legal aspects of advertising adapted from j. scott armstrong december 2014 legal aspects of...

Legal aspects of Advertising

Adapted from J. Scott ArmstrongDecember 2014

Legal aspects of advertising-R2

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Learning Diary

The lectures follow an experiential learning experience. To make this work properly:1. Obtain a learning diary (paper). A 10 x 13 bound

diary is suggested.2. Take the learning diary with you to all of the class

sessions.3. For self-learners, use the diary to track your learning

progress for all of your learning activities.

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Objectives of this session

To understand and apply these principles and techniques (not to convince you). Ask for clarification as needed.

Set a goal for yourself on how many principles and techniques you plan to use by the end of this session. Even a goal of one will help you. Put this in your learning diary now.

Note: We will discuss only some of the slides. When you go through the lecture on your own, view it in “Slide Show” and follow the experiential procedures.

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Procedure

Focus on understanding.

Record questions in your learning diary that will help you to apply the techniques or principles, then, after you decide which ones you want to apply, try to answer these from the readings. If not clear, ask others for help.

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Define free speech as you understand itCan you say:

“Ice cream is good for you.”

“Smith’s ice cream is good for you.”

Commercial free speech existed in the US until around 1930. In 1942, the U.S. Supreme court ruled that free speech does not apply when money changes hands. The state can decide what companies are allowed to say.(Green & Armstrong 2012)

Conclusion: Be aware of advertising laws in your area.

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FDA proposed advertising to be mandatory for the tobacco industry

Graphic images to be placed on the top 50% of the front and back panels of every cigarette package manufactured and distributed on or after September 22, 2012. (choice of 36 graphic images)

Top 20% of all printed advertising would consist of warnings. (choice of 9 text warnings)

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Mandatory disclaimers: Sample of required images

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FDA claims

Would reduce deaths from smoking in the U.S. Initial estimate based on a short-term comparison of U.S. vs. Canada (which had the law in effect). Later. The expected gains were revised by a 60% reduction in the deaths forecast due to tobacco use.

How would you evaluate whether such a policy should be adopted?

How would you evaluate the validity of the claims?

1. Cost and benefits based heavily on opinions. How would you evaluate the health gains due to the reduction in 2nd-hand smoke?

2. Cited no use of experimental research to predict the effects of this proposed policy. Adprin.com

FDA graphic images

The FDA admitted to altering the images to make them look more gruesome, and therefore more upsetting, without informing the audience. • Would such behavior be illegal if done by a

private firm? • Is it ethical for government to mislead potential

buyers of a legal product?

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Ruling

Assume that you were the judge in this case. Would you grant an injunction to block the FDA’s proposed rules? Write your ruling in your learning diary (5 minutes – if you think that is long, how long do you think it took for the judge to write his ruling?).

Actual ruling: The injunction was granted. The U.S. is one of the few countries to restrict free speech.

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Should cost-benefit analyses be done for freedom of speech?

We used cost-benefit economic analysis to assess whether the state should grant freedom of speech to its citizens. Is that proper? Write your notes in your leaning diary.

When you finish, click here for some opinions.

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Cost/benefit for the tobacco case

What if cost/benefit concluded that mandated speech on tobacco were harmful? Would that lead you to suspend restrictions on advertisers? Write your answer in your learning diary.

The FDA claimed to have a net benefit, but the analysis was based on their own judgments. We found no evidence for experimental studies.

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When are regulations necessary to protect health of customers?

Write your notes in your learning diary.

Example: Effects of regulations on poisons. Mandated requirements led the bottles to be more difficult to recognize as harmful.

How can health be protected without regulations?

Write your answer. Then click for some answers

1. Contract law: Provides some protection against harming others. Handled by the courts.

2. Internet: Consumers send information to one another. Sellers and their competitors will become aware.

3. Companies are concerned about their image (their brand). Especially family-owned companies.

How would you ensure this ad is truthful?

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1. Write your answer in your diary.

2. What would you do if it were false?

3.How can you protect against lying?

Click here for some answers

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Some ways to ensure that ads are truthful

1. Get name and contact for the person pictured, then contact or visit them.2. Ask people on the advertising team to sign an ethics statement, before doing an advertisement and after.3. Ask ad agencies for a statement of their ethical procedures.4. Use an independent advertising review board.

Actual photo

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Under what conditions should firms be required to adopt policies to improve their social responsibility?

Economic theory say no and we were unable to find any experimental evidence to support this

Source: Effects of Corporate Social Responsibility and Irresponsibility Policies

Question on the Bill of RightsWould it be proper for each of our freedoms to be judged on whether the law makers and courts find it to be in our interests to have the right to each freedom to be restricted?

Write your thoughts in your learning diary. Then click.

Compare your ideas with those in Should we put a Price on Free Speech.

Iron Law of Regulation

States that “There is no form of market failure, however egregious, that is not eventually made worse by the political interventions intended to fix it.”

Try to find experimental evidence that would demonstrate that a government regulation was beneficial to consumers? (Use Google Scholar Search). Summarize one study in your learning diary.

We conducted a search for such information. We were unable to find any.

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Application session

Apply the principles from this session to your organization.- a project, or to your “House ad.”

Time out for generating your list.

Gallery writing.

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Advice on learning

One study found that fewer than 10% of students were successful in applying new knowledge.• This went to 20% if they actively applied what they

were taught during a class session.• It went to 90% when they worked with a learning

partner and coached each other.

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Follow-up

___ Review this lecture on your own (It is on the Educational Materials page)

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