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Chapter 4 Social, Ethical, and Regulatory Aspects of Advertising Social Aspects of Advertising • Advertising Educates Consumers – Pro: Advertising informs – Con: Advertising is superficial • Advertising improves living standards – Pro: Ads lower the costs of products – Con: Ads are wasteful and help only some Ch 4: Ethics & Regulation 2 Critics of advertising feel that advertising is superficial because many ads carry little actual product information. Do you think advertising is superficial? Advertising affects Happiness and Well-Being Con: Ads create needs Pro: Ads address a wide variety of needs Con: Ads promote materialism Pro: Ads reflect society’s priorities Ch 4: Ethics & Regulation 4 Critics feel advertising promotes materialism Advertising: Demeaning and deceitful, or liberating and artful? Con: Ads perpetuate stereotypes Pro: Advertisers are more sensitive now Con: Ads are often offensive Pro: Ads are a source of liberation Con: Ads deceive via subliminal stimulation Pro: Advertising is art Ch 4: Ethics & Regulation 6 Do you think this ad perpetuates stereotypes? Advertising has a powerful effect on mass media Pro: Ads foster a diverse and affordable mass media Con: Advertising affects and controls programming Ch 4: Ethics & Regulation 8 Ethical Aspects of Advertising Ethics are the moral standards against which behavior is judged. Key areas of debate regarding ethics and advertising are: • Truth in advertising • Advertising to children • Advertising controversial products Ch 4: Ethics & Regulation 9 Regulatory Aspects of Advertising Areas of advertising regulation: • Deception and unfairness • Competitive issues – Vertical cooperative advertising – Comparison advertising – Monopoly power • Advertising to children Ch 4: Ethics & Regulation 10 Key Regulatory Agents Government Regulation • Federal Trade Commission (FTC) – Wide range of regulatory programs and remedies • Federal Communications Commission (FCC) • Food and Drug Administration (FDA) • U.S. Postal Service • Bureau of Alcohol, Tobacco, and Firearms Ch 4: Ethics & Regulation 11 Key Regulatory Agents (con’t) Industry Self-Regulation • National Advertising Review Board (NARB) • State and Local Better Business Bureaus • Ad Agencies and Associations • Media Organizations Consumers as Regulatory agents • Consumerism: Grass roots consumer movements • Consumers Organizations Ch 4: Ethics & Regulation 12 Regulation of Other Promotional Tools • Direct Marketing and e-commerce – Privacy, Contests, Telemarketing • Sales Promotion – Premiums, Trade Allowances, Contests • Public Relations – Privacy, Copyright Infringement, Defamation Ch 4: Ethics & Regulation 13