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Free Speech

Overview

Throughout American history, the constitutional right of freedom of speech has repeatedly sparked controversy and public debates. While the right of freedom of speech is guaranteed by the First Amendment to the Constitution, many groups and individuals have challenged its limitations and function in the real world. Freedom of speech ultimately affects everyone. With the explosion of mass communications and in a post-9/11 world, the issue of free speech remains a point of controversy in many sectors of society.

Because advertising is a form of expression, it too has been affected by the debates over free speech. While there are many facets to the controversy, it comes down to one major point of ambiguity - is "commercial speech" afforded the same protection by the First Amendment as personal and political forms of expression? The industry has consistently maintained that the First Amendment makes no distinction between different forms of speech. As such the regulation of advertising or "commercial speech" would constitute a form of censorship and be in direct violation of the Constitution. Repudiating this claim are those who believe that advertising can directly and seriously impact people's mental and physical health. Pointing to ads that feature products with known toxic affects, such as tobacco and alcohol, these critics contend that advertising must be regulated in order to protect the unsuspecting consumer. In recent times, the advertising of Direct-to-Consumer (DTC) prescription drugs and "unhealthy foods" has become a topic of great interest to many politicians, advocacy groups, and the industry. In response to these attacks, the industry has formed, over the past few decades, a series of self-regulatory agencies whose purpose it is to set standards for advertising and monitor the effectiveness of these regulations. Groups like the National Advertising Review Council (NARC) and the Children's Advertising Review Unit (CARU) operate within the industry and are, therefore, accepted more readily than government legislation.

Many legal battles have sprung from the controversy over advertising and free speech, some of which have been brought before the Supreme Court. To date, the Court has largely upheld the right of advertisers to produce their ads with few regulations. Nevertheless, advocacy groups and political leaders continue to move forward in their fight to impose regulations on the advertising of certain controversial products. The debate has, in no way, been settled and continues to face new and relevant challenges.

ADVERTISING TAX

At present, the federal government treats advertising as a "necessary and ordinary business expense," and allows advertisers to deduct 100% of their costs. In recent years, there have been efforts to levy taxes on the advertising industry, but all proposals to do so have been successfully defeated.

In order to raise revenue and reduce budget deficits, several states have attempted to increase the tax burden of the advertising industry. In 2004, Texas, Arkansas, and Nebraska submitted proposals to impose taxes on media outlets. The measures were defeated, and no state currently taxes advertising. Connecticut, which had passed a 3% tax on media services in 2003, repealed the tax in 2004 as well.

Industry experts argue that advertising taxes would impact the economy negatively. They maintain that advertising is an important driving force in the global market and that taxation would limit the ability of advertisers to reach consumers. Others simply argue that taxation, in its limiting function, would constitute a form of censorship and, therefore, violate the First Amendment rights of the advertising industry.

ALCOHOL ADVERTISING

Alcohol advertising is a primary concern of advocacy groups as well as many Americans who believe that alcohol advertising in mainstream media directly influences the frequency of underage drinking. While drinking among youth and young adults has declined over the last six years, a recent study by the Justice Department found that 25% of 15-17 year olds said they drink. Junior and senior high school students drink 35% of all wine coolers sold in the U.S., and consume 1.1 billion cans of beer annually.(1) The alcohol industry has come under sharp attack from organizations and individuals who believe that underage drinking rates speak for themselves. A national survey indicates that 67% of adults in the U.S. support banning liquor advertisements on television and 61% favor banning beer and wine advertising.(2) In countries where liquor advertising has been restricted or banned, rates of alcohol abuse and underage drinking have not, as yet, decreased. The high price of alcohol appears to be the most effective deterrent to drinking in all countries.

Even though there are no legal prohibitions against the broadcast of alcohol advertisements on TV and radio, liquor manufacturers voluntarily decided to refrain from airing ads (radio in 1936 and television in 1948). However, in 1996, citing declining sales and a need to strengthen brand promotions, the distilled spirits industry ended its voluntary ban. For a few years product-focused liquor advertising was shown on selected cable stations. In 2002, NBC - alone among the networks - announced that it would begin a pilot test airing liquor advertising. The major British spirits manufacturer, Diageo, began running commercials on NBC in December 2002 for their designated-driver program ending with a brief shot of the Smirnoff vodka logo. NBC outlined 19 stringent requirements for liquor advertising, but a number of Congressmen and public advocacy groups, including the American Medical Association (AMA) and Mothers Against Drunk Driving (MADD), demanded a halt to the commercials. After three months of continued pressure, NBC announced that it would no longer accept ads for spirits and liquor.

At this time, liquor advertising is airing only on cable stations. The failure of NBC's bold initiative illustrates that alcohol advertising continues to be a highly controversial topic. Beer and wine advertising, however, continues to air in all broadcast media, and remains a highly lucrative industry.

Beer and malt advertising

Beer is the drink of choice for 43% of Americans (followed by wine at 31%),(3) and the most heavily advertised. Men account for 85% of sales and advertising is generally directed toward them. For many years this category has not received much attention within the debate over advertising and free speech. However, following the Janet Jackson "clothing malfunction," at the Super Bowl this year, Anheuser-Busch announced that it will monitor and reduce the "sexiness" of its ads. Coors will likewise follow suit, reconsidering the risqué character of some of its ads.(4)

Malt Beverage advertising

Marketed as "malternatives" in the beer category, these beverages are sweet-tasting, malt-based, low-alcohol drinks. As such, they are allowed to be advertised on television and radio. Smirnoff Ice was the first major brand to be introduced in this category and was considered a great success, only to be followed by a number of other contenders. The market quickly became saturated, and it appears that malternatives may be a fast-fading fad, going the way of wine coolers, with just a few brands left to carry the category (Smirnoff Ice, Bacardi Silver, Bacardi 03 and Sky Blue from Skyy Spirits and SABMiller).

Because of its particular appeal to younger consumers, advocates are expressing growing concern over the marketing and advertising of malternatives. The Federal Trade Commission (FTC) is looking into the impact of malternative advertising and continues to monitor alcohol advertising in general.

Youth and Advertising

Several academic centers, including Georgetown University's Center for Alcohol Marketing and Youth (CAMY), are also studying the relationship between advertising and underage drinking. In its last report, CAMY urged the government to restrict all alcohol ads in publications and broadcast outlets with readership/viewership comprised of at least 15% minors. CAMY continues to cite statistics that America's youth is exposed to alcohol advertising on a much more frequent basis than adults of legal drinking age.

The following are data taken from CAMY's fact sheet Summary: Youth Exposure to Alcohol Advertising

  • Televised alcohol ads reached about 90% of youth ages 12-20 in 2001 with such individuals viewing an average of 245 ads.
  • Of the 30% most likely to view alcohol ads, an average of at least 780 ads were seen.
  • This age group saw more ads for beer and distilled spirits in magazines in 2001 than did adults - 45% more for beer and 27% more for distilled spirits.
  • Youth saw 58% fewer ads for wine than did adults in 2001 (this stark disparity, claims CAMY, is evidence that alcohol advertisers can more accurately and effectively market their products to adults).

CAMY promotes stricter restrictions on the advertising of alcohol in all media in order to reduce the amount of alcohol advertising seen by underage persons.


Online Alcohol Advertising

Like most companies today, alcohol manufacturers are using the Internet to market their products. However, because minors are among the Internet's most frequent and savvy users, alcohol advertising on the net has come under increasing scrutiny from advocacy groups concerned about underage alcohol consumption. In a recent study conducted by comeScore Media Metrix in the last six months of 2003, 55 alcohol websites were tracked. In that time period the study revealed that 700,000 in-depth site visits were made by underage drinkers, accounting for 13% of all in-depth visits.(5) Of these 55 sites, budlight.com and budweiser.com, each received 90,000 visits by persons underage. Many speculations as to why these sites attract young audiences center around the interactive character of many alcohol-related sites. Games, downloads, and attractive interfaces draw young visitors to these sites.(6)

To date, the Supreme Court has maintained that the Internet is protected by the First Amendment. Since censorship is unconstitutional, restrictions are not imposed on Internet-based alcohol ads. The advertising industry and alcohol manufacturers outwardly oppose the marketing of alcohol to underage audiences, but they maintain that it is their constitutional right to advertise alcohol to individuals of legal age. They are in favor of ongoing self-regulation by organizations such as the National Advertising Review Council (NARC).


GAMBLING

In 1999, the U.S. Supreme Court issued an opinion upholding the right of casinos to air ads in which gambling is featured. Some ambiguity remains for those states in which commercial casinos are currently illegal. At this point, the issue lies primarily in the hands of the states. Nevertheless, the ruling was a significant victory for advertisers.

Very recently online gaming advertisements have come under attack by the Criminal Division of the Department of Justice. The Department believes that offshore sports betting and online gaming may be in violation of many federal and state laws. It has issued a warning to media outlets who advertise these activities that they may be "aiding and abetting a criminal act." Responding to this advisory, the National Association of Broadcasters has alerted its members to the Department's impending investigation.(7)


INTERNET/INTERACTIVE ADVERTISING

Over 60% of Americans now use the Internet and are growing increasingly comfortable with its technology. Privacy issues - including the sharing of personal information by companies - continue to be of great concern to the government and advocacy groups alike. In 2003, with the proliferation of SPAM (unsolicited emails from companies, marketers, and individuals), Congress passed a bill imposing heavy fines on known Spammers. Since enactment, many spammers have been prosecuted and found guilty, incurring exorbitant penalties. The anti-spam measure has sharply limited the ability of marketers to freely advertise via the Internet. To support the bill's effectiveness, Congress is also encouraging the development of anti-spam technologies, enabling individuals to both block and report spammers.

Telephone Solicitations

Similarly, the U.S. government has taken significant steps to curtail the number of unsolicited telemarketing calls. In 2003, the government initiated the "Do Not Call List" and 50 million numbers registered in the first six months of operation. The list continues to grow, demonstrating its widespread approval. Marketers who call numbers on the list face heavy fines.

Advertisers and marketers feel that these measures violate their First Amendment rights. However, the new laws are extremely popular and are unlikely to be repealed.

(The information for this section provided by the AAAA)


PHARMACEUTICAL ADVERTISING

Direct-to-Consumer (DTC) advertising of prescription drugs is one of the fastest growing categories in the United States, totaling over $3 billion in 2002.(8) In 1999 the FDA released guidelines enabling drug companies to advertise directly to consumers, but with several stipulations. Commercials must include disclaimers, detailing side effects and risk factors. Many advertisers believe these mandates are excessive, but recognize that they are not likely to change.

The rising cost of prescription drugs has become a seminal issue in U.S. politics. Congressmen have strongly criticized DTC advertising, claiming that consumers are ultimately paying for the additional costs. In June 2003, Senators John Edwards (D-NC) and Tom Harkin (D-IA) introduced amendments to the Medicare reform bill that would have effectively ended all DTC advertising of prescription drugs. In two decisive votes, the Senate rejected the Edwards-Harkins proposals.(9) Industry representatives continue to meet with key members of Congress to defend DTC advertising as providing important and necessary medical information to consumers.


POLITICAL ADVERTISING

Candidates, political parties and independent groups spent over $1.6 billion on TV ads in the 2004 election, more than double the previous record of $771 million set in 2000.(10) While political advertising is an increasingly significant category, most commercial agencies traditionally do not produce political ads. In AAAA's study of its members - who comprise 80% of all U.S. agencies - less than ½ of 1% of its membership is involved in political advertising in any capacity.

While political advertisers deal little with other forms of advertising, they face many of the same issues as commercial agencies. Political advertising is protected by the First Amendment, but there are many critics of the current state of political campaigns and their advertising strategies. Many believe that political advertising has become too commercialized and too expensive, giving those with greater assets an obvious edge in their campaign efforts. Many steps have been taken to bring about campaign finance reform as the cost of political advertising reaches unprecedented levels.

(Information for this section taken from the AAAA Bulletin #6356; 4/5/04: Political Campaigns Could Significantly Affect Other Media Business in 2004)


TOBACCO ADVERTISING

Tobacco advertising was once one of the most controversial issues within the industry. In the 1980's and 1990's, the industry and tobacco manufacturers came under attack for having promoted a product with known health risks. Tobacco raised many ethical dilemmas for the industry and for those who profit from its sale. The fundamental issue surrounding the tobacco debate is whether tobacco ads are protected by the First Amendment, given the deadly effects of tobacco intake and exposure. The following is an outline of the crucial factors considered in the tobacco advertising controversy.

Background

In 1965, the Surgeon General's office issued a report that forever changed American smoking habits. The report linked smoking to lung cancer, heart disease and other health problems. Before the report, 44% of Americans smoked; recently that figure has dropped to a record low of 22.5%.(11)

In 1969, the Federal Communications Commission (FCC) proposed a total ban on broadcast advertising of cigarettes. The industry responded by offering to adhere to a voluntary ban. The issue was resolved in 1970 when legislation was passed banning all broadcasts of cigarette advertising, effective January 1971. Mandatory health warning labels followed the next year. In 1985, the American Medical Association called for a complete ban on cigarette advertising of any kind. The ACLU, the Freedom to Advertise Coalition (FAC), and others denounced the proposal as government-sponsored censorship.

Tobacco Regulation

Responsibility for tobacco regulation rests with Congress, which has delegated primary regulatory authority to the FTC along with a dozen other federal agencies. However, in 1996 the Food and Drug Administration (FDA) sought to regulate tobacco as a drug. The AAAA and the FAC went to court to ask for an injunction against the FDA, arguing that Congress had assigned regulatory authority to the FTC. The lower courts upheld this decision and restrained the FDA from moving forward with the initiative. In 2000 the issue reached the Supreme Court where, in a 5-4 ruling, the Court ruled that the FDA did not have the legal authority to regulate tobacco as an addictive drug as it had not been granted this authority by Congress. However, this ruling may be effectively overturned with a bill recently passed in the Senate. On July 15, 2004, in a 78-15 vote, the Senate approved a bill that would essentially allow the FDA to assume full control of all tobacco related products - their advertising and promotion. The specific measure is part of a larger payout bill to compensate tobacco growers for declining sales. The AAAA, ANA, and AAF have denounced the measure as "content-based censorship of advertising." The bill has yet to reach the House and as such, has not yet been enacted into law. The consequences of transferring total control of tobacco production and advertising to the FDA are unknown. Advertisers will challenge the bill if passed.(12)

American Legacy Foundation - "Truth" Campaign

Founded as part of the $206 billion settlement reached by the states and the tobacco industry, the mission of the American Legacy Foundation is to "unsell" cigarettes to young people. To realize their mission, the Foundation launched its controversial "Truth" campaign in 2000. With the help of several advertising agencies, the Foundation produced a series of ads exposing the hard facts about the risks of smoking. A great deal of money went into the campaign. Funding has declined in recent years, however, due to the economic downturn. Philip Morris and Lorillard have also been producing extensive anti-smoking messages targeted to the younger market.

In spite of reduced funding, the latest information available indicates that the "Truth" campaign appears to be making an impact. The Centers for Disease Control and Prevention (CDC) reports that 29% of high school students smoke; down from 36% in 1997. The CDC attributes the drop to not only the anti-smoking campaign, but to higher cigarette prices and health education programs.(13)

Many industry experts fear that increased regulations of tobacco ads may lead to further regulation of other controversial products such as condoms, alcoholic beverages, lotteries, and certain "unhealthy foods." The Freedom to Advertise Coalition and the AAAA are actively contesting governmental efforts to regulate tobacco advertising as well as other legal products.

 


FOOTNOTES

1. Columbia University National Center on Addiction & Substance Abuse 2002; Justice Department 2002; MD Underage Drinking Coalition.
2. Wagenaar et al, 2000.
3. Center for Disease Control and Prevention.
4. Elliott, Stuart. Anheuser-Busch Reconsiders Ads. The New York Times. April, 2004.
5. CAMY: Fact Sheet. The Internet, Alcohol, and Youth.
6. Ibid
7. AAAA Bulletin. Many Media Outlets Refuse Placement of Ads for Online Gaming/ Department of Justice Continues Interests in Ads. July 13, 2004.
8. American Association of Advertising Agencies.
9. American Association of Advertising Agencies
10. USA Today, November 26, 2004.
11. American Demographics, CDC Analysis. February 2001.
12. AdAge. Senate Passes Bill Curbing Tobacco: Measure Empowers FDA to Regulate Advertising. July 16, 2004.
13. Centers for Disease Control and Prevention, 2002.

 

 

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