As an industry, advertising recognizes its obligation to consumers with
regard to truth in advertising by enforcing self-imposed regulations to
prevent or modify deceptive and/or false claims in advertisements. They
1. Agency and advertiser checkpoints
2. Television and radio clearances
3. The self-regulatory systems:
- The National Advertising Division (NAD)
- The National Advertising Review Board (NARB)
- The Children's Advertising Review Unit (CARU)
- Local Advertising Review Panels (LARPs)
Since 1924, the American Association of Advertising Agencies (AAAA) has
had a written Creative Code. The current version of the code says:
We, the members of the American Association of Advertising Agencies,
in addition to supporting and obeying the laws and legal regulations pertaining
to advertising, undertake to extend and broaden the application of high
ethical standards. Specifically, we will not knowingly create advertising
a) False or misleading statements or exaggerations, visual or verbal
b) Testimonials that do not reflect the real opinion of the individual(s)
c) Price claims that are misleading
d) Comparisons that unfairly disparage a competitive product or service
e) Statements, suggestions or pictures offensive to public decency or
minority segments of the population
Within most agencies, creative (storyboards, copy and layouts) is screened
by the legal department to adhere to agency and client legal and ethical
standards. In addition, the advertiser's marketing department reviews
all creative and their research and technical departments approve all
product claims. Creative is then sent to the company's legal department
and frequently to top management for final review.
Further monitoring of product claims occurs at the individual television
networks. Before a commercial runs on a network, the storyboard and copy
must be submitted to its clearance department. Proof of product claims
may be requested, and a spot can be rejected for inaccuracy or bad taste.
Finished commercials are always submitted for final network approval before
they are aired.
Certain products such as toys and those with health-related claims, must
also be submitted to the Code Authority of the National Association of
Broadcasters. The Code Authority may reject a storyboard which networks
Each publication has its own policies and standards regarding the acceptance
of ads. They, too, have in-house departments set up for review purposes;
however, guidelines vary dramatically from one publication to the next,
and tend to be less stringent. Benetton print advertising is a good example.
The Benetton social conscience campaign, which ran for a number of years,
was extremely controversial with many ads singled out as offensive, particularly
their "Death Row" corporate campaign, featuring prison inmates.
Some magazines accepted these ads while others rejected them, each based
their decisions on their own standards, knowledge of their readership
and an awareness of the public outcry. Benetton parted ways with their
longtime Creative Director for a more mainstream campaign.
The mechanism employed to implement voluntary self-regulation nationwide
is the National Advertising Review Council (NARC), which is comprised
of the National Advertising Division (NAD), the National Advertising Review
Board (NARB) and, at the local level, the Local Advertising Review Panels
(LARPs). The NARC is a strategic alliance formed by the advertising industry
and the Council of Better Business Bureaus.
The system was established in July 1971 on a voluntary basis in response
to public disenchantment with the industry and an increase in regulatory
efforts. It was founded by the Association of National Advertisers (ANA),
the American Association of Advertising Agencies (AAAA), the American
Advertising Federation (AAF) and the Council of Better Business Bureaus
(CBBB). The NARC has continuously worked to protect the public from false
and misleading advertising. The NARC, together with the CBBB, provides
advertising with a comprehensive self-regulatory system unmatched by any
Since its formation in 1971, over 4,100 complaints have been successfully
handled. Considering that the typical consumer is exposed to over 3,000
commercial messages per day, this is evidence to the fact that the majority
of advertising is reviewed even before the public sees it.
In 2003 alone, the NARC handled 296 cases. Of those cases, 147 were presented
to the NAD, 144 to CARU and 5 to the NARB.
The NAD is the investigative division of the self-regulatory system.
It consists of a small group of full-time advertising review specialists
with backgrounds varying from legal to nutrition to corporate regulations.
They continually monitor television, radio and print advertising and research
those ads that may be inaccurate or misleading. The majority of cases
come from competitive challenges between national advertisers to particular
advertising claims. However, about 30 percent of challenges are brought
forth by ongoing monitoring conducted by the NAD and the rest are comprised
of challenges from consumers or the Better Business Bureau (BBB).
Some cases are resolved informally, (i.e., consumer complaints) while
others are referred to outside organizations depending on the nature of
the grievance. Some are out of the scope of the NAD's review, such as
issues unrelated to advertising (i.e., non-delivery of goods).
EXAMPLE 1: KFC Corporation
Basis of Inquiry
Due to its ongoing monitoring, NAD inquired about the truth and accuracy
of two television commercials for KFC fried chicken. The first commercial
claims that "Two Original Recipe chicken breasts have less fat than
a BK Whopper." The second commercial states "One Original Recipe
chicken breast has just 11 grams of carbs and packs 40 grams of protein.
So if you're watching carbs and going high protein, go KFC." Both
commercials end with the voiceover tagline "For a fresh way to eat
better, you gotta KFC what's cookin'!" NAD requested that KFC substantiate
its claims because of concerns that the commercials implied that eating
fried chicken is part of a healthy diet and can help you lose weight.
In response to the challenge, KFC submitted nutritional summaries as substantiation
for the express nutritional claims made in the commercials. KFC contended
that the advertisements do not convey the implied message that fried chicken
in general is healthy or that eating KFC can help people lose weight.
For that reason, it did not provide evidence addressing those concerns.
KFC also informed NAD that the commercials had been discontinued with
no plans to run them in the future.
NAD determined that the supers that appeared in the commercials did not
provide sufficient nutritional information or qualify the commercial's
health-related claims. However, because of NAD's concerns about the implied
messages regarding the healthfulness of KFC fried chicken, NAD appreciated
KFC's decision to discontinue running the commercials.
The NARB is the appeals body of the self-regulatory system. If the NAD
and an advertiser reach an impasse, either party may request review by
the NARB, an organization comprised of 85 members representing three different
categories: Advertisers, Advertising Agencies and Public/Academia. In
this instance the NARB functions as a peer review group. A panel of five
NARB members meets as needed to determine whether to uphold or overturn
an NAD decision. In this forum, involved parties express their viewpoints
via written statements that are used as the basis for a verbal hearing.
Even the largest advertisers usually adhere to the decision made in the
verbal hearing. If, however, the advertiser being challenged refuses to
modify or discontinue the ad in question, the matter is turned over to
the Federal Trade Commission (FTC), which is empowered to impose penalties.
Very few advertisers who have participated in the complete process of
an NAD investigation and an NARB appeal have refused to comply with the
EXAMPLE 2: General Mills, Inc.
Basis of Inquiry
Kellogg Company, maker of Special K cereal, challenged a comparative claim
by General Mills, Inc. in a television commercial for Total Cereal. Kellogg
argued that the commercial expressly and asserts that because Total has
more calcium than Special K, a diet including Total rather than Special
K will result in greater weight loss - (a claim declared in the absence
of any conclusive research comparing the weight loss performance of the
two cereals). The commercial merely restates the results of a recent "Zemel
Study" which was based on supplements, not cereals.
General Mills contends that the challenger misrepresents the plain wording
of the commercial and noted that the announcer clearly states that the
study referenced is a "study of calcium supplements and reduced calorie
diets," and not a study of cereals. Further, to prevent any miscommunication,
they added a super stating "study did not test cereals" - a
super that appears on screen for a significant length of time. The advertiser
asserted that its commercial is not misleading - it speaks about calcium,
its benefit, and where to find it.
NAD concluded that the challenged commercial conveyed an, albeit unintended,
message that simply substituting Special K cereal with Total in one's
reduced calorie diet, by itself, will result in more weight and fat being
lost - a message that the underlying science does not support. NAD further
concluded that the super contradicts rather than qualifies the implied
message conveyed. Consequently, NAD recommended that the commercial be
discontinued or modified.
General Mills, Inc. appealed the NAD decision to the NARB.
The panel agreed with the advertiser and determined that General Mills
has competent and reliable evidence to support the express and implied
messages reasonably conveyed by the challenged advertisement. NARB also
determined that use of the super is not contradictory to the messages
reasonably conveyed by the commercial.
The Children's Advertising Review Unit (CARU) was established by advertisers
in 1974 to promote truthful and accurate advertising to children under
the age of 12. CARU's Self-Regulatory Guidelines for Children's Advertising
go beyond the issues of truthfulness and accuracy by recognizing the effects
advertising has on an impressionable and vulnerable child audience.
Cases are brought to CARU in much the same manner as with the NAD. CARU
monitors children's print, television and Internet advertising routinely
and, on request, reviews ads prior to production. CARU then determines
whether ads meet its guidelines. CARU also provides educational services
to assist advertisers in adhering to its policies.
CARU has recently developed guidelines unique to Internet advertising
issues. In order to coincide with the Children's Online Privacy Protection
Act of 1998, the data collection guidelines apply to Web sites directed
to children under 13 years of age.
(Note: See Children's section.)
EXAMPLE 3: McNeil-PPC, Inc.
Basis of Inquiry
This commercial was brought to the attention of CARU through its routine
monitoring. A bouncing strawberry is shown attempting to squeeze into
the opening at the top of the Tylenol bottle. It then pushes its way into
the bottle, transforming its white outer shell to show a red liquid, similar
to fruit punch that children frequently consume. CARU's Guidelines state
medications, drugs and supplemental vitamins should not
be advertised to children." Given that the commercial aired during
Saturday morning children's programming, CARU took the position that this
product should not be advertised in such a time slot.
The advertiser informed CARU that its intended target audience for Children's
Tylenol is mothers of young children, not children themselves. Asserting
that the commercial inadvertently aired during Saturday morning programming,
the Advertiser provided CARU with its media plan, which demonstrated that
the advertising was targeted to air during daytime and evening programming
directed to adults. The Advertiser stated that it was taking measures
to help ensure that the spot airs during appropriate times in the future.
CARU determined that the representations made by McNeil-PPC, Inc. effectively
address CARU's concerns with respect to the subject advertising.
Because advertising - particularly at the local level - continues to
have a reputation for being untruthful, the CBBB (Council of Better Business
Bureaus) has decided to become more of a watchdog. In 1995, the Council
issued a renewed charter to local Better Business Bureaus to review local
advertising, respond to complaints and conduct ad reviews, similar to
what the NAD does on a national level.
If these bureaus are not able to resolve complaints, a local advertising
review panel will attempt to resolve the case. The LARPs have been given
their impetus from the American Advertising Federation (AAF) and the CBBB,
which have formed a partnership called the Joint Committee on Self-Regulation.
Rapid growth of the Internet has created ethical marketplace issues never
before considered. The Council of Better Business Bureaus (CBBB), together
with the Federal Trade Commission (FTC), has developed voluntary self-regulation
mechanisms that will maintain standards of truth in online advertising
directed to both children and adults.
A subsidiary of the CBBB, BBBOnLine has developed guidelines for corporate
Web sites. A "Code of Online Business Practices" will provide
guidelines to online merchants that address issues unique to the interactive
medium, such as consumer protection.
(Note: See Interactive presentation.)
There is general agreement that the advertising industry's self-regulatory
system has been a success. The role of the NAD/NARB has been highly praised
by the White House, Congress and the FTC. With guidelines in place, the
industry has the incentive to communicate truthful and accurate product
benefits to consumers.
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