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Part Seven Special Topics and Perspectives
Belch: Advertising and
Promotion, Sixth Edition
Exhibit 21-12 The
American Legacy
Foundation was established
as part of the Tobacco
Settlement Agreement and
is dedicated to reducing
tobacco use in the United
States
VII. Special Topics and
Perspectives
21. Regulation of
Advertising and Promotion
© The McGraw−Hill
Companies, 2003
resulting from this order were designed to keep teenagers from smoking. 66 However,
the tobacco industry immediately appealed the order. While continuing to fight its
legal battle with the federal government over the FDA regulations, the tobacco makers
did agree to settle lawsuits brought by 46 states against the industry in late 1998 by
signing the Master Settlement Agreement. This settlement was considered a better
deal for the tobacco industry, as many of the onerous cigarette marketing restrictions
contained in the original FDA proposal settlement were missing. The agreement
allows large outdoor signs at retailers, whereas the original proposal banned all outdoor
ads. The original deal banned all use of humans and cartoons in ads, while the
current settlement bans only cartoons and even permits their use on cigarette packs.
And while the original proposal eliminated sports sponsorships, the current agreement
allows each company to continue one national sponsorship. 67
An important provision of the Master Settlement Agreement was that the tobacco
companies agreed not to target youth (those under the age of 18) in the advertising,
promotion, and marketing of tobacco products either directly or indirectly. However,
over the past several years there has been considerable debate over whether tobacco
companies are complying with the agreement. Much of this debate centers on what is
called the 15 percent rule, under which the tobacco companies voluntarily pledged not
to advertise in magazines that have more than 15 percent of their readers under the age
of 18. Some major tobacco companies such as Philip Morris have stopped advertising
in magazines that have a substantial number of youth readers, such as People, Sports
Illustrated, Spin, and Rolling Stone. However, other tobacco companies still advertise
in these publications, and it appears that there are still a number of battles to fight in
the war over the marketing and advertising of cigarettes. 68
A number of consumer advocacy groups as well as health departments in many
states run ads warning consumers against the dangers of smoking and tobacco-related
diseases. For example, the American Legacy Foundation, which was established as
part of the 1998 tobacco settlement and is dedicated to reducing tobacco use, has run a
number of hard-hitting ads warning consumers of the risk of smoking (Exhibit 21-12).
Another area where the Food and Drug Administration is being asked to become
more involved is the advertising of prescription drugs. IMC Perspective 21-3 discusses
the tremendous growth in direct-to-consumer drug advertising that has
occurred sine the FDA issued new guidelines making it easier for pharmaceutical
companies to advertise prescription drugs to consumers.
The U.S. Postal Service Many marketers use the U.S. mail to deliver advertising
and promotional messages. The U.S. Postal Service has control over advertising