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Belch: Advertising and
Promotion, Sixth Edition
VII. Special Topics and
Perspectives
21. Regulation of
Advertising and Promotion
Several pieces of legislation passed in recent years
involve the FCC and have an impact on advertising and
promotion. The Cable Television Consumer Protection
and Competition Act, passed in 1992, allows the FCC and
local governments to regulate basic cable TV rates and
forces cable operators to pay licensing fees for local
broadcast programming they retransmit for free. One purpose
of this bill is to improve the balance between cable
rates and rapidly escalating advertising revenue. FCC
rules affecting telemarketing will be discussed toward the
end of this chapter.
Important issues now facing the FCC are the growth of
broadband Internet access and interactive television
(ITV), both of which offer new communications opportunities
for marketers. Under the Bush administration, the
FCC is giving the free markets more rein to expand these
new telecommunication technologies. 64 The FCC plans to open more doors for small
businesses to get involved in the broadband arena, which is now dominated by large
companies. The FCC is also looking for new ways to expand ITV services, which are
expected to reach over 18 million U.S. households by 2003 (Exhibit 21-10). ITV
enables consumers to request product information or make a purchase without having
to dial an 800 number or write down a mail-order address. 65 A major hurdle to the
growth of ITV is incompatibility among different service providers’ technologies. The
FCC plans to develop standard criteria for ITV services that will address the problem
of incompatible platforms and help facilitate the growth of this technology.
The Food and Drug Administration Now under the jurisdiction of the
Department of Health and Human Services, the FDA has authority over the labeling,
packaging, branding, ingredient listing, and advertising of packaged foods and drug
products. The FDA is authorized to require caution and warning labels on potentially
hazardous products and also has limited authority over nutritional claims made in food
advertising. This agency has the authority to set rules for promoting these products
and the power to seize food and drugs on charges of false and misleading advertising.
Like the FTC, the Food and Drug Administration has become a very aggressive
regulatory agency in recent years. The FDA has cracked down on a number of commonly
used descriptive terms it believes are often abused in the labeling and advertising
of food products—for example, natural, light, no cholesterol, and fat free. The
FDA has also become tougher on nutritional claims implied by brand names that
might send a misleading message to consumers. For example, Great Foods of America
was not permitted to continue using the HeartBeat trademark under which it sold most
of its foods. The FDA argued the trademark went too far in implying the foods have
special advantages for the heart and overall health.
Many changes in food labeling are a result of the Nutritional Labeling and Education
Act, which Congress passed in 1990. Under this law the FDA established legal
definitions for a wide range of terms (such as low fat, light, and reduced calories) and
required straightforward labels for all foods beginning in early 1994 (Exhibit 21-11).
In its current form the act applies only to food labels, but it may soon affect food
advertising as well. The FTC would be asked to ensure that food ads comply with the
new FDA standards.
Another regulatory area where the FDA has been heavily involved is the advertising
and promotion of tobacco products. In 1996 President Bill Clinton signed an executive
order declaring that nicotine is an addictive drug and giving the FDA board
jurisdiction to regulate cigarettes and smokeless tobacco. Many of the regulations
© The McGraw−Hill
Companies, 2003
Exhibit 21-10 The
Federal Communications
Commission plans to
develop standards to
encourage the growth of
interactive television
Exhibit 21-11 The
Nutritional Labeling and
Education Act requires that
labels be easy for consumers
to understand
735
Chapter Twenty-one Regulation of Advertising and Promotion