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Ethical and Legal Issues in Advertising and Promotion

Ethical and Legal Issues in Advertising and Promotion. Irene Powell and Paul Gaskin. Ethical and Legal Issues. People’s attitudes to the institution of advertising Frameworks for thinking about ethics Legal issues and ethical issues Voluntary Codes in Advertising

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Ethical and Legal Issues in Advertising and Promotion

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  1. Ethical and Legal Issues in Advertising and Promotion Irene Powell and Paul Gaskin

  2. Ethical and Legal Issues • People’s attitudes to the institution of advertising • Frameworks for thinking about ethics • Legal issues and ethical issues • Voluntary Codes in Advertising • several Industry associations • agreements

  3. Attitudes to Advertising Advertising is… % who agree 95 96 97 Boring & repetitious 67 71 74 Out of touch with everyday life 61 63 63 Out of touch with econ. reality 61 64 65 In tune with my needs 35 32 31 Insults my intelligence 66 67 66 Provides useless info na 78 77 Sexist 56 51 51 Entertaining na 46 48 Source: Eye on Australia Grey/Sweeney, 1997

  4. Information SourcesMost reliable source, from 1-10, 10=most reliable: Personal previous experience 8.5 Advice from people you know 7.5 Endorsements from reputable sources 7.0 TV programs (Money,Better Homes & Gnds) 6.6 Testimonials from experts 6.4 Articles in newspapers & magazines 5.6 Advice from staff in stores 5.5 TV, press and magazine ads 4.7 Internet 4.6 Direct mail 4.0 Source: Eye on Australia Grey/Sweeney, 1996

  5. Only after the event? “Most of us have a child’s notion of ethics and a graduate school notion of finance, marketing & management.” Paul Thayer, former CEO of LTV after being sentenced to 4 years in prison for stock fraud.

  6. Anita Roddick, Body and Soul, London, Ebury Press, 1991founder of the Body Shop • “I am still looking for the modern day equivalent of those Quakers who ran successful businesses, made money because they offered honest products and treated their people decently, worked hard, spent honestly, saved honestly, gave honest value for money, put back more that they took out and told no lies. This business creed, sadly seems long forgotten.

  7. Why we study ethics To help decision-making • Some decisions are easy because they are correct ie compliance with the law • Some decisions are problematic because there is no correct answer. Conflicts may arise as we balance the demands of doing business in a competitive environment and an ethical position personally, professionally and organisationally

  8. Ethical Issues in Advertising • Not what to think BUT what to think about (utilising agenda setting theory) • LAW sets minimum standards, beyond that ETHICS (organisation/individual & professional) + CODES OF CONDUCT (organisation/industry)

  9. The relationship between legal and ethical issues in Advertising Overview influence each other & often result in Ethics Legislation forms arise from can be Minimum standards eg organisational professional individual Culture Codes of Conduct inform the decisions on Advertising controls eg TPA, AANA, AFA,

  10. Action to encourage ethical behaviour • Examine values - corporate conscience, professional and individual values • Philosophical analysis - principles such as: • Teleology - the study of ends. A utilitarian approach maximises benefits and/or minimises harm. • Deontology - the study of duty. A humanist approach epitomised by ‘do as you would be done by’ …..role of socially acceptable behaviour

  11. Ethical Decision-makingModels • Frank Navran & Associates model 1 Define the problem 2 Identify available alternative solutions 3 Evaluate the alternatives 4 Make the decision 5 Implement the decision 6 Evaluate the decision

  12. Ethical Decision-makingModels PLUS = Set of filters P = PoliciesIs it consistent with my organisation’s policies, procedures, and guidelines? L = LegalIs is acceptable under applicable laws & regulations? U = Universal Does it conform to the universal principles/values my organisation has adopted? S = SelfDoes it satisfy my personal definition of right, good and fair?

  13. Ethical behaviour Three Rules of Thumb 1. The Golden Rule Act in the way you would expect others to act towards you. 2. The Professional Ethic Take actions that would be viewed as proper by a disinterested group of colleagues. 3. The TV Test Ask yourself ‘Would I feel comfortable explaining to a national TV audience why I took this action?’!

  14. Control of Advertising Legal Controls • Advantages • Pervasive • Wider scope • Level playing • field • Disadvantages • Slow to act • Over restrictive • Time • consuming

  15. Legal controls “….black letter law frequently acts as a road map for the unscrupulous. It encourages the attitude that what is not explicitly forbidden is permissable. This in turn leads to a search for loopholes in legislation.” Henry Bosch, Business Council of Australia, 1992

  16. Legal controls “Legislation is not an appropriate means of achieving ‘morality’. Legislation is results oriented, is often assessed in terms of increased costs, and tends to encourage a minimal response.” Company Directors’ Duties, Australian Senate Standing Committee, 1989

  17. Main legal issue concerning advertising and promotion • Is it “misleading and/or deceptive”? • Trade Practices Act requires that sellers do not act so as to mislead or deceive • See subject Marketing Law • Where advertising is involved in cases • mostly product, price or availability are the problem, but advertising them brought it to notice! • tiny proportion involve only the “creative expression” being the major legal problem

  18. Control of Advertising Ethics in business = sound economics BUT Voluntary Controls • Advantages • Preventative • Flexible • Self-governing • Disadvantages • Adherence • Interpretation

  19. Voluntary Codes Basis of SELF REGULATION system • Advertiser Code of Ethics • Therapeutic Goods Advertising Code • Slimming Advertising Code • Alcoholic Beverages Advertising Code See AANA handout for detail

  20. Regulatory Framework for Advertising • Australian Association of National Advertisers • Self regulation system with support of major industry players (agencies, media buyers & clients) • Funded by media levy of 0.035% on all media invoices • Advertiser Code of Ethics

  21. AANA Code of Ethics • Advertising should be legal, decent, honest & truthful • Obligations to consumer, society & competitors • 11 Clauses • comply with law • not (likely to be) misleading & deceptive • no damaging misrepresentations to competitors

  22. Clauses of the Code of Conduct(con’t) • no portrays which discriminates or vilifies race, ethnicity, nationality, sex, age, sexual preference, religion, disability, political belief • no unjustifiable violence • sensitive sex, sexuality & nudity • no alarm or distress to children • appropriate language (no strong/obscene) • health & safety according to prevailing community standards • no misleading environmental benefits • no misleading Australian origin or content claims

  23. Regulatory Framework for Advertising • Advertising Federation of Australia • Business Code of Ethics (Telstra/Mojopartners issue) • Pitching Ethics • relationship between pitching agencies • ideas not paid for not to be stolen, even if client wants to do it! • issues of intellectual property and mechanisms to gain rights to that property

  24. Advertising Industry Players • Australian Association of National Advertisers (AANA) 1928 • clients’ body - 150 members mainly large consumer goods & services • Considerable clout • To represent advertisers’ views (took leadership role on behalf of members in post accreditation agenda development) • To educate via management training

  25. AANA created two Boards Advertising Standards Board 1997 • AANA driven with Register of Public Persons • To maintain standards of taste & decency in national advertising having regard to prevailing community values • To handle complaints from any source Advertising Claims Board 1997 • To resolve claims, especially with competitors

  26. Regulation funding • Media Levy of 0.035 percent on all media invoices from 1 Sep 1997 • remitted (by media receiving) to Australian Advertising Standards Council, which runs the two boards on previous slide

  27. Advertising Industry Players • Advertising Federation of Australia (AFA) 1975 • advertising agencies’ body • 160 members with top 20 accounting for 60% of billings • To represent agency views • To provide training via AFA Training Program

  28. Advertising Industry Players • Media Planning and Buying Association (name????) 1999 • perhaps aims to be a countervailing power (in policy development terms) to large TV, newspaper and magazine groups • identifies separate interests from advertising agencies

  29. The Grand Council Australian Advertising Industry Council (AAIC) 1978 • AANA, AFA, media owners (and maybe soon media buyers?) • To create positive attitudes to advertising • only acts if advertising threatened

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