Ethics and Regulations in Advertising

Module 2
Agenda

• Advertising and Social

Responsibility
• Impact of Advertising
• Women and Advertising
• Ethics in Advertising
• Regulatory Bodies

1
Ethics in Advertising

• Is it ethical to advertise cigarettes or

to engage in alcohol advertising,
which might persuade young people
to start smoking and drinking?
• These and other questions of
advertising and marketing ethics have
become subjects of heated debate in
recent years

2
Ethics in Advertising

•Many laws and regulations are put into force

that determines what is permissible in
advertising
•However, every issue is not controlled by
rules
•Marketers are often faced with decisions
regarding appropriateness of their actions,
which are based on ethical considerations
rather than what is within the law or industry
guidelines
• Certain actions may be within the law but still
unethical
Ethical Issues in Advertising

1. Using unnecessary sex appeal or

showing women in
advertisements immorally
without purpose
2. Making false claims about the
product with hidden tactics
3. Criticizing or dishonoring anything
which is in real of some honor to
the society
4. Criticizing the competitor’s
product by any similar name or
any other matching
 Ethical Issues in Advertising
5. Pointing out human formulation such as
black and fair complexion comparison etc.
6. Delivering confusing and misleading
information
7. Showing infeasible and unnatural things or
actions that are shown as a result of using the
product
•8. Advertising intoxicating products like wine,
cigarette, tobacco etc.
False or Deceptive Advertising

• False claims about products , when

made in advertisements destroy public
faith in advertising
• Advertising containing false statements
amounts to deception
• Conceptually, deception exists when an
advertisement is introduced into the
perceptual process of some audience
and the output of that perceptual
process (i) differs from the reality of the
situation, and, (ii) affects buying
behavior to the detriment of the
consumer
• Refer Page 657 to 670 of Myers and
Aaker Text for more on Deceptive or
False Advertising
• Also refer Page 656 of the same text for
History of Federal Regulation of
Advertising
False or Deceptive Advertising
• The definition of ‘Deceptive
Advertisement’ or ‘False Advertisement’
was given in the Wheeler- Lea Act of
USA as follows:
• “The term ‘false advertisement’ means
an advertisement other than labeling,
which is misleading in a material
respect; and in determining whether any
advertisement is misleading, there shall
be taken into account (among other
things) not only representations made
or suggested by statement, word,
design, device, sound or any
combination thereof, but also the extent
to which the advertisement fails to
reveal facts material in the light of such
representations or material with the
commodity to which the advertisement
relates under conditions prescribed in
said advertisement, or under such
conditions as are customary or usual”
Legal Restrictions on Advertising

• There are 3 major institutions in the society that

protect consumers against misleading or
fraudulent advertising:
1. Government agencies enforcing laws against
offenders
2. Advertising industry associations and media
groups that impose self regulation upon their
member firms and advertisers
3. Advertisers themselves acting through
enlightened self- interest and a sense of social
responsibility
 Legal Restrictions on Advertising
• The Federal Trade Practices Act as passed by the
Federal Congress in 1890 has declared dealing
with unfair methods of competition in
commerce and unfair or deceptive acts or
practices in commerce to be unlawful. The Act
added:
a. “It shall be unlawful for any person, partnership
or corporation to disseminate or cause to be
disseminate any false advertisement-
i. By mails or in commerce by any means for the
purpose of inducing or which is likely to induce
directly or indirectly the purpose of food, drugs,
devices or cosmetics, or
ii. By any means for the purpose of inducing or
which is likely to induce directly or indirectly the
purchase of food, drugs, devices, or cosmetics
b. The dissemination or the causing to be
disseminated of any false advertisement within
the provision of sub section (a) of this section
shall be an unfair or deceptive act or practice in
commerce”
 Legal Restrictions on Advertising

•Sachar Committee has recommended the

following acts of sellers as Unfair Trade
Practices:
1.Misleading advertisements and false
representation- A seller should not falsely
represent that-
a.The goods are of a particular standard,
quality, grade composition, style or model, if
they do not possess that qualification
b.The rebuilt, second- hand goods are new
goods
2.Offering of gifts or prizes with the intention
of not providing them and conducting
professional contests
•The committee is of the opinion that all the
aforesaid unfair trade practices should be
punishable as an offence or any person on
undertaking indulging in any of these activities
should be liable to be prosecuted before the
commission
Legal Restrictions on Advertising

• Advertising Standards Council of India (ASCI)

• In order to enforce an ethical code, India has the
Advertising Standards Council of India (ASCI)
• It is a non- profit organization set up by 43
founder members who are involved with
advertising in one way or the other
• It was established in 1985
• Its Board of Members has members with
equitable representation to advertisers,
agencies, media and others
• It puts forward a regulating code
• ASCI proposes to adjudicate on whether an
advertisement is offensive and its decision will
be binding on its members
• It proposes to deal with the government if there
are any disputes
• It seeks to achieve the acceptance of fair
advertising practices in the best interest of the
ultimate consumer
Need for Advertising Regulations

• Morality and Tastes: All ads are

not morally acceptable and known
for good taste
• Untruthful advertisements:
Almost all ads are not cent percent
true.
• Womanizing: Almost ninety
percent of ads make use of
women even if their presence is
not needed.
• Advertising is mind pollutant: Too
much advertising pollutes our
mental environment.
 Corrective Advertising
• Corrective Advertising requires advertisers to rectify past
deception by making suitable statements in future commercials
• The 1975 corrective advertising order against Warner- Lambert’s
Listerine is a classic example
• Listerine has advertised for over fifty years that gargling with
Listerine mouthwash helped prevent colds and sore throats by
killing germs
• The order required them to include the statement, “Listerine will
not help prevent colds or sore throats or lessen their severity” in
$10 million of advertising, which was equal to the average annual
Listerine expenditure during the prior ten- year period
• Listerine implemented the order by embedding the statement in a
commercial featuring two couples, each with a husband finding
himself having “onion breath”
• The corrective disclosure appeared mid- way in the thirty- second
spot as follows:
• “While Listerine will not help prevent colds or sore throats or lessen
their severity, breath tests prove Listerine fights onion breath
better than Scope(a rival mouthwash brand for Listerine)”
• Refer Page 671 to 675 of Myers and Aaker Text for remedies
against Deceptive Advertising
 Advertising to Children

• Advertising to children has been a major

focus of public policy and concern for
many years
• Much of children’s advertising is
deceptive in that it omits significant
information, such as the complexity and
safety of operating toys
Is Advertising a waste of money?

• It is logical to think that if advertising

adds value to products or services, it
also adds cost and affects prices.
• This view is not totally correct.
• While some advertised products do
cost more than the unadvertised
products, the opposite is also true.
• Advertising may help lower the
overall cost of a product more than
enough to offset costs and keep the
prices down because of economies of
scale in production and by encouraging
competition
Guidelines for Advertising

1. Truth: Advertising shall reveal the truth, and shall

reveal significant facts, the omission of which
would mislead the public
2. Substantiation: Advertising claims shall be
substantiated by evidence in possession of the
advertiser and the advertising agency prior to
making such claims
3. Comparisons: Advertising shall refrain from
making false, misleading, or unsubstantiated
statements or claims about a competitor or his
products or services
4. Bait Advertising: Advertising shall not offer or
services for sale unless such offer constitutes a
bona fide effort to sell the advertised products or
services and is not a device to switch consumers
to other goods or services, usually higher priced
Guidelines for Advertising
5. Guarantees and Warrantees: Advertising of
guarantees and warrantees shall be explicit, with
sufficient information to apprise consumers of
their principal terms and limitations or, when
space or time restrictions preclude such
disclosures, the advertisement shall clearly reveal
where the full text of the guarantee or warranty
can be examined before purchase
6. Price claims: Advertising shall avoid price claims
that are false or misleading, or savings claims that
do not offer provable savings
7. Testimonials: Advertising containing testimonials
shall be limited to those of competent witnesses
who are reflecting a real and honest opinion or
experience
8. Taste and decency: Advertising shall be free from
statements, illustrations, or implications that are
offensive to good taste or public decency
THANK YOU !!!