Chapter 18: Social Impact, Responsibility, and Ethics: Is it Right?
The existence of a regulatory agency such as the FTC influences advertisers’
behavior. Although most cases never reach the FTC, advertisers prefer not to risk
The FTC revised its guidelines governing testimonial advertisements, bloggers, and
celebrity endorsements in October 2009 for the first time since 1980. These
The Food and Drug Administration (FDA)
The FDA is the regulatory division of the Department of Health and Human Services
that oversees package labeling, ingredient listings, and advertising for food and drugs.
The Federal Communications Commission (FCC)
The FCC is designed to protect the public interest in radio and television broadcast
communications and can issue and revoke licenses to broadcasting stations. The FCC
Other Regulatory Bodies
Below is a list of other key regulatory agencies.
Bureau of Alcohol, Tobacco, Firearms and Explosives: Regulates deception in
advertising and establishes labeling requirements for the liquor industry.
The Impact of Regulation
In our discussion of issues, we mentioned several that have spurred governmental
regulation, such as children’s advertising, deception, and claim substantiation. In this
section we discuss these regulations in terms of the government agencies taking
responsibility for them.
Chapter 18: Social Impact, Responsibility, and Ethics: Is it Right?
The FTC and Children’s Advertising
Developing responsible advertising aimed at audiences of children is a critical issue.
The FTC and other governmental agencies have gotten involved with the regulation
of marketing to children.
In 1990 Congress passed the Children’s Television Act, which placed 10.5- minute-
per-hour ceilings for commercials in children’s weekend television programming and
12-minute-per-hour limits for weekday programs. The act also set rules requiring that
commercial breaks be clearly distinguished from programming and barring the use of
program characters to promote products.
Responding to issues emerging in the digital environment, the Children’s Online
Privacy Protection Act grants parents control over what informatic websites can
collect from their children. It requires websites and online services to provide parents
with direct notice of their information practices and get parental consent before
collecting information from children.
Regulating Deception
Deceptive advertising is advertising intended to mislead consumers by making
claims that are false or failing to make full disclosure of important facts or both.
The current FTC policy on deception contains three basic elements:
Misleading: Where there is representation, omission, or practice, there must be a
high probability that it will mislead the consumer.
Chapter 18: Social Impact, Responsibility, and Ethics: Is it Right?
This policy makes deception difficult to prove because the criteria are rather vague
and hard to measure. It also creates uncertainty for advertisers, who must wait for
congressional hearings and court cases to discover what the FTC will permit.
Regulating Substantiation
Claim substantiation is an area of particular concern to the FTC in determining
whether or not an advertisement is misleading. The advertiser should have a
reasonable basis for making a claim about product performance or run the risk of an
FTC investigation. In determining the reasonableness of a claim, the FTC considers:
Type and specificity of claim.
Type of product.
Possible consequences of the false claims.
Remedies for Deception and Unfair Advertising
Common sources of complaints concerning deceptive or unfair advertising practices
are competitors, the public, and the FTC’s own monitors. After the FTC determines
that the ad is deceptive, the first step in the regulation process is to issue a consent
decree. Most advertisers sign it to avoid bad publicity.
It is important for advertising students to understand the legal ramifications of
deceptive and unfair advertising. Essentially, an agency is liable for deceptive
advertising along with the advertiser when the agency is an active participant in the
preparation of the ad and knows or has reason to know that it is false or deceptive.
Chapter 18: Social Impact, Responsibility, and Ethics: Is it Right?
Media Review of Advertising
The media attempts to regulate advertising by screening and rejecting ads that violate
their standards of truth and good taste. Most networks have a Standards and Practices
Department that screens every ad and gives approval before the ad can run. Each
individual medium has the discretion to accept or reject a particular ad.
Self-Regulation
Responsible advertisers take the initiative and establish individual ethical standards
that anticipate and even go beyond possible complaints. Such a proactive stance helps
the creative process and avoids the kinds of disasters that result from violating the law
or offending members of society. Advertisers practice three types of self-regulation:
self-discipline, industry self-regulation, and self-regulation by public and community
groups.
Self-Discipline
An organization such as an advertising agency exercises self-discipline when it
develops, uses, and enforces norms within its own practices. Self-discipline starts
with the individuals in the agency or organization.
Industry Self-Regulation
When the development, use, and enforcement of norms comes from within the
industry, the term industry self-regulation is used. The most effective attempts at pure
self-regulation have come through industry groups, such as the Advertising Review
Council (ARC) and the Better Business Bureau (BBB).
In 1971, the National Advertising Review Council, now known as the Advertising
Self-Regulatory Council was established. It attempts to negotiate voluntary
Chapter 18: Social Impact, Responsibility, and Ethics: Is it Right?
Copyright © 2019 Pearson Education, Inc.
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The National Advertising Review Board (NARB) is a 50-person regulatory group that
represents national advertisers, advertising agencies, and other professional fields.
When an advertiser appeals a case to NARB, it faces a panel of five people who
attempt to resolve the issue. Although neither NAD nor NARB have any real power
other than threatening to invite government intervention, these groups have been
effective in controlling cases of deception and misleading advertising. Figure 3.3
illustrates the NARB appeal process.
Self-Regulation by Public and Community Groups
The advertising industry voluntarily involves non-industry representatives, such as the
BBB or the media, in the development, application, and enforcement of norms. Local and
consumer activist groups represent two ways in which self-regulation occurs in this
manner:
Local Groups. At the local level, self-regulation has been supported by the BBB,
which function much like the national regulatory agencies and also provides local
END-OF-CHAPTER SUPPORT
REVIEW QUESTIONS
18-3. Explain the debate over whether advertising shapes or mirrors society. If you
were to take a side in this debate, which side would you choose?
An important debate about advertising’s role in society questions the limits of its
influence. At what point does advertising cross the line between reflecting social
values to creating them? Critics argue that advertising has repeatedly crossed this
line, influencing vulnerable groups such as children and teenagers too strongly.
Chapter 18: Social Impact, Responsibility, and Ethics: Is it Right?
Copyright © 2019 Pearson Education, Inc.
431
The shaping-versus-mirroring debate is the most central issue we address in considering
advertising and public relations’ role in society. What drives consumers to behave as they
do? And what are the cultural forces that underlie their decisions? It’s complicated to
decipher. Advertising and societal values are interwoven, so the answer to this debate
may simply be that advertising both mirrors and shapes values.
Students will have differing opinions on this issue. The debate will surely be lively.
18-4. What do you consider the most pressing ethical issues facing advertisers?
Explain.
Advertisers face a range of pressing social issues. Some critics charge that advertising
causes demand creation, which occurs when an external message drives people to feel a
need or want unnecessarily. A Harris Poll indicated that two-thirds of Americans
believed that ad agencies were at least partially to blame for the economic crisis in 2008
18-5. Explain how trademarks and copyrights are legally protected and why the
First Amendment is important to advertisers.
A trademark is a distinctive symbol or a brand, corporate, or store name that identifies the
seller’s brand and thus differentiates it from the brands of other sellers. A trademark must
be registered through the United States Patent and Trademark Office of the Department
Chapter 18: Social Impact, Responsibility, and Ethics: Is it Right?
The most basic federal law that governs advertising is the First Amendment to the U.S.
Constitution, which says that Congress shall make no law “. . . abridging the freedom of
speech, or of the press; . . .” First Amendment protection extends to commercial speech,
which is speech that promotes commercial activity.
18-6. In addition to the FTC, what other governmental bodies are involved in
regulating advertising practices?
DISCUSSION QUESTIONS
18-7. The Dimento Game Company has a new basketball video game. To promote it,
“Slammer” Aston, an NBA star, is signed to do the commercial. In it, Aston is shown
with the game controls as he speaks these lines: “This is the most challenging court game
you’ve ever tried. It’s all here—zones, man-to-man, pick and roll, even the alley-oop.
For me, this is the best game off the court.” Is Aston’s presentation an endorsement?
Should the FTC consider a complaint if Dimento uses this strategy? What would you
need to know to determine if you are safe from a challenge of misleading advertising?
18-8. Zack Wilson is the advertising manager for the campus newspaper. He is looking
over a layout for a promotion for a spring break vacation package. The headline says,
“Absolutely the Finest Deal Available This Spring—You’ll Have the Best Time Ever if
You Join Us in Boca.” The newspaper has a solid reputation for not running advertising
with questionable claims and promises. Should Zack accept or reject this ad? Take one
side of this issue and write a short 1-2 page position paper explaining your viewpoint.
In a class discussion, determine how many of your classmates agreed or disagreed with
your view.
Chapter 18: Social Impact, Responsibility, and Ethics: Is it Right?
TAKE-HOME PROJECTS
18-9. Portfolio Project: Check the Websites of three big-name companies such as:
McDonald’s (www.mcdonalds.com)
Avon (www.avon.com)
Ben & Jerry’s (www.benjerry.com)
Write a two- to four-page report on their efforts to be socially responsible. How is the
company’s social responsibility position reflected in its advertising?
18-10. Mini-Case Analysis: Imagine that you are now working for Starbucks. What
does the company do that provides evidence that it is socially and environmentally
responsible? What other ways can you think of for the company to expand these efforts?
Chapter 18: Social Impact, Responsibility, and Ethics: Is it Right?
TRACE North America Case
Multicultural Ethics and Issues
Read the Trace case in the Appendix before coming to class. Then answer the following
questions:
18-11: Does the “Hard to Explain, Easy to Experience” campaign communicate its brand
message of innovation without using ideas, words, or images that are offensive or
insensitive to the target audience?
18-12: Give an example that demonstrates how the TRACE campaign is socially
responsible.
18-13: What evidence in this case leads you to believe that the advertising team that
created this campaign understood Multicultural Millennials? Can you identify any
additional insights?
HANDS-ON CASE
P5-1. After reading about Green Works in the case and on the internet, do you think this
product line is a believable attempt by Clorox to improve the environment? Why or why
not?
P5-2. Does Green Works represent an attempt to mirror a trend in society or create one?
P5-3. Had you been the product manager, would you have put the Clorox name on Green
Works products, as the company did? Explain your response.
