poetic license” or allowable exaggeration and does no harm as consumers can

recognize it and do not really believe the claims. However, critics of puffery argue that consumers

cannot distinguish between puffery and verifiable, fact-based claims.

You might ask your students whether they think advertisers should be permitted to make claims that

they cannot substantiate and defend them as puffery. Critics of puffery argue that its use burdens

16. What is corrective advertising? Why do you think corrective advertising is so controversial? Evaluate

the arguments for and against corrective advertising? (L03)

Corrective advertising is a Federal Trade Commission program whereby and advertiser found guilty

of deceptive advertising can be required to run additional ads designed to remedy the deception

resulting from consumer exposure to the previous ads. The purpose of corrective advertising is to

remedy the misinformation, incorrect beliefs or perceptions that consumers may have developed as a

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17. Discuss how areas such as sales promotion and direct marketing are impacted by laws and

regulations. Do you think it is as important to regulate these areas as much as media advertising?

(L04)

Both consumer and trade-oriented promotions are subject to various regulations. Consumer-oriented

promotions such as contests and sweepstakes must adhere to certain guidelines so as to not be

classified as a lottery, which is considered a form of gambling and violates federal and state laws.

Contests, games and sweepstakes must also meet various disclosure requirements. Trade-oriented

promotions such as trade discounts and allowances as well as vertical cooperative advertising are

governed by the Robinson-Patman act, which deals with price discrimination.

IMC Exercise

Contact a trade or industry association or go to the Web site of an industry whose advertising or

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AdForum Exercise: “Evaluating Advertising Claims from a Legal Perspective”

(See Advertising and Promotion Playlist, Chapter 20)

Part 1

The playlist for this chapter four commercials that use comparative claims including ads for Pizza Hut,

Ford, Coors Light and Miller Lite. Watch the four commercials and answer the following questions:

1. Evaluate the comparative message used by each advertiser with respect to the type of claim being

2. Do you think any of the comparative claims made in the commercials for these four brands could

result in a lawsuit from a competitor under the Lanham Act? Why or why not?

Part 2

The playlist includes three commercials for Bayer aspirin. Watch each commercial and answer the

following questions:

1. Evaluate the performance claims that are made for Bayer in each commercial and discuss the type of

research data that is required to support these claims.