Advertising to Children

Advertising to children is a sensitive and emotionally-charged issue because children are easily influenced and like to experiment with new things. The proliferation of products, advertising, promotions and media targeted to children is of concern to lawmakers, the industry and the general public. Children's advertising is under attack because it is perceived as "making kids want what they don't need" and puts pressure on parents to respond to those needs. More recently, advertising is accused of being a factor in causing children's obesity. While there are more regulations in effect than ever before, there is a public outcry for even more.

Much is at stake. The children's market today (through age 12) is estimated to represent $500 billion, consisting of both personal spending of $200 billion--primarily for snacks, soft drinks, entertainment and apparel--and $300 billion in directly-influenced spending in these same categories plus food, toys, health and beauty aids, gifts, accessories and school supplies. Another $500 billion worth of purchases are indirectly influenced in categories such as recreation, technology, vacations, etc. The spending power of children is, altogether, in the area of $1 trillion. (1)

According to the American Academy of Pediatrics (AAP), the average child watches about four hours of television a day and sees more than 20,000 commercials each year, often for high-fat, high-sugar and high-salt snacks and foods.(2) By the time American children finish high school, they have spent nearly twice as many hours in front of the television set as in the classroom. (3)

LEGISLATION

The debate about Children's advertising has prompted legislation over the years. Members of Congress have introduced bills to limit advertising time on children's programming, mandate educational content of those programs and restrict "program-length commercials."

In 1990, The Children's Television Act was passed and remains in effect today. Interpreted and enforced by the Federal Communications Commission (FCC), it applies to the networks, local broadcasters and cable operators. The bill stipulates that for:

Ages 12 and under: The amount of advertising aired during children's programming should be limited to 10.5 minutes per hour on weekends and 12 minutes per hour on weekdays -- still more than for adult prime time;

Ages 16 and under: The FCC is required to consider the amount of educational programming that a broadcaster presents in approving license renewals and examine the role of "program-length commercials." (4)

The FCC subsequently ruled that a program based on a toy or children's product cannot contain advertising for that product within the program, although it may directly follow the program. "Program-length commercials," however, are not prohibited for fear of jeopardizing positive shows like Sesame Street, despite the fact that it has inspired countless lines of toys.

The FCC also proposed that stations be required to broadcast three hours of educational children's programming per week. Six years later (July 1996), this proposal became an
FCC ruling which broadcasters (not cable operators) must adhere to in order to qualify for license renewal.

The FCC recently accused Viacom Inc. (parent company of Nickelodeon) and the Walt Disney Company (parent company of the ABC Family Channel) of violating limits on the use of advertising during children's programming. In October 2004 Viacom and Disney together agreed to pay $1.5 million in fines, the largest total fine the FCC had ever levied involving commercial advertising and children's programs. (5)

A GROWING CONCERN: ADVERTISING FOOD TO KIDS

Childhood and adolescent obesity is fast becoming a global health concern as figures reach epidemic proportions. Almost 16% of adolescents ages 12-19 and 15% of children ages 5-11 are currently obese. These numbers have more than doubled for children and tripled for adolescents in the past two decades. As is the case with tobacco and alcohol, political leaders, consumer advocates, and legal professionals have attributed the growing rate of childhood obesity to unregulated advertising.

The issue of food marketing and obesity had only surfaced in state legislatures and local courts in June 2004 when Senator Tom Harkin (D-Iowa) introduced a broad bill to combat chronic disease and obesity. This bill, which was not passed in 2004, but is viewed as a possible precursor of future legislation, would have granted the Federal Trade Commission (FTC) the power to restrict advertising to children.(6) The issue is gaining momentum at a fast pace with urgings from the World Health Organization (WHO) and the American Psychological Association. The WHO has already issued white papers in several other countries, documenting the relationship between food advertising and childhood obesity, and as a result, several European Union (EU) countries have placed restrictions on food advertising. The WHO was a leader in the fight to restrict tobacco advertising worldwide and affected a great deal of change in this respect. They will undoubtedly play an important role in this new debate. The American Psychological Association has echoed the WHO in a recently released report, calling for more stringent regulations of child-targeted food advertising.

The outgoing chair of the FTC (in 2004) and the Secretary of Health and Human Services both oppose restricting advertising in favor of educational campaigns to better inform parents and children about good eating and fitness habits. To this end, an ad campaign was launched by the Ad Council.

Industry response to the issue of obesity and food advertising to children has been preemptively strong. In June 2004, The National Advertising Review Council (NARC) issued a White Paper entitled, Guidance for Food Advertising Self-Regulation, setting forth the major issues surrounding the volatile debate over food advertising and childhood obesity. Citing the epidemic figures of childhood obesity, NARC recognizes that food advertising may indeed be a factor in the epidemic's fast growing rate. However, rather than calling for restrictions, NARC has proposed increased self-regulation by marketers and advertisers. NARC believes that it is within its power to bring about closer monitoring of food advertising to children. (Please see Addendum on the Children's Advertising Review Unit (CARU) at the end of this presentation.)

Likewise, many agency organizations such as the American Association of Advertising Agencies (AAAA) and the Association of National Advertisers (ANA), as well as food manufacturers, oppose legal restrictions on food advertising. Along with Coca Cola, McDonalds, General Mills, and Nestle, the AAAA has formed the American Council on Fitness and Nutrition to promote physical activity in schools, effective nutrition education, and applied research on how to bring about lasting behavioral changes. The industry believes that any legal injunctions against food advertising is a violation of the First Amendment. The AAAA has formed a lobby with some of its members to appear before Congress in order to voice industry concerns about the growing movement to impose restrictions on food advertising. Many have dubbed food "the new tobacco" and the industry is preparing to protect and defend its position.

While there are no federal restrictions in place in the U.S., food marketers are doing what they can to help curb the obesity problem. Kraft has voluntarily suspended advertising of some of its less-nutritious products, like Kool-Aid and Oreos, from television, radio and print aimed primarily at children age 6 to 11. Fast food chains, such as McDonalds and Wendy's, are now offering healthier alternatives to french fries and soft drinks.

INDUSTRY POSITION

Advertisers need to gain the trust of children and their parents through effective and honest advertising. In turn, parents must take responsibility for their children: monitor what they watch and read, determine how they spend their free time, and educate them to become responsible and informed consumers. Advertising to children will become less controversial only when advertisers and parents assume mutual responsibility for its content and exposure.

With respect to broadcast advertising, the industry believes that current guidelines - - the careful review and approval process of commercials by the advertiser, its agency, and the station or network that will air the advertising - - provide sufficient controls for children's advertising. According to the AAAA, whose member agencies place more than 80% of all national advertising in the U.S., product commercials aired during children's programming are designed to "show the product's features and explain its benefits in terms understandable to children and sensitive to their special attitudes and perceptions."

ADDENDUM
CARU: A SELF-REGULATORY ORGANIZATION FOR CHILDREN'S ADVERTISING

The Children's Advertising Review Unit (CARU) was founded in 1974 to promote responsibility in children's advertising as part of a strategic alliance with the major advertising trade associations through the National Advertising Review Council (NARC) comprising the AAAA, the AAF, the ANA and the Council of Better Business Bureaus (CBBB). CARU is the children's arm of the advertising industry's self-regulation program and evaluates child-directed advertising and promotional material in all media to advance truth, accuracy and consistency with its Self-Regulatory Guidelines for Children's Advertising (www.caru.org/guidelines/index.asp) and laws. Although the great majority of its inquiries are the result of its own monitoring, CARU also entertains consumer complaints and challenges from competing advertisers. CARU also provides educational and consulting services to assist advertisers in adhering to its policies.

CARU's Guidelines are used as the industry standard. The networks have guidelines similar to CARU's, while cable stations are independent and individually select which guidelines to follow.

OVERVIEW OF CARU GUIDELINES
CARU's Guidelines address the level of children's knowledge, sophistication and maturity. They apply to all advertising directed to children under age 12, including print, radio, broadcast and cable television, as well as the Internet.

CARU's Guidelines cover the following eight areas:

• Product Presentations and Claims
• Sales Pressure
• Disclosures and Disclaimers
• Comparative Claims
• Endorsements and Promotions by Program or Editorial Characters
• Premiums, Promotions and Sweepstakes
• Safety
• Interactive Electronic Media

INQUIRIES BROUGHT BEFORE CARU
When an advertisement appears misleading, inaccurate or inconsistent with CARU's Guidelines, CARU requests that the advertiser substantiate any objective claims or demonstrate (through consumer perception, safety or other studies) that the advertising otherwise complies with the Guidelines. If a claim cannot be substantiated, or compliance with the Guidelines cannot be verified, the advertiser is asked to modify or discontinue the advertising. If the advertiser declines to comply with a CARU decision, CARU will refer the matter to an appropriate government agency - in most cases the FTC or state attorney general. If an advertiser disagrees with CARU's decision, it may appeal to the National Advertising Review Board (NARB) - a representative group of advertisers, advertising agencies, media and the public sector which is the appellate branch of the National Advertising Review Council (NARC), the advertising industry's self-regulatory forum.

In 2003, CARU initiated 144 inquiries, up from 119 in 2002. Of these:

• six were substantiated
• 134 were modified or discontinued
• one was sent to the FTC
• three were compliance cases where the advertiser had failed to comply with a prior decision.

The self-policing system works. Since 1974, all but ten of the inquiries investigated by CARU were resolved through the self-regulatory process. None of these has been appealed to the NARB, one was referred to the FCC and nine have been referred to the FTC. Violations of CARU's voluntary guidelines occur more often on independent stations and cable channels than on network affiliations.

(Note: See Industry Regulations section.)

CARU GUIDELINES FOR INTERACTIVE MEDIA

CARU's Guidelines address all media. However, increased understanding of children's use of the Internet contributed to the development of specific guidelines for interactive media in 1996. In order to correspond with the Children's Online Privacy Protection Act (COPPA), which became effective in April 2000, these guidelines apply to Web sites directed to children under 13 years of age.

AAAA supports maximum possible self-regulation for the Internet, but continues to work with government regulators to formulate privacy protection for all online consumers, including children. AAAA generally characterized the COPPA rules as workable, and applauded the designation of the CARU Guidelines as a "safe harbor" under COPPA.

The guidelines related to the Internet include:

• Reasonable efforts, using all available technology, should be made to establish full disclosure and choice exercised by a parent or guardian when a site wishes to obtain personally identifiable information from children for marketing purposes.
• Advertisers who maintain children's sites should not knowingly link their sites to pages of other sites not in compliance with CARU's guidelines.
• Advertisers who communicate with children via e-mail should remind and encourage parents to regularly monitor their children's e-mail and online activities.
• Information collected for the purpose of obtaining verifiable parental consent should not be kept in retrievable form by the site if consent is not received in a reasonable amount of time.

While these guidelines highlight issues unique to Internet and online advertising to children under 13, they should also be used within the broader context of overall Guidelines, which apply to advertising in all media.

FOOTNOTES

1. Paul Kurnit. KidShop.
2. The New York Times. June 2, 2002.
3. The New York Times. August 3, 2004.
4. Cable operators are exempt since the FCC does not approve its licenses.
5. The New York Times. October 22, 2004.
6. The New York Times. July 21, 2004.

AEF

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