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Belch: Advertising and
Promotion, Sixth Edition
VII. Special Topics and
Perspectives
21. Regulation of
Advertising and Promotion
toward certain issues and products change. Also, many advertising people believe
these changes are a response to competition from independent and cable stations,
which tend to be much less stringent in their standards and practices. However, since
television is probably the most carefully scrutinized and frequently criticized of all
forms of advertising, the networks must be careful not to offend their viewers and
detract from advertising’s credibility.
Appraising Self-Regulation
The three major participants in the advertising process—advertisers, agencies, and the
media—work individually and collectively to encourage truthful, ethical, and responsible
advertising. The advertising industry views self-regulation as an effective mechanism
for controlling advertising abuses and avoiding the use of offensive,
misleading, or deceptive practices, and it prefers this form of regulation to government
intervention. Self-regulation of advertising has been effective and in many instances
probably led to the development of more stringent standards and practices than those
imposed by or beyond the scope of legislation.
A senior vice president and general counsel at Kraft Foods, while praising the
NAD, summarized the feelings of many advertisers toward self-regulation. In his testimonial
he stated: “NAD is superior to its competition, which is regulation by the government
or regulation by the courts. Accurate, prompt, and inexpensive decisions year
in and year out have earned NAD its well-deserved credibility with the industry and
with regulators.” Federal Trade Commission chairman Timothy Murris has described
the NAD as a “model of self-regulation” (Exhibit 21-6).
There are, however, limitations to self-regulation, and the process has been criticized
in a number of areas. For example, the NAD may take six months to a year to
resolve a complaint, during which time a company often stops using the commercial
anyway. Budgeting and staffing constraints may limit the number of cases the
NAD/NARB system investigates and the speed with which it resolves them. 27 And
some critics believe that self-regulation is self-serving to the advertisers and advertising
industry and lacks the power or authority to be a viable alternative to federal or
state regulation.
Many do not believe advertising can or should be controlled solely by self-regulation.
They argue that regulation by government agencies is necessary to ensure that
consumers get accurate information and are not misled or deceived. Moreover, since
advertisers do not have to comply with the decisions and recommendations of self-regulatory
groups, it is sometimes necessary to turn to the federal and/or state government.
© The McGraw−Hill
Companies, 2003
Exhibit 21-6 Praise for
the NAD is noted on its
website
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Chapter Twenty-one Regulation of Advertising and Promotion