Deck 20: Regulation of Advertising and Promotion

Question 1

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.

Answer 1

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 consumers find very annoying as most of the direct mail offers that consumers receive come from companies they have never bought anything from and/or have no interest in buying from. Environmental groups argue that the vast amount of direct mail solicitations and catalogs that consumers receive have a major environmental impact as it take 53 million trees to product the 3.6 million tons of paper in all of the catalogs and direct mail pieces.  Advocates of the creation of Do Not Mail registries argue that consumers should have the right to decide if they want to receive catalogs and other types of direct mail rather than have to sift through all of the unwanted solicitations they receive.
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 argues that there are already provisions available for those consumers who do not want to receive unsolicited direct mail as they can pay $1 and have their name put on Do Not Mail list for three years. They note that the service is supported by the United States Postal Service and has more than 4.5 million subscribers. However, it should be noted that the online service prevents companies from adding a person's name to their list but does not stop catalogs and other mail solicitations they are already receiving. The DMA also refutes the environmental impact of direct mail by noting that the trees are planted to replace those cut down for wood and paper products and that Americans can save over 3 billion miles of driving by eliminating trips to retailers and shopping by catalog instead.  The Finally, the DMA argues that direct mail is important to businesses that rely on it to communicate with consumers and creates nearly $700 billion in economic activity annually. Thus, there would be a major economic impact if Do Not Mail legislation was enacted.

Question 2

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?

Answer 2

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 guidelines are designed to clarify what an endorser can say about a company or brand on a social media site or blog.  Proponents of the guidelines note that bloggers and social media marketers should not be exempt from the same rules of openness and fairness that other they have to follow when using other media.  They note that endorsements on social media sites or blogs should not be hidden and represented as editorial as that the consumer has a right to know if  someone is being paid to endorse a brand on these sites.  The use of fraudulent testimonials and endorsements are not permitted in traditional media advertising and should not be allowed on blogs or through social media. 
Opponent to the new guidelines argue that they are too broad and vague and not enough specificity is provided regarding how disclosures must be communicated. They note that the FTC will review violations of the new guidelines on a case-by-case basis which means the commission can apply the rules selectively.  Critics also argue that there are First Amendment issues with the new guidelines as well as it they may be overly restrictive as to what a consumer can say on a social media site or a blog.  The new guidelines are going to require that marketers take more responsibility for the actions of people they pay to endorse their products  The guidelines require that marketers develop policies regarding disclosure and truthfulness in their social media programs and that they monitor online conversations of those paid to endorse their products and services and correct any misstatements.

Question 3

PART 1
The playlist for this chapter consists of 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:
Evaluate the comparative message used by each advertiser with respect to the type of claim being used. What documentation might be required by the company to substantiate the claim, and how it might impact consumer decision making for this brand?

Answer 3

not answer

Question 4

PART 2
The playlist includes three commercials for Bayer aspirin. Watch each commercial and answer the following questions:
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.

Question 5

The chapter opener discusses how the Federal Communications Commission is considering more stringent regulation of product placements in television shows. Evaluate the arguments for and against this policy by the FCC.

Question 6

PART 1
The playlist for this chapter consists of 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:
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?

Question 7

PART 2
The playlist includes three commercials for Bayer aspirin. Watch each commercial and answer the following questions:
Discuss how puffery is used in each commercial and whether it is appropriate or might mislead a consumer who sees these advertisements for Bayer.

Question 8

Discuss the need for regulation of advertising and other IMC tools Do you advocate more or less regulation of advertising and other forms of promotion by governmental agencies such as the Federal Trade Commission and the Food and Drug Administration?

Question 9

Discuss the role the National Advertising Review Council plays in the self-regulation of advertising. Do you view self-regulation as an effective way on protecting consumers from misleading or deceptive advertising?

Question 10

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 bans 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.

Question 11

What are the three essential elements required to prove deception under the definition used by the Federal Trade Commission?

Question 12

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.

Question 13

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?

Question 14

Discuss the Lanham Act and how it affects advertising. What elements are necessary to win a false or deceptive advertising claim under the Lanham Act?

Question 15

Discuss how the Do-Not-Call Registry developed by the Federal Trade Commission is impacting the direct marketing industry. What arguments might direct marketers make in their efforts to have this program rescinded?