Ad-Vantage

Writers Guild Wants to Push the Product Placement Envelope

2009-10-22T02:03:00.008-04:00

by Adonis Hoffman

The Writers Guild of America has petitioned the new Chairman of the Federal Communications Commission to pass new rules on product placement.

Specifically, the WGA wants the FCC to regulate more strictly the disclosure of commercial products that are embedded in program content.

My view is this:

"Arguments for stricter rules for embedded advertising imply there is an underlying harm simply because a product appears in the show. We cannot forget the guidance the Federal Trade Commission provided on this issue when it ruled that when a product merely appears in the content without making a claim it is little more than a prop.

"If more clarification is needed, a statement at the end (or even the beginning of a program) noticing that some 'props' in the show were paid for, would seem to address the issue of transparency. Beyond that, there remains the issue of harm. Thus far, no one has made a clear or compelling case that consumers are harmed by products merely appearing in the content."

Cheerios Combatting Cholesterol

2009-05-12T23:35:00.005-04:00

FDA: Cheerios Claims Could Make It A Drug

Must stop promoting as reducing cholesterol by certain percentage or face seizure and injunction

See article at: Broadcasting & Cable

By John Eggerton -- Broadcasting & Cable, 5/12/2009 2:46:03 PM MT

The Food and Drug Administration has warned Cheerios that it will either have to stop promoting the cereal as reducing cholesterol by a certain percentage or face seizure and injunction against manufacture.

That is because if it continues to maintain that the cereal can lower cholesterol by 4% in six weeks, the FDA says, the government will consider the cereal a drug, and a new drug at that, which cannot be marketed at all without being submitted first for approval to the FDA.

That is according to a letter to the company on the FDA web site.

Cheerios maker General Mills stood by the claim, but said it would work with the FDA to address its concerns.

The FDA letter, dated May 5, gives General Mills 15 days from receipt of the letter to correct the violations or face "enforcement action without further notice," adding that "[e]nforcement action may include seizure of violative products and/or injunction against the manufacturers and distributors of violative products."

The FDA points out in the letter that it has approved the claim that soluble fiber from whole grain oats, which Cheerios is made from, is associated with a reduced risk of coronary heart disease. The claim can also include that Cheerios, for example, reduces that risk via lowering LDL cholesterol. Where the claim by Cheerios manufacturer General Mills runs afoul of the rules is by including a percentage of reduction. The rules state that the claim cannot attribute any degree of risk reduction for heart disease, and the FDA considers LDL cholesterol (so called "bad"
cholesterol) levels to be a "surrogate endpoint" for coronary heart disease.

In a statement, General Mills spokesman Tom Forsythe defended the cereal's claims. "Cheerios' soluble fiber heart health claim has been FDA-approved for 12 years, and Cheerios' "lower your cholesterol 4% in 6 weeks" message has been featured on the box for more than 2 years," he said. "The science is not in question. The scientific body of evidence supporting the heart health claim was the basis for FDA's approval of the heart health claim, and the clinical study supporting Cheerios' cholesterol-lowering benefit is very strong. The FDA is interested in how the Cheerios cholesterol-lowering information is presented on the Cheerios package and website. We look forward to discussing this with FDA and to reaching a resolution."

At press time, the company was still promoting the cereal on its Web site as helping reduce cholesterol by 10% in one month.

“I don’t understand the FDA’s logic in issuing a warning letter to General Mills for their claims that Cheerios can lower your cholesterol,” said Adonis Hoffman, senior VP and counsel for the American Association of Advertising Agencies. “If the claim is truthful, not misleading and can be substantiated, what sense does it make to require a food product to be treated like a drug? Where does such a policy lead us when it comes to claims for healthful foods such as broccoli, milk, eggs, beef, oatmeal and many, many more?”

Erectile Dysfunction Commercials are Not Indecent

2009-05-06T15:04:00.008-04:00

by Adonis Hoffman

On April 29, Congressman Jim Moran (D-VA)introduced HR 2175, the "Families for ED Advertising Decency Act".

The legislation would change the law to require the FCC to interpret and enforce its regulations to treat any ad for "a medication for the treatment of erectile dysfunction or for male enhancement" as "indecent material" and prohibit such ads on radio or television from 6 a.m. to 10 p.m.

Recognizing that many things often get turned around in the heat of the debate, I felt compelled to point out a few important facts. Let's call them the 10 C's of ED advertising.

1. Concern for Children--Underlying the legislation is a legitimate concern for protecting children from inappropriate commercial messages. This is a lofty and laudable objective for any public policy, and as a parent I agree totally with the goal. Although the bill has this aim, the proscribed enforcement will not accomplish the objective.

2. Conditions--We often lose sight of the fact that ED commercials promote medicines for a legitimate medical condition, which while ridiculed, is no laughing matter to the thousands of men and couples who suffer from it.

3. Comfort--One of the many side effects of ED medications beyond headache, loss of vision, and nausea, is the ominous "four hour erection" . Because FDA regulations require these ads to cite all known benefits and risks, this side effect has to be plainly stated or articulated. That alone, makes many people uncomfortable.

4. Censorship--The new law would require the FCC to treat ED advertising the same way it treats highly salacious visuals, pornography and other "indecent"material. This would amount to an unacceptable level of government censorship, which if polled, probably would be rejected soundly by the average man or woman on the street.

5. Constitution--There are serious questions as to whether such a ban on advertising would pass the Court's long-developing test for the protection of "commercial speech". After all, as long as the ads truthfully promote a legal product, the government has to show a compelling interest in limiting their publication and get around a presumption that there may be less restrictive alternatives to such a limitation. It is doubtful the Moran bill could pass these well-established constitutional tests.

6. Conversation--Often overlooked in the debate on DTC advertising in general, is the fact that these commercials have proven to drive patients to doctor's offices and as a result, engage in a conversation about their health. In the case of ED, thousands of men not only have begun the conversation, but in the course of treatment have discovered they suffered from previously undiagnosed conditions, including high cholesterol, diabetes, and hypertension. For men of color, these conditions are even more prevalent.

7. Clearance--Any commercial that appears on broadcast television has gone through a series of clearances to make sure they meet a laundry list of criteria. In the case of ED commercials, the clearances have been even more strict, as pharmaceutical companies and their advertising agencies now voluntarily submit the ads in advance to the FDA for its opinion as to their propriety. Of course every network has its own in-house standards and clearance advisor (often called censors) to make sure that commercials and program content meet their standards.

8. Code--The Pharmaceutical Manufacturers of America (PhRMA), the trade association for drug companies, instituted an industry-wide set of Guiding Principles on DTC advertising which establish a notable self-regulatory regime. Sweeping in their application, the PhRMA Guidelines set up very reasonable rules of the road for drug advertising. Principle 16 speaks to this problem directly: "In terms of content and placement, DTC television and print advertisements should be targeted to avoid audiences that are not age appropriate for the messages involved. In particular, DTC television and print advertisements containing content that my be inappropriate for children should be placed in programs or publications that are reasonably expected to draw an audience of approximately 90 percent adults (18 years or older)."

9. Corporate Responsibility--The behavior of the drug companies in upholding this principle can be viewed as a matter of corporate responsibility. Responsible advertising requires them to take into account the impact of their messages on society. If it can be shown that these commercials are having a negative impact, the companies should, as a matter of good corporate citizenship, adjust when and where they are broadcast.

10. Constructive Compromise--As with most things in life, the solution to the problem Congressman Moran has identified probably lies in a compromise of some sort. Is it not reasonable for Congress to go back to the pharmaceutical industry and ask it to enforce its own self-regulatory code? Can't Congressman Moran enter into a constructive dialogue with the big drug companies to discuss this issue? Wouldn't that be more productive than a prolonged and costly legal battle which surely would ensue over the constitutionality of the law, should it pass?

In sum, there are many more arguments to be made against legislation that prohibits ED ads than those in favor. Now in the interest of full disclosure, I do advise advertising agencies on legal and legislative matters in Washington. But it seems to me, the solution here is more a matter of common sense conversation between policymakers and big pharma than anything else.

(c) 2009. All rights reserved

View more news videos at: http://www.nbcwashington.com/video.

Danger Signs for Advertising and Marketing

2008-02-18T08:12:00.007-05:00

by Adonis Hoffman

Unless something changes, advertising as we know it today could be headed for a cataclysmic run-in with policymakers who would like to impose more, not less, regulation on the industry. My suspicion—and fear—is that in a dynamic, fast-paced, new media environment, industry self-regulation may no longer be enough to withstand the inclination of government to regulate industries that it does not understand and are too large to ignore.

I believe there are twelve (12) indicators that portend more, not less, governmental regulation of advertising in the future.

Over the course of the next few days, I will comment on these indicia with a degree of, I hope, some insight.

I should say at the outset that none of these indicators have anything to do with a lack of effectiveness of industry self-regulation. As any astute observer will attest, the advertising industry’s self-regulatory framework works extremely well. It is efficient, saving government thousands, if not millions, of dollars in routine oversight and enforcement. It is effective, compelling compliance with well-recognized principles for ethical and responsible advertising. And the system has been lauded by successive chairmen of the Federal Trade Commission as a model for other industries to follow.

But sound reasoning and rationale has never been a deterrent to governmental intrusion before, and I’m afraid it may not be a deterrent going forward in the new media environment.

So, here goes:

The first sign of danger is advertising is a big industry, and it’s getting bigger.

At an estimated $600 billion, the advertising industry is large and growing. Even with cyclical expansion and retrenchment, the sector will continue to grow steadily over the next five to ten years. It is a juggernaut whose tentacles touch every other sector of the global economy.

Since its rather pedestrian beginnings at the turn of the century, advertising has become more sophisticated, more ubiquitous, and—according to its many critics—more intrusive than ever. Its reach is global. Its impact virtually incalculable, even though billions of dollars are spent each year trying to do just that. Measurement of advertising’s value and reach has become a science with its own lexicon and subculture. And the laws that have evolved to regulate, limit and allow advertising are multiplying, as cities and states join the federal government’s efforts to contain the advertising juggernaut.

Advertising is an indispensable element of competition, and competition spurs the technological innovation that makes appliances, cars, computers, personal services, and much of what we need to live, quite affordable indeed.

The tremendous growth of the Internet has opened up yet another medium for advertising products and services. Online advertising dollars recently eclipsed radio, and print, television and cable are sure to follow at some point in the not-too-distant future.

The salient point about the size of the advertising industry is not to stand it in competition with other industries. My concern is that advertising has grown much too large for government regulators and policymakers to ignore or leave alone. It remains one of the biggest industries—outside the Internet—that has remained largely underegulated. Or put a better way, it is one of the biggest industries with its own self-regulatory framework augmented by light-touch government regulation.

(c) 2008. All rights reserved

Advertising Makes the World Go Round

2008-02-11T10:02:00.001-05:00

by Adonis Hoffman

You cannot pick up a business magazine or newspaper today without reading a headline about advertising. “Google Acquires Ad-Serving Network;” “Microsoft Makes Bid for Yahoo's Advertising Network"; “AOL Abandons Pay in Favor of Ad Supported Service.” And the list goes on.

For an industry that has been overlooked, overshadowed and under-appreciated, advertising is finally getting its long overdue credit. The business world has figured out what everyone in advertising has known all along: advertising makes the world go round. In 2006, over $150 billion was spent on measured media advertising. Growth of 4 percent is projected for 2008.

Advertising, after all, is something of a shadow industry, akin to the “invisible hand” Adam Smith used to describe the force that guides free market capitalism. It undergirds the core of almost every major industry and has been the economic backbone of the media business since inception. Unfortunately few have publicly attributed such prolific economic power to the advertising industry, so the folks on Madison Avenue have had to pat themselves on the back over the years.

Until recently, the advertising industry had a latent inferiority complex that deepened whenever a new technology or “new thing” got credit for driving economic growth. Other sectors have looked down on advertising for decades, treating it as a lesser-than, but necessarily tolerable, component of whatever (bigger) business they are in. But all that is changing. With private equity confirming the multiples surrounding advertising, economic respect is on the way. There’s a palpable self-confidence permeating the advertising business today, even amidst the financial and cultural problems the industry perennially faces.

But with higher stakes come higher barriers to entry. Advertising agencies themselves can no longer afford to make horizontal acquisitions. The entrance of big money players has changed the rules of the game for the foreseeable future. The signs are clear, and in the words of Fergie and the Black-Eyed Peas: “If you ain’t got no money, take your broke a** home.”

Without doubt, advertising’s ascendance owes much to the maturation of digital, interactive and broadband technologies. The advertising models driving today’s market were heretofore impossible because the media platforms were neither reliable nor well-developed. Annual spending on online advertising recently surpassed spending on radio advertising, and it is on target to bypass newspaper, magazine and other media in the not-too-distant future.

So what does all this mean and why is it important anyway?

First, paid-for consumer content could slowly die. The proliferation of ad-supported networks provides so much choice that paid content will have to be extremely rich, highly targeted or extremely narrow to demand subscriptions. Cable television remains the glaring and profitable exception with its dual revenue streams.

Second, advertisers could slowly eclipse media as arbiters and developers of non-news programming content. In an environment where consumer choice abounds and media lack leverage, advertisers can be the kings of content if they choose to exercise their market power. As more media move toward a pure-play advertising model, the big challenge for advertising creatives will be to remain relevant and part of the mix.

And third, speaking of power, at the end of the day, it is all moving slowly but surely toward the consumer who alone determines which media platform(s) to watch, support and include in their social networks. Advertisers must find new ways to keep them engaged and interactive, while at the same time respecting their privacy, tastes and individual priorities—a daunting, but not impossible challenge for the future of advertising.

Common Sense on Product Placement

2008-02-05T10:14:00.000-05:00

AAAA, ANA Push FCC on Product-Placement Rules

w w w . b r o a d c a s t i n g c a b l e . c o m

American Association of Advertising Agencies, Association of National Advertisers Meet with FCC Commissioner McDowell

By John Eggerton -- Broadcasting & Cable, 2/5/2008 5:40:00 PM

Advertisers and agencies are trying to get the Federal Communications Commission to seek more comment and information before deciding to adopt new rules on product placement.

In a meeting Monday with FCC commissioner Robert McDowell, representatives of the American Association of Advertising Agencies and Association of National Advertisers said that if the FCC did anything, it should open an inquiry rather than proposing rule changes.

According to a filing at the FCC, they argued that the commission's existing sponsorship-identification rules are sufficient and cited the Federal Trade Commission's 2005 finding that no action was warranted on product placement absent a showing that it was unfair, deceptive or harmful.

Adonis Hoffman of the AAAA and Daniel Jaffe of the ANA said their associations would also like to clarify for the FCC the different types of product placement, including the differences between paid endorsers, products that are "embedded" in programming but are not sponsored, products that are embedded but make no claim about a product and paid-for product integration.

© 2008, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

America Interactive--The Republic is Not Yet Safe

2007-12-12T10:29:00.000-05:00

By Adonis Hoffman

If history is any barometer, it will not be long before a well-meaning public servant comes up with a solution to a problem that does not exist. Policymakers just might over-react to new technologies they do not quite understand. For some, the default position becomes: when in doubt, regulate. Or at least try to regulate.

In line at the DuPont Circle Krispy Kreme in Washington, I could not help but notice the young woman ahead of me who was peering intensely into her video iPod. On the screen was a podcast of last Sunday’s Meet the Press. I asked her how she liked watching programs on such a small screen and whether it was worth the time and effort. She said her husband uploaded all of her content every morning, and sent her off to work with more programs than she could watch—all without commercials. “And, oh by the way,” she said, “we don’t really watch much TV at home, nor do we have cable—he gets most of this stuff online.”

As a parent of two teenagers, I am rapidly becoming an interactive expert out of necessity—not unlike a jailhouse lawyer—because there is so much I need to know just to keep apace in the day-to-day world of digital convergence where music, games, voice, video, products, goods and services are all within the grasp of a handheld device. In the wrong hands—say that of a fourteen year old male—this could be disastrous either due to the cost or the content. But for a responsible adult, this new world is simply marvelous.

When I talk with advertisers seeking to master today’s new world order, I encourage them to leave their value judgments at the doorstep. The ease of interactivity changes everything, not the least of which is how marketers vie for the attention of viewers, listeners and consumers. For the millions of Americans who love shopping from home via television, interactivity makes purchasing as easy as pressing a button on the remote control. For those who buy online, permission based marketing messages and RSS can cut through the usual clutter. And for wireless handheld devices, the sky is the limit.

While some experts say that better creative content is the key, I think the answer lies in the speed, personalization and medium of delivery. After all, when the ad for sales on the latest lacrosse sports gear comes over my son’s cell phone, he could care less about the creative content—although there are style points given for the “cool factor”. Three things make it most effective: First, the ad reached him where he was; second, it was for something he really wants and somehow opted into; and third, it caught his attention before and better than any other form of marketing.

But all is not rosy in this scenario. If history is any barometer, it will not be long before a well-meaning public servant comes up with a solution to a problem that does not exist.

My concern is that policymakers just might over-react to new technologies they do not quite understand. For some, the default position becomes: when in doubt, regulate. Or at least try to regulate.

This is not good for business, good for competition or good for end-using consumers. America, if not there already, is well on the road to complete media and marketing interactivity, and consumers appear to really like the power it gives them. Few people really understand how all the interactive technology works. Even fewer know anything about the complex interstitial relationships between suppliers, delivery systems and media platforms. What’s more, they don’t care.

What people care about is ease. Make it easy for them to do what they want to do with the medium that is in their hand, on their desk or in their family room, and they will be very, very happy. If marketers can help policymakers understand this simple, but powerful maxim, the republic will be safe for the pursuit of commerce, innovation and information.

If marketers do not succeed in making the case, we could see 20th century regulation imposed on new millennium technologies. Not a comforting thought.

© Adonis E. Hoffman, 2007

FCC Preps Product-Integration Inquiry--Adelstein's Pet Issue Part of Tentative Agenda for FCC’s Dec. 18 Meeting

2007-11-30T11:29:00.000-05:00

By John Eggerton
Broadcasting & Cable, 11/30/2007 11:29:00 AM

www.broadcastingcable.com

The Federal Communications Commission is preparing a possible crackdown on product integration in TV shows.

According to sources who have seen the tentative agenda for the FCC's December meeting, it includes a proposal seeking information on how and where to put on-air disclosures for products that advertisers have paid to be worked into the plot lines of shows.

Product integration is distinguished from product placement, where a product might be used as a prop. For example, Everybody Loves Raymond creator and executive producer Phil Rosenthal told a Hill hearing audience earlier this year about a Seventh Heaven episode in which Oreos were repeatedly mentioned by name and even featured in a marriage proposal in which the ring was embedded in Oreo cream filling.
The commission isn't proposing exactly what to do, the sources said, but the item -- which is expected to pass with the help of commission Democrats -- would signal that the FCC is serious about taking some action.

Democratic Commissioner Jonathan Adelstein, in particular, has pushed hard for better disclosure of paid and outside material used in broadcasts, including video-news releases and paid product plugs, but Martin had also pledged to look into it. The issue was also raised in public hearings on media-ownership rules.

Industry lobbyists will be meeting with FCC officials about the issue over the next couple of weeks. They are looking to avoid disclosures that would break up the flow of a show, such as a crawl across the bottom of that Seventh Heaven episode pointing out that Nabisco had paid for the privilege.

Adonis Hoffman, senior vice president and counsel to the American Association of Advertising Agencies, said the FCC should not go in with the presumption that there is a problem or tar new forms of advertising with the payola brush.

"There is quite a bit of misinformation and misunderstanding surrounding the very term 'product placement,'" he told B&C. "Today, the opportunities for advertisers to advance brands in multiple media platforms and formats are not limited to what we all grew up with. But just because there are new forms does not mean there is something inherently sinister going on."

He continued, "It goes against logic for any advertiser to hide its message, no matter where or how it appears. The fact that a product appears embedded in noncommercial content should not be cause for alarm, provided that there is ample opportunity during the credits for acknowledgement and disclosure. What we do not want to see is the association and mischaracterization of today's branded content with the unlawful practice of 'payola,' which everyone acknowledges is wrong ... Our members would look forward to helping the commission understand current practices, terms and trends in the business."

Product integration was among a half-dozen media items circulated among the other FCC commissioners by chairman Kevin Martin. None is a lock to make the final cut, which is released publicly seven days before the Dec. 18 meeting, and items could be pulled after that, as well.

Also on the list are several media-ownership-related items the chairman would probably like to take care of all at once, including a vote on the newspaper-broadcast cross-ownership rules (although pressure from the Hill could still potentially foil that plan); proposals to boost minority broadcast ownership, including a Martin proposal to lease digital-TV spectrum to minorities, women and small business and address broadcast localism; and a vote to cap cable companies' subscriber count to 30% of multichannel-video providers.

The package of broadcast-related issues would be an attempt to bring the 18-month media-ownership-rule review to a close, although, again, that could depend on how much push-back there is from Hill Democrats, who are holding hearings and trying to pass a bill that would block a media-ownership vote.

© 2007, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

The Advertisers' Advocate

2007-07-23T10:20:00.000-04:00

The Advertiser's Advocate

By Staff -- Broadcasting & Cable, 7/23/2007
w w w . b r o a d c a s t i n g c a b l e . c o m

Washington legislators are turning up the heat on advertisers over childhood obesity, drug ads and violent content, to name a few issues. Adonis Hoffman's job is to help explain why advertising should not be the government's “default” scapegoat. He is senior VP/counsel at the American Association of Advertising Agencies as well as director of the Center on Responsible Marketing and Media, of the American Business Leadership Institute in Washington. Complex problems can't be solved with simplistic solutions, he says. At stake is more than $10 billion worth of food advertising to kids.

How seriously are advertisers taking the childhood-obesity health issue?

The issue is perhaps one of the most important public-policy issues to come on the agenda in a while. First, we're all concerned about the health of children. Second, advertisers have been front and center on critics' lists as one of the leading causes of childhood obesity.

Is that a fair criticism?

I don't think so. It is clear that many, many factors contribute to childhood obesity. Advertising and marketing is remote at best. While policy makers, public-health experts and the food industry search for solutions, the implications for business are extremely important. Marketers of junk foods have been postulated by many as the chief contributors to childhood obesity. I think there is a disputable scientific basis for the claim, but it has taken root in an activist sector that wants to limit or abolish advertising.

You acknowledge that there is some industry responsibility for the problem as well as for the solution?

There is certainly a responsibility for the solution, and I think that, if you want to look at media as a factor in behavior, yes, media is a factor in behavior for a lot of things.

If childhood obesity is a legitimate threat, shouldn't the government step in to protect kids wherever it can, including regulating TV ads, as FCC Chairman Kevin Martin said it might have to do?

Here are some areas where the government can be helpful. How about lack of exercise? What about stimulating physical-education programs that get kids off the couch? Diet has a big, big role to play. Parental choices. Helping parents become wiser.

The FCC limits ads in children's shows. Why shouldn't it limit food ads in those shows, as Rep. Ed Markey (D-Mass.) has suggested?

The commercial time limits are a legitimate use of the FCC's regulatory authority because it has nothing to do with content. It's a time limitation. To take that authority and extrapolate it into content— as in, you can only advertise food that somebody determines is healthful—that gets us into a qualitative determination by the government into what we can say and consumers can hear. There is no such thing as an unhealthy food. There are unhealthy diets.

What is the biggest government threat to commercial speech?

I am very troubled by the notion that advertising and marketing has been seen as the cause of so many societal ills, whether it is obesity, the high cost of prescription drugs, violence. There has been an automatic default to go immediately to marketing and advertising.

What is driving this issue? Politics?

Sen. Sam Brownback [R-Kan.] and Sen. Tom Harkin [D-Iowa] have taken on the childhood-obesity issue and have legitimate concerns about the public-health issue. To ask the advertisers and marketers to come into a larger group of stakeholders is perfectly legitimate. To zero in on marketing and advertising as the single most controllable factor for solving the problem misses the mark. A lot of activity has developed around these issues. It is driven in part by public advocates and public policy, but it is also driven by the marketplace. I can't tell you how many Dateline NBC specials there have been on advertising to kids, junk food, the perils of food marketing. And yet in some very credible research and polls, parents rate marketing and advertising way down in the single digits as causes of childhood obesity.

On the viral-marketing front, the FTC has been asked to look into the practice. Should parents be concerned that kids are being sold products by marketers posing as fake online friends?

To the extent that those practices exist, they represent a very small portion of marketing and advertising practices. Social marketing is a reality. I would like to see disclosure for social marketers and buzz marketing. If my next-door neighbor who just got a Chevy Tahoe and says it is the best truck he's ever had and he is a paid endorser, I want to know that. But I don't think the viral marketing to kids is at such a serious level at this point. I would like to see perhaps an FTC guideline or rule that, like every other form of marketing, you have to be truthful, fair and accurate.

© 2007, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

Seeking Answers to Google-Doubleclick from FTC

2007-05-31T10:40:00.000-04:00

4A's And ANA To FTC: We Want Answers!

by Tameka Kee, Media Post, Online Media Daily
Thursday, May 31, 2007 6:00 AM ET

WITH A JOINT LETTER TO the FTC and the Justice Department, the 4A's and the ANA made it clear that marketplace restriction is one of the possible implications of the $11 billion wave of online advertising mergers and acquisitions.

"Advertising on the Internet is one of the fastest-growing sectors of marketplace promotion," the letter said. "Therefore, ensuring its competitiveness is critical for all participants."

So while market analysts, bloggers and journalists alike have been content to theorize how deals like Google/DoubleClick and WPP's acquisition of 24/7 Real Media will affect how online advertisers do business, the two major advertising associations want definitive answers.

"When all of the acquisition announcements came out, we said, there's so much stuff going on here and we don't know what the implications are," said ANA CEO Bob Liodice. "We simply asked the people who could best assess this to use the tools and ability and look at the market dynamics as a whole."

Given the FTC's wealth of antitrust experience, relative manpower and federal budget, the agency is well equipped to tackle both micro issues such as how the merged companies should handle pricing and inventory management, and macro questions such as whether the deals affect just online advertising or advertising as a whole.

While neither organization would comment on specific concerns, maintaining industry-wide competitiveness was a key consideration. "As a trade association, we have a vested interest in making sure that the Internet remains competitive as an advertising/marketing space," said Adonis Hoffman, legal counsel for the 4A's. "But it's fair to say that a lot of people are looking at the impact that these combinations will have on the marketplace."

Industry players--from publishers to brand executives to smaller ad networks--will be affected by how these deals play out, but independent agencies offer a unique perspective.

"I think the big issue will be what are the definitions of the categories of business," said Tom Bedecarre, CEO of AKQA, the largest remaining independent agency, which took a majority investment from private equity firm General Atlantic Partners earlier this year. "The people putting up noise are doing it for competitive reasons. It smacks to me of paranoia and fear in the face of change."

According to Gal Trifon, Eyeblaster's founder and chief executive officer, "these deals erase the familiar demarcation lines. When the dust finally settles after the recent frenzy of acquisitions, we believe that this complexity will drive demand for independent campaign management solutions."

MARKETERS GET THE MESSAGE

2006-11-15T17:19:00.000-05:00

Say what you will about product marketers, but they are nothing, if not smart. There is a new political wind a-blowing in Washington, with a Democratic House and Senate, and promises by lawmakers to look closely at business practices throughout the land.

That makes today's action by two different industries all the more prescient.

First, food companies that sell to kids have promised to be much more responsible in the products they advertise and the way in which those ads are delivered to our youngest consumers.

Second, the distilled spirits industry--makers of alcoholic beverages--conducted its first ever nuts and bolts media buying summit. The importance of this industry-led event is that alcohol makers are proving they want to do everything possible to make sure their products are not advertised in any media whose audience (readers, viewers, etc) is not comprised of 70% adults.

To the skeptics out there who say these self-regulatory initiatives were driven by the threat of government action, I say: "so what." It doesn't matter how these industries got to where they are--it only matters that they're here--and here to stay.

I am most impressed with the alcohol industry's educational efforts. It is bending over backwards to help distillers understand the societal and regulatory framework in which they operate, and to keep their marketing and advertising squarely within bounds. Other than those industries that are highly regulated (securities, pharmaceuticals), I do not know of many other self-regulatory efforts as robust or rigorous as that found among distilled spirits. Kudos to them for getting the message, and taking even more steps toward responsible advertising.

As for the food companies, their plan to launch new self-regulatory guidelines is exactly what the FTC had in mind when it encouraged the industry to review its messaging to children.

When policymakers and the public spoke, these industries got the message.

Adonis Hoffman, a former FCC and congressional lawyer, is a strategic communications expert in Washington.

The Senate, FCC Obesity Task Force

2006-09-28T10:53:00.000-04:00

AAAA's Praises Obesity Task Force

By John Eggerton -- Broadcasting & Cable,
9/28/2006 3:18:00 PM

The American Association of Advertising Agencies Thursday praised the task force on media and obesity launched by Senator Sam Brownback with an assist from FCC Chairman Kevin Martin.

"We commend Chairman Martin and Senator Brownback for broadening the public policy conversation on obesity to include industry and media as well as consumer groups," said AAAA senior VP Adonis Hoffman. It is currently a Republican-heavy bipartisan effort, but Brownback said they planned to reach out to both sides of the aisle.

Brownback and Martin both said in announcing the task force Wednesday that its goal was industry-government cooperation, not regulation.

Hoffman was all for it: "I hope the Task Force will lead to a solid public-private partnership and viable solutions to address a growing societal problem," he told B&C.

"Every credible study concludes there are many factors contributing to childhood obesity, including less physical education time in schools, parental choices in diet, and more time spent on computers," said Hoffman. "Advertising is way down on the list.

The task force is seeking input from a variety of sources, and Hoffman suggests some of that should accentuate the positive. "As food companies and advertisers continue to adjusted their messages to accentuate healthy choices, they should be applauded by policymakers for responsible action."

© 2006, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

Meeting the Challenge of Diversity on Madison Avenue--Testimony of Adonis Hoffman before NY Human Rights Commission

2006-09-26T10:47:00.000-04:00

Statement of Adonis E. Hoffman, Esq., to New York City Council,
Commission on Civil Rights, Sept. 26, 2006

Chairman Seabrook, Members of the City Council,

Good afternoon. My name is Adonis Hoffman. I am Senior Vice President and Counsel for the American Association of Advertising Agencies, also known as the 4-As. I also serve on the board of the Center for Responsible Media and Marketing, which is a think tank focused on the issues of responsible media policies and practices, and formerly on the board of the Black Education Network, a New York-based broadcast network focused on delivering quality content to African Americans. Before this, I had the honor of serving as a Senior Counsel to the Chairman of the Federal Communications Commission, where I headed up an inter-agency task force on advertising practices.

I appreciate the opportunity to testify at your hearing today on this important topic. My testimony today is in two parts. Part one is on behalf of the American Association of Advertising Agencies, which was invited to testify at the hearing. Part two is in my private capacity as a communications lawyer who has been involved in this issue for the last ten years.

I am joined at the table today by the Honorable Victor Frazer. Mr. Frazer is a former Member of the U.S. House of Representatives. He is a lawyer, and has been one of the distinguished outside advisors to the advertising industry on this issue.

PART I—On Behalf of the American Association of Advertising Agencies

1. Headquartered in New York, the 4-As is comprised of over 450 advertising agencies and media agencies throughout the country. These large and small agencies are responsible for approximately 75 percent to 80 percent of the advertising placed in all media in the U.S.

2. Several of our member advertising agencies and media companies received invitations to testify here today. Those agencies asked that the 4-As, as the industry trade association, collate their testimony into written form and submit it for the record on their behalf. And we are happy to do that.

3. As has been well-publicized in the media, 16 advertising agencies in New York signed individual agreements with the New York Commission on Human Rights to bolster employment diversity and the numbers of African Americans within their middle and senior ranks.

4. These agreements were historic inasmuch as no other industry has made such commitments. Chairman Patricia Gatling of the Human Rights Commission and her staff deserve high marks for moving the industry forward.

5. As the advertising agencies sealed their negotiations with the Human Rights Commission, it was agreed that they would be free to proceed with their diversity plans without any hearings on the issues that were resolved as a result of many months of negotiation. Thus, following the advice of their individual legal counsel, the agencies, as you can understand, opted not to appear today. I believe there were a number of corporations that opted-out as well.

6. As a courtesy to you, Mr. Chairman, and out of our respect for the City Council system, we did not want to let the opportunity go by without affecting the record on this issue.

7. Consequently, I would like to submit this report on Advertising in New York Media for the record today.

8. This report was compiled by experts in the New York media industry who are familiar with both the challenges and opportunities that exist when it comes to this category.

9. The data were derived from independent, third-party data collection sources and standard industry research sources, including Nielsen Ad-View, TNS, Audit Bureau of Circulation, and Arbitron. These are not estimates and are not sourced from advertising agencies, but reflect standard industry measurements.

10. Much of the report is technical, and some of the data were taken from proprietary sources. Unfortunately, as much as I would like to claim to be, I am no expert in this area.

11. If you have questions or comments about the report, I am sure it can be arranged for industry experts to discuss the details with you and your staff at a working session, or if you prefer to submit them in writing.

12. I would also submit for the record a copy of Principles & Best Practices for Diversity and Inclusion in Advertising Agencies. This document was issued by the 4-As to provide guidance to its member agencies on a range of issues relating to diversity, including the expanded utilization of minority media. It was produced after consultation with a number of concerned individuals from around the country who served on the Diversity Advisory Board. I draw your attention to the fact that the Principles and Best Practices calls for increasing minority contracting by all agencies.

Finally, Mr. Chairman, the advertising industry would urge you to explore productive rather than punitive initiatives to further diversity and inclusion in the advertising and media industries.

I appreciate the opportunity to testify today. This concludes my remarks on behalf of the American Association of Advertising Agencies.

Part II—Personal Statement of Adonis Hoffman

Councilman Seabrook, now, if I can take off my advertising association hat for a moment, and speak to you in a different voice. And that is as a communications lawyer who has observed the landscape from both inside and outside of government. I would like to offer your committee a few recommendations.

First, the question of inclusion in any industry is not something that lends itself to a fast, easy solution. There are any number of industries in this country, and this City, for that matter, that have serious, serious, challenges when it comes to diversity. From Wall Street, to the broadcast networks, to the editorial rooms, to the law firms, to the accountants, insurers, and almost any other major industry, the representation of minorities, generally, and African Americans, particularly, is woefully low, especially at the most senior levels.

As the merger of major communications companies continues and consolidation within the media industry increases, opportunities for smaller players are shrinking. I say smaller players because most minority media are small players. The number of minority and black-owned media are shrinking. Whether due to lack of access to capital, increased competition from the general market media, paucity of financial resources, sale of the business by the founder, or just plain old racism, it is a fact that black media have a particularly difficult time surviving. For every BET success story, there are the untold hundreds who could not make the payroll, meet the deadlines, or cover the rent.

As media becomes larger and more bundled, it becomes increasingly more difficult for smaller and independents to survive. It is a reality that affects not only media, but also minority-owned advertising agencies, too. Their survival is something to be concerned about as well.

The real challenge is to stimulate opportunity and ownership for black and minority firms in the advertising and media space. It seems to me there are two highly laudable goals:

1. Increasing the overall number of black and minority-owned media; and

2. Increasing the current utilization of black and minority media by major corporations.

Meeting that challenge will take a sustained and multifaceted approach, and the City Council of New York can play an important role. By adopting a broader approach to the issue of economic development, the Council can investigate ways to stimulate and promote minority ownership of media and media-related entities.

Here are six recommendations:

1. Develop a City program to produce more minority owners of print, television and radio media in New York.

2.As the center of finance and private equity, the City of New York should find ways to involve the capital markets in the goal to increase minority media ownership.

3.The City should investigate the use of tax credits to stimulate investment in minority-owned media companies and to encourage minority media utilization.

4.The City should investigate tax holidays or other investment incentives for minority entrepreneurs starting media companies.

5.To facilitate access to capital, the City could provide incentives to financial institutions who lend to minority media owners.

6.To spur further economic investment and development, the City should expand its economic development zones as an incentive for media companies to locate businesses there.

Mr. Chairman, I am not an economist, but it seems to me there are any number of financial inducements the City could come up with to promote the growth and development of minority media ownership in New York.

Recognizing that city government is limited in scope and resources, it becomes even more important to partner with independent private sector entities to reach these goals. As the original architect of many of the initiatives on the table today, Mr. Sanford Moore should be encouraged to play a more constructive role as an interface between the City and the private sector. I understand that Moore’s group has had discussions with agencies and advertisers on a series of programs to achieve these very objectives. Before the City Council proceeds with more hearings, it should allow for private initiatives to take root.

As everyone knows, the media and advertising industries are at the core of a vibrant New York economy. I am sure you will find willing partners among every stakeholder if this constructive approach is followed. In short, Mr. Chairman, it is in the best interests of the City, the advertising and media industries, and minority firms alike to find ways to work together on these important issues.

I appreciate the opportunity to submit these remarks to your committee.

Responsible Advertising: Who Determines What is Right?

2006-06-12T14:07:00.000-04:00

For better or worse, the rules of advertising are changing. I’m not talking about new techniques or creative concepts here, or even the Big Idea. Nor am I referring to the latest technologies surrounding product integration, search marketing, interactive platforms, or anything as intriguing as that.

The growing challenge for advertisers is not how to reach consumers where they are—marketers know how to do that very well—but how socially responsible the message is once it reaches those consumers. The new rules of advertising have more to do with responsibility than with Return On Investment. It is not the medium, it is the message.

We are witnessing the dawning of a new era of “responsible advertising” that seeks to protect consumers from advertising that someone, somewhere, deems socially and politically incorrect. Even if we stipulate there are categories of advertising that can—and should be—disallowed, responsible advertising goes well beyond traditional notions of content regulation. For example, should values become an indispensable part of the advertising mix?

Bolstered by political rhetoric and a conservative mood in Washington, the would-be arbiters of responsible advertising claim a public mantle, if not a public interest. Most would like to see advertising go entirely away, but would surely settle for heavier regulation at the end of the day. And they seem to be getting nearer to that goal every year. Because it is impolitic for big corporations to wage extended war with do-good public interest groups, companies prudently have disengaged from that battle and taken initiative on another front.

More and more advertisers are choosing to aggressively self-regulate the marketing of products or categories that some critics have found to be objectionable. Since most large companies have a working familiarity with the mandates of social responsibility in other areas, applying those principles to marketing and advertising has not been difficult.

Last summer, prescription drug makers established a new code of marketing practices and set up an Office of Accountability to review direct-to-consumer drug commercials. More recently, a leading food company decided not to advertise some of its products on children’s television programs that reach audiences under age 12. Many other industries have instituted marketing codes and established independent review panels. And the advertising industry has strengthened its unique self-regulatory regime through the Children’s Advertising Review Unit (CARU).

All of these actions suggest the emphasis on responsibility is well-placed.
What troubles me, though, is who gets to define responsible advertising.

Advertisers have a vested commercial interest in portraying their products in the best light possible. They are, after all, ultimately accountable to both their customers and shareholders in a competitive marketplace, and should be able to decide for themselves. It would be a mistake to abdicate this role to outside interest groups who want to do away with advertising altogether, or who would promote a system that only permits the marketing of products they alone deem to be good, healthful, nutritious, wholesome or necessary.

© 2006

Adonis Hoffman is a lawyer and strategic marketing and communications expert in Washington, DC. He is the founder and chairman of the Center on Responsible Media & Marketing in Washington.

Advertising to Kids on the Bus: Just Because You Can Doesn't Mean You Should

2006-06-09T16:40:00.000-04:00

Marketers must learn to balance their constitutionally-protected right to commercial speech against society's expectations that companies will behave responsibly. With every legally protected right comes a duty. In the marketing context, a company should recognize that just because it can legally do something, does not always mean it should. Occasionally, restraint is the better part of wisdom.

The need for such balancing was highlighted by the recent decision of a few municipal school districts to allow commercial advertising to kids on school buses this coming fall. An enterprising company has a new system that, according to the Washington Post, “will pipe into school buses around the country a private radio network that plays music, public service announcements, contests and ads aimed at kids as they travel to and from school.”

Apparently, there is nothing in law, regulation or policy that prohibits such advertising. To be sure, the school districts, suffering from funding cutbacks and shortfalls, could use the extra money. Advertising revenues could supplement a host of sorely-needed school expenditures ranging from teacher salaries to physical education programs.

But at what cost?

Marketers have much more to lose than to gain by going forward with such a plan. Doing so risks the wrath of many. Moreover, ads on school buses could bring unnecessary attention to the thriving business of advertising to children altogether—at a time when the practice itself is under considerable scrutiny.

Prudence suggests this is a bad idea. It is a bad idea not because advertising to children is wrong. It is a bad idea because advertising to children on a school bus is not wise.

Some things should be out of bounds, even if the rules allow them. It is a classic case of a short-sighted, context-void, idea that should not see the light of day. And just because advertisers can do it, does not mean they should.

If the last two years have proven anything to marketers, it is that children (and to a lesser extent youth) are in a very special category. Society demands and expects that they be treated differently by everyone, but especially by marketers and media. The siren song coming from Capitol Hill, interest groups and even consumers is blaring: we are watching.

Right now, advertising to children is undergoing a thorough review. Congress, the Federal Trade Commission and the Children’s Advertising Review Unit (CARU) of the Better Business Bureau all are examining ways to meet the challenges of a new media environment in which commercial messages aimed at kids seem to be coming from everywhere.

I believe the answer for all stakeholders involved lies in the balance between the rights of marketers on the one hand, and their capacity to be responsible corporate citizens on the other. If they are wise, marketers will refrain from exercising their rights and go to great lengths, instead, to prove their responsibility.

© 2006

Adonis Hoffman is a lawyer and marketing communications expert in Washington, DC. He is the founder and chairman of the Center on Responsible Media & Marketing.

Global Challenges in Advertising: A Look Across the Pond

2006-01-11T16:14:00.000-05:00

Twice a year, a distinguished group of advertising experts and practitioners from around the world convene under the aegis of the International Chamber of Commerce (ICC) to discuss major issues and challenges facing the marketing and advertising sector. The 2006 session of the ICC Commission on Marketing and Advertising was held in New York this week and was focused on emerging challenges to industry self-regulation.

Delegates came from Belgium, India, Italy, Mexico, the Russian Federation, Sweden, Switzerland, Turkey, the United Kingdom and the U.S., representing leading corporations, advertising agencies, media companies, trade associations and law firms involved in marketing, advertising and commercial communications. In addition to a broad discussion on the challenges of self-regulation, a dedicated task force met to review possible changes to the ICC Code of Advertising and Marketing Communication Practice.

While many who follow advertising issues in the United States may not be familiar with this group or the series of codes it promulgates, it is a big deal in Europe where the advertising sector and governments take the ICC's deliberations quite seriously. There, the ICC's position on marketing and advertising practice sets a high standard for a wide range of commercial marketing communications, and plays a key role in advertising litigation and enforcement.

International Self-Regulation

For example, the ICC Code sets out clear guidelines on basic matters such as decency, honesty, truthfulness and social responsibility in marketing and advertising. There is a decidedly protective (and some say over-protective)element to marketing communications directed toward children and young people, recognizing their inherent sensitivities. The Code speaks to everything from sales promotions, sponsorship, direct marketing, and the uses of electronic media to environmental advertising.

At its core, the Code is a self-regulatory framework that complements existing national and international laws. It is intended to bolster public confidence in advertising by showing that the marketing and advertising sector abides by the principles of corporate responsiblity and respect for consumers' privacy and preferences.

In Europe, there remains a patchwork of laws and regulations governing advertising of certain products such as food, and advertising to certain markets, such as children or youth. Variations from country to country make it difficult to plan global campaigns. The ICC Code provides companies with a credible and reliable set of guiding principles that respect those frameworks. As such, it is an indispensable tool for companies seeking to expand their global reach into new and emerging markets.

As the ICC turns its attention to newer practices involving product placement, branded content, and direct marketing, it is paying close attention to the concerns of consumers, regulators and non-governmental organizations in Europe. As it turns out, European concerns are not much different than those in the United States, especially on the matter of transparency and disclosure in commercial communications.

One other message is clear. Self-regulation in advertising, a practice that has been heralded in the United States by serial chairmen of the Federal Trade Commission from both political parties, is alive and well in Europe. The robust self-regulatory regime put forth by the ICC in its Code of Advertising and Marketing Communication practice is something in which the advertising industry can take pride.

Unfortunately, much of the good work and adherence to ethical principles remains hidden from the very consumers it is designed to protect.

(c) 2006 Adonis Hoffman

Food Advertising to Kids--A Winter of Discontent?

2005-12-15T10:12:00.000-05:00

We may look back to Winter 2005 as a seminal period in advertising. While nothing has changed, much is changing.

The title of the long-awaited report from the Institute of Medicine, "Food Marketing to Children and Youth: Threat or Opportunity?" may just say it all. The fact that a highly respected governmental body has raised tough questions about food marketing to children at all puts the industry in a hard-to-win position.

Even if we accept that current food advertising to children is benign (and there is ample evidence to support this assertion), the way that companies market, sell and advertise food products to youth, hereafter, will no longer be the same.

The Committee on Food Marketing and the Diets of Children and Youth, along with the Food and Nutrition Board and the Board on Children Youth and Families, all have concluded that "there is strong evidence that television advertising influences the food and beverage preferences of children ages 2-11, and that statistically, there is strong evidence that exposure to television advertising is associated with adiposity (body fatness) in children ages 2-11 and teens ages 12-18 years."

The Committee recommends that food and beverage companies should promote more healthful diets for children, including shifting their product portfolios to foods and drinks that are substantially lower in total calories, lower in fats, salt, added sugars, and higher in nutrient content.

With this and more stringent recommendations, food manufacturers must decide how much resistance to muster against an unmistakable mandate for healthier foods.

For some companies, this will be a simple call: phase out advertising of the suspect products--a move recently aplombed by Kraft and heralded by critics and policymakers alike. For other companies more heavily invested in the kids' food category, the decision could be much more wrenching, as the choice becomes (1)to continue in a significantly changed category or (2)leave it altogether. Certainly no easy call.

Whatever happens in the short-term, the long-term imperative is clear: the companies that make foods which appeal to children not only have to make their products different, but they also have to market and advertise them differently.

Any such changes are certain to affect the bottom lines of food companies and the advertising agencies involved. Only time will tell whether kids will become healthier as a result.

One thing is certain: Congress, regulators, children's advocates and the media will be watching with raised expectations. If for no other reason, that alone should propel the industry to continue its rapid and responsible course of action. In so doing, it will find there is goodwill to be gained among every quarter.

Plus, when it comes to children, everybody knows that a little bit of goodwill goes a long, long way.

(c)2005 Adonis Hoffman

Internet Advertising--A Tale of Two Cities

2005-11-30T09:56:00.000-05:00

"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way--in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received for good or for evil, in the superlative degree of comparison only."--Charles Dickens, 1858

There is much ado about Internet advertising these days.

In New York, the epicenter of the advertising world, interactive advertising is ascendant. Internet advertising has grown from $6 billion in 2002 to nearly $13 billion this year, according to research firm, eMarketer. Google's dominance in Web search and the expectation that it will reach $9.5 billion in ad revenue by 2006 has legitimized the mad migration of ad dollars to the online space.

Predictions by Veronis Suhler that Internet advertising will grow at an average of 24 percent a year over the next five years, compared with 7 percent for the advertising industry overall, add credibility, and perhaps rationality, to the exuberance. Plus, recent maneuvers by Microsoft, AOL and Yahoo to improve their place in the space suggest that the big players have figured things out and are increasingly significant to advertisers.

It seems that in the business world, companies are readily improving technology and techniques to reach consumers more efficiently. That is, after all, what the digital space delivers. As more Americans come to engage media online, marketers invariably have followed.

The tale in Washington is different; policymakers seem to see the world through a set of Dickensian lenses. As earnestly as marketers seek to expand the uses of interactive technologies, Congress is seeking ways to contain them.

Don't misunderstand. It's not that the government wants to do away with Internet advertising altogether. But in its sincere attempt to protect consumers from abusive behavior, government could just go too far.

In a recent meeting with Senate staff, a group of advertisng experts led by the American Association of Advertising Agencies (4-As), Association of National Advertisers (ANA) and the American Advertising Federation (AAF) made that point. In seeking to set the record straight on spyware and adware, their message was, "you can regulate conduct, but leave technology alone."

Norm Lehouillier, Managing Director of Grey Interactive told Senate staff that "when used ethically, adware and other forms of behavioral marketing can offer benefits to consumers and marketers. Unfortunately, like so many Internet technologies, there are bad guys who use the same technologies to deceive."

Mike Donahue, Exec VP at the 4-As reminded them that "reputable ad agencies working on behalf of major companies would be loath to abuse adware. Not only is it not smart business, but it's against industry guidelines which are spelled out in our Terms and Conditions for online advertising." 4-As Washington chief Dick O'Brien added: "We're the good guys. The culprits deploying spyware are not on Madison Avenue--they're taking shelter somewhere in Kazakhstan."

Nick Pahade, Managing Director at Beyond Interactive pointed out that "policies that protect and educate the consumer should not hurt marketers out there that use technology to create opportunity and efficiencies. The attention should be on prosecuting those who are taking advantage of emerging technologies for the wrong reasons."

Following the recent markup of the Burns-Boxer, SPYBLOCK bill by the Senate Commerce Committee, these admonitions should be well-received. The bill now appears to have the buy-in of most industry groups involved in internet marketing or advertising.

Perhaps the biggest paradox in the legislative effort is what Internet security expert Greg Blair of Blair Dubilier points out: "While computer exploits will continue as long as there are computers, we have seen a significant decrease in hijacked browsers and computers compromised by undesired and undesirable software during 2005. We believe this is due to improved security within browsers, better anti-threat software and most importantly increased user awareness of the techniques used by those seeking to install unwanted applications."

The Internet space is so dynamic that the online practices Congress is regulating against today, will soon become, if they have not become already, things that have gone by the wayside for a variety of reasons. There already has been a measurable decline in the type of spyware that seems to be at the heart of the Congressional effort, and the good guys (reputable advertisers and agencies) are simply not involved.

So as Washington continues to search for ways to protect Americans from Web abuses, marketers in New York and beyond are searching for ways to make abuses of Web technology unproductive, unprofitable and one day, perhaps, obsolete.

It is the best of times, it is the worst of times.

(c) 2005 Adonis Hoffman

Broadcast Decency on Congressional Horizon

2005-11-22T17:30:00.000-05:00

If you had any thoughts that Congress might be inclined to overlook media and advertising issues as it deals with more pressing matters of state, take a look at the Senate Commerce Committee's agenda for the next four months.

In the prelude to a long-awaited rewrite of the 1996 Telecommunications Act, the Commerce Committee will hold hearings on a broad range of media and communications issues. Some of the topics don't really have much to do with the Telecom Act, per se, but are far too juicy for policymakers to ignore.

It is probably no coincidence that the Senate chose to focus on "decency" and "pornography" as the first two hearings for January 2006. January is Super Bowl month in America, after all, and it was not too long ago that Janet Jackson's risque, breast-baring, half-time routine focused the nation's attention on the issue of decency in broadcasting.

The growing public enmity over indecent broadcasts has been seized upon by a few activists who are seeking nothing short of a sea change in the status quo. Citing Jackson, plus ABC’s prime-time, backside-baring promo for Monday Night Football featuring Terrell Owens holding a scantily-clad Nicollette Sheridan, and repeat offender Howard Stern’s liberal use of the F-word, these crusaders hope to chasten the media into adopting new cultural idioms.

In the interim, the FCC has issued a series of rulings on indecency, from broadcasts of Saving Private Ryan to the excited utterance of the F-word by a winning quarterback in a post-game interview. In one of his first high-level appointments, FCC Chairman Kevin Martin selected a senior official to monitor decency in the airwaves. We can bet that more, not less, scrutiny lies ahead.

So what does all this have to do with advertising, you ask?

Well, advertising is a creative medium that, in its earnest efforts to be funny, cool or edgy, often tests the current boundary line of social acceptability. These efforts have not gone un-noticed by policymakers and regulators who bristled at the "Go Daddy" commercial featuring a buxom brunette writhing in mock testimony before a Congressional hearing. To some, this bordered on indecent; to others it was simply a saucy--and completely acceptable--satire.

Since there is no bright-line test on broadcast decency, advertisers may be forced to guess, and, in so guessing, risk erring on the wrong side of the line.

Consider the FCC's current guidelines on indecency, taken from its website:

What makes material “indecent?” Indecent material contains sexual or excretory material that does not rise to the level of obscenity. For this reason, the courts have held that indecent material is protected by the First Amendment and cannot be banned entirely. It may, however, be restricted to avoid its broadcast during times of the day when there is a reasonable risk that children may be in the audience. The FCC has determined, with the approval of the courts, that there is a reasonable risk that children will be in the audience from 6 a.m. to 10 p.m., local time. Therefore, the FCC prohibits station licensees from broadcasting indecent material during that period.

Material is indecent if, in context, it depicts or describes sexual or excretory organs or activities in terms patently offensive as measured by contemporary community standards for the broadcast medium. In each case, the FCC must determine whether the material describes or depicts sexual or excretory organs or activities and, if so, whether the material is “patently offensive.”

In our assessment of whether material is “patently offensive,” context is critical. The FCC looks at three primary factors when analyzing broadcast material: (1) whether the description or depiction is explicit or graphic; (2) whether the material dwells on or repeats at length descriptions or depictions of sexual or excretory organs; and (3) whether the material appears to pander or is used to titillate or shock. No single factor is determinative. The FCC weighs and balances these factors because each case presents its own mix of these, and possibly other, factors.

Given this standard, I would not be surprised if a few Congressional champions of the public interest sought to tighten the standards on broadcast decency, and in so doing, include a little piece on advertising, too.

If that were to occur, advertisers would certainly find out where the new line on decency is drawn and, unlike today, they very well could be penalized for the slightest misstep over it.

(c) 2005 Adonis Hoffman

Senate Poised to Seriously Curtail Adware, Spyware

2005-11-17T14:43:00.000-05:00

The growing interest of Congress and regulators in Internet practices continues--this time with serious consequences for online advertising. Today, the Senate Commerce Committee is considering legislation that would significantly curtail the use of ADWARE and SPYWARE software on the personal computers of every American.

The SPY BLOCK Act

Introduced by senior Senate Commerce Committee member Conrad Burns (R-MT), S. 687, the “Software Principles Yielding Better Levels of Consumer Knowledge Act" (popularly known as the SPY BLOCK Act) authorizes the Federal Trade Commission to go after any person engaged in deceptive acts and practices related to SPYWARE, and imposes stiff civil and criminal penalties for violation of the law.

Intent

S.687 is intended to put an end to deceptive online practices that install surreptitious software on the computers of unsuspecting users without any notification or consent. It prohibits a number of practices that cause the installation of computer software through e-mail, viruses, and advertising messages, as well as software designed to capture the personal information of the user.

For example, the bill prohibits the use of Zombies and Modem Hijacking—programs that take control of the user’s computer by transmitting or relaying commercial E-mail or a computer virus—and puts it in the hands of an unauthorized user. It also prohibits software that attacks the computer to effectively deny any further service to the owner.

Putting An End to Endless Loop Pop-Up Ads

The legislation expressly prohibits the installation of software launched for the purpose of “opening multiple, sequential, stand-alone advertisements in an authorized user’s protected computer without the authorization of that user and with knowledge that a reasonable computer user cannot close the advertisements without turning off the computer or forcing an application to close using means other than the ordinary means for closing the application.”

Preventing Identity Theft, and Tampering With Security and Browser Settings

S. 687 would prevent the installation of software that enables the theft of personally identifiable information from the user. It also prohibits software that disables the security settings and browser settings of a person’s computer, including a page that appears when a person launches an Internet browser or opens a bookmarked page.

Uninstall Deception

The bill disallows software that falsely represents that a computer user has the option to uninstall the program, but does not allow them to do so, or that falsely directs a user to the Internet to remove the software.

Adware That Conceals Its Operations

In a clearly marked title, Section 6 of the legislation would prohibit software that “causes advertising windows to appear on the protected computer regardless of whether any other non-advertising-related functionality of the software or of other software installed as part of bundle with such software is (A) activated by the authorized user; or (B) conspicuously active on the protected computer.

Adware Labeling Requirements

The only way Adware can be used is if “the software displays to the user, each time the software causes an advertisement to appear, a clear and conspicuous label or other reasonable means of identifying to the user of the computer,

(1)The identity or name of the software that caused the advertisement to appear;

(2)If the software was installed as part of a bundle of software, the name of a program in such a bundle that the authorized user is likely to identify as the main component of the software bundle; and

(3)A clear and conspicuous hypertext link to instructions concerning how the user may uninstall the software causing the advertisement to appear through usual and customary means within the computer’s operating system.

The exception to this requirement is when a user is accessing or using an Internet website or online service that is (1) owned or operated by the author or publisher of the software; or (2) the owner or operator of which has authorized the author or publisher of the software to display such advertisements to users of that website or service.

Stiff Fines and Penalties

The legislation imposes stiff penalties for violations, especially if they are determined to be part of a pattern of practice. In those cases, the FTC can impose fines up to $3 million for each violation. In addition to the seizure of assets, the FTC also can force violators to disgorge any ill-gotten gains derived through the unfair and deceptive acts. The bill also allows state attorneys general to bring actions on behalf of aggrieved citizens in federal courts.

Mark-up Today, More to Come

The SPY BLOCK Act is set for markup today in the full Senate Commerce Committee. Stay tuned for results and further action on this bill and its companion legislation in the House of Representatives. With all of this attention, something is bound to happen this Congress

© 2005 Adonis Hoffman

DTC Advertising--A Fact Sheet

2005-11-16T10:00:00.000-05:00

The Food and Drug Administration (FDA) recently conducted two days of public hearings to review attitudes toward direct-to-consumer (DTC) advertising of prescription drugs. This follows a series of internal surveys, reports and hearings conducted by the agency over the last three years, all with the intention of possibly revamping the rules governing DTC advertising.

Whenever a federal agency opens the door to public comment, it is a good thing. It allows every conceivable stakeholder to go on record with its views--whether supported by data or not--and prescriptions for policy changes. The downside to this open record, however, is that a lot of misinformation becomes permanently indited in the annals of history.

In the interest of setting the record aright, I thought this brief fact sheet on DTC advertising might be helpful.

DTC Advertising Plays an Important Role in Public Health

A number of medical studies and public opinion surveys indicate that millions more Americans are being treated for previously undiagnosed diseases since the FDA expanded the use of advertising for prescription drugs in 1997.

Advertising can provide valuable information that can help save lives. It can lead consumers to identify and find solutions for serious medical conditions by making them aware of previously unrecognized conditions and potential treatments. There is a common sense reason why this information enjoys the protection of commercial speech under the First Amendment.

For example:

Prescription drug advertising has been part of a public health revolution. It informs patients more about their health and it is directly responsible for getting patients to visit their doctors. Surveys by FDA (2002) and Prevention magazine (2004) indicate that DTC advertising prompted between 23 and 30 million Americans to talk to a doctor about a new or previously untreated condition.

Advertising produces new diagnoses of clinically important conditions. Faculty from the Harvard Medical School and Harvard Business School, in a study for Health Affairs, found that DTC ads prompted a sizeable portion (35%) of patients to visit a physician for clinically important conditions. The authors, Dr. Joel Weissman and Alvin J. Silk, noted these conditions are often under diagnosed and under treated, and that approximately 43% of new diagnoses and 51% of existing diagnoses were "high priority" conditions such as high cholesterol, hypertension, diabetes, and depression.

Advertising raises health awareness and can lead to earlier diagnosis and treatment. DTC reaches out to the estimated 6 million Americans who suffer from diabetes but have not been diagnosed. As many as 56 million Americans have high blood pressure, and yet it appears that 18 million are unaware they have this silent killer. Another 8 million Americans know they have high blood pressure but are not taking medication. Advertising also can help the U.S. Public Health Service achieve its goal of increasing from 23% to 50% the treatment rate for the 19 million Americans who suffer from depression.

DTC advertising encourages greater patient compliance. As many as one-third of patients fail to take all of their prescribed medicine. These ads help remind people to properly use their medicines. 33% of respondents to a Prevention magazine study said the ads reminded them to refill their prescriptions, and 22% reported the ads made them more likely to take their medicine regularly.

The physician must write the prescription. Patients cannot go to a pharmacy and request a particular drug – a doctor must write the prescription after examining the patient and recommend the best treatment. FDA nevertheless requires that DTC advertising be accurate and balanced, and FDA has aggressively increased its oversight of these ads.

Insurance companies can safeguard against inappropriate prescribing or overuse of prescription drugs. They determine what drugs to cover under their formularies and the amounts they will reimburse for drugs. Co-payments also are a critical component of patient compliance.

Prescription drug advertising is constitutionally protected commercial speech, and Americans recognize the value that these messages offer them. The U.S. Supreme Court for 29 years has continuously elevated the standard for protecting this and other forms of commercial speech. The Court has held, "As to the particular consumer's interest in the free flow of commercial information, that interest may be as keen, if not keener by far, than his interest in the day's most urgent political debate."

These facts support both the value and legality of DTC advertising. Words to the contrary belie a long and persuasive public record that speaks in favor of allowing more of this kind of information to American consumers, not less.

(c)Adonis Hoffman 2005

Advertising To Children: A Fact Sheet

2005-11-09T12:46:00.000-05:00

Advertising and marketing to children is one of today’s most controversial issues. Throughout the world, governments are engaged in ongoing debate on the impact of marketing to children and whether there should be limits to that marketing. In many European nations, there is an outright ban on television commercials that target kids under the age of twelve.

In every society throughout the world, children are sacred. As God’s gift, these young creatures are to be guided and nurtured by their parents. As the most vulnerable members of society, they are to be protected by the law of the land.

When it comes to advertising, children present a wrenching paradox. They comprise a major market for the makers of toys, clothes, and foods, among many others. It is a market that grows steadily every year, and is global in scope. Yet, by their very nature, children are a special class. They are impressionable. They have difficulty discerning fantasy from reality. They are easily influenced by cartoon and other fictional characters. The lack sophistication and discernment. They are vulnerable to cultural and societal influences. They rely on the wisdom and judgment of their parents.

Special Care in Marketing to Children

Because children are special, marketers must behave responsibly in their advertising practices.

Responsible advertising of products to children has been an important issue for both the advertising industry and the government in the United States. For almost thirty years, the advertising industry has upheld self-regulatory guidelines for advertising to children. In 1972, the Association of National Advertisers published the Children’s Advertising Guidelines to encourage truthful and accurate advertising that would be sensitive to the unique needs of children.

In 1974, the National Advertising Review Council (NARC), a strategic alliance of the advertising industry and the Council of Better Business Bureaus (CBBB), established the Children’s Advertising Review Unit (CARU) to promote responsible children’s advertising, and to serve as an independent manager of the industry’s self-regulatory program. The NARC Board of Directors is drawn from key executives of the CBBB, the American Association of Advertising Agencies (AAAA), the American Advertising Federation (AAF) and the Association of National Advertisers (ANA). This board sets policy for CARU's self-regulatory program, which is administered by the CBBB and is funded directly by members of the children's advertising industry.

In 1975, CARU edited and republished the Self-Regulatory Guidelines for Children’s Advertising, and revised the guidelines again in 1977, 1983, 1991, 1995, and 1996 to respond to new developments and growing public concerns. The most recent revisions focus expressly on data collection and privacy on the Internet. CARU, with the support of its industry partners and patrons, has been a beacon light of responsibility and practical guidance on children’s advertising.

Basic Principles for Advertising to Children

The advertising industry has developed six basic principles for advertising directed toward children:

1. Advertisers should take into account the level of knowledge, sophistication and maturity of their audience. Younger children have a limited capacity to evaluate the credibility of the information they receive or to fully understand that information; therefore advertisers have a special responsibility to protect children from their own susceptibilities.

2. Advertisers should exercise care not to unfairly exploit the imaginative quality of children.

3. Advertisers should communicate information truthfully and accurately, and in language understandable to children, recognizing that the child may learn practices that affect his/her health or well-being.

4. Advertisers should capitalize on the potential of advertising to influence behavior by developing advertising that addresses positive and beneficial social behavior such as friendship, kindness, honesty, justice, generosity, and respect for others.

5. Advertisers should take care to incorporate minority and other groups in advertisements in order to present positive and pro-social role models, where possible, and to avoid negative stereotyping.

6. Although many influences affect a child’s development, it is the prime responsibility of the parents to provide guidance to their children. Advertisers should contribute to this parent-child relationship in a constructive manner.

Incorporating these principles into their marketing messages, advertisers continue to pursue responsible ways to advertise to children. In a dynamic environment of new media and new technologies, balancing innovative and creative messages with principles of responsible advertising is one of the many challenges faced by advertisers.

(c)2005, Adonis Hoffman

Beware, Adware, Washington Is Watching

2005-11-08T14:36:00.000-05:00

Creators and users of adware should beware. Over the past few months federal lawmakers and regulators have turned a keener eye to the growing business of online advertising. Usually such increased scrutiny can mean only thing--more regulation.

As millions more advertising dollars migrate to the Internet, and online advertising technology becomes more sophisticated, Congress and the Federal Trade Commission (FTC) are examining measures to protect privacy and to stem abuses. A growing number of consumer complaints have led the FTC to step-up its enforcement against unfair and deceptive marketing practices.

In two recent reports, the FTC examined adware in its review of new online practices. In a March 2005 staff report entitled, Monitoring Software on Your PC: Spyware, Adware, and Other Software the FTC noted that "adware is spyware if users have not received clear notice about what the software will do or have not provided adequate consent to its installation or operation."

In a later report entitled, Peer-to-Peer File Sharing Technology: Consumer Protection and Competition Issues, the FTC noted that "software bundled with peer-to-peer file-sharing programs can have a range of effects. Some of the bundled software will cause consumers to receive ads on their computers. Some bundled software can have deleterious effects. For example, once downloaded to a user's computer, the software can impair computer operation and performance, and even cause the computer to crash. The software also can compromise the user's privacy, such as by facilitating the theft of personal information, monitoring of communications, and tracking of an individual's online activity. In addition, some of the software programs use tactics to prevent users from uninstalling them, or remain active on a computer even after the user deletes the software."

Some in Congress have expressed concern that certain peer-to-peer websites are riddled with pornography, citing a simple P2P search for a song by a popular artist that led to a site containing graphic and inappropriate images. Noting that unsuspecting families and children could be exposed to inappropriate material through adware and spyware, critics point out that banner ads for legitimate, well-known, businesses also have shown up on these sites.

So far,the FTC acknowledges there are legitimate commercial uses of peer-to-peer technology that employs adware, but it urges industry to do a better job educating consumers and finding technological solutions to stem widespread abuses.

For its part, the advertising industry appears to understand what is at stake if it does not find a self-regulatory solution to adware abuse. This solution may be easier said then done; many of the bad actors are companies that lurk outside the mainstream of the industry, and it would be unfortunate if the good guys get painted with a broad brush.

Complying with consumer demands and regulatory expectations should not be a problem for legitimate marketers going forward. The challenge, instead, will be to keep policymakers convinced of the commercial benefits of this evolving technology. It's only the beginning.

(c) 2005, Adonis Hoffman

Blaming Advertising for Societal Ills

2005-11-04T15:23:00.000-05:00

by Adonis Hoffman

Advertising is under attack. It is becoming accepted orthodoxy to blame advertising and media for the many ills afflicting our society today, from childhood obesity to rising rates of violence. American kids getting fatter—must be all those cereal and food commercials. Higher prescription drug prices--surely the result of those expensive commercials. Crime getting worse--must be the video games.

The ensuing public policy fiction is that society’s problems can be fixed quite simply by ceasing all commercials. This is a chimera of the worst order.The rationale runs the risk of becoming dogma for groups who want nothing more than to stop any advertising for any products, anytime.

By positioning advertising as the problem, the anti-commercial lobby has been able to concoct a convenient panacea—muzzle the messengers and all will be well. This rationale is behind the various campaigns to stifle or seriously curtail advertising for products people do not like or agree with.

What about some of the proximate causes for our problems. In the area of childhood obesity, for example, shouldn't we consider the fact that parents themselves are more overweight than ever before, so kids stand to be more obese too.Or with both parents working outside the home, fast food has become a larger and more convenient portion of the family diet.Or that budget cuts for physical education programs in public schools leave children less active.Or that our kids spend more hours in front of a computer screen, video game or television set than playing ball in the back yard.

Maybe, just maybe, these things have as much—if not more—to do with growing rates of obesity among America’s children as does advertising. And not to be overlooked is the role of parents in designing the family regimen for diet and exercise.

In the area of rising prescription drug prices, a few influential voices have pointed the finger at advertising as one of the key contributing factors. This thinking has guided (or misguided) efforts to do away with the direct-to-consumer advertising of prescription drugs, or to disallow the tax deductibility of advertising as a legitimate business expense.

Let’s be real.Advertising is not always the beacon of public enlightenment that its advocates earnestly contend.Most of the time, it is little more than tolerable infotainment—lingering somewhere between information and entertainment. But neither is it the bete noir that critics claim either.As Dick Sittig once noted, “If advertising was that powerful, then people would believe there’s talking fruit in their underwear.”

The value of advertising lies in the fact that it drives commerce, employs millions of people in one form or another and pays for the newspapers, magazines and yes, television programs, we all love to rail against for having—you guessed it—too much advertising.

In fact, as advertising executive Bruce Barton aptly put it: "Advertising is of the very essence of democracy. An election goes on every minute of the business day across the counters of hundreds of thousands of stores and shops where the customers state their preferences and determine which manufacturer and which product shall be the leader today, and which shall lead tomorrow."

Perhaps, most importantly, advertising undergirds competition. And competition spurs the technological innovation that makes appliances, cars, computers, personal services, and much of what we need to live, quite affordable indeed.

The handwriting is on the wall. Cultural critics and activist interest groups have learned how easy it is to serve up a bogeyman big enough to blame for just about anything wrong in America today.With over $141 billion spent on advertising last year, Madison Avenue conveniently fits the bill.

Seeking responsible solutions to society's problems can be a daunting challenge for our policymakers. In their earnest efforts to solve societal ills, scapegoating advertising would be neither good nor enlightened public policy.

© 2005, Adonis Hoffman

A Dose of Reality on Prescription Drug Advertising

2005-11-03T17:26:00.000-05:00

Amidst the emotional appeals to end direct-to-consumer (DTC) advertising of prescription medicines, we should not lose sight of a few harsh realities.

Prescription medicine is one of the most highly regulated industries in the United States--as it should be. As part of this process, the marketing of those drugs is closely monitored and governed by a set of rules, regulations and practices that have evolved over the years, and that have been tested time and again in the courts.

DTC advertising is now a $4.5 billion communications category that brings valuable health product information to millions of Americans. The length of time it takes to get a drug through the FDA approval process and onto the market averages 8.5 years. Given that the health and safety of millions of people are at stake, that appears to be a reasonably safe period of time. Once the drug is approved by the FDA, drug manufacturers should remain free to market their products, but only subject to well-defined procedures.

One such practice--voluntary submission of commercials to the FDA before they are aired or published--insures that the ads pass FDA muster before going public. FDA statistics indicate that well over 90 percent of commercials are submitted by agencies and advertisers in advance, and receive prior approval before appearing in the media.

Now accepted as a customary prerequisite and industry orthodoxy, voluntary advance submission of drug ads effectively gives the government--not the advertiser--final control over the marketing messages that are communicated to American consumers. While this makes perfect pragmatic sense, the long-term legal effect of this practice is that advertisers of prescription drugs have surrendered their constitutional right to speech without advance government censorship--often referred to as prior restraint of speech.

In the hustle and bustle of writing ad copy, producing commercials, obtaining client approvals, and ultimately satisfying the FDA, advertisers probably give little thought to the constitutional implications of the last step in the process. But let's be clear: it is not insignificant.

Some would say this concession is a small price to pay for getting the product to market or keeping the regulators at bay. Others suggest that it is merely the cost of doing business. But we should not lose sight of the irony. If, somehow, Congress or the FDA were to legislate or regulate mandatory prior review of all drug advertising, it is likely the courts would strike it down. This would result in the status quo. The burden, once again, would fall to advertisers to find ways to communicate their products in a responsible manner. Voluntary advance submission, if nothing else, meets that burden

Hard-line critics calling for the abolition of prescription drug advertising tend to gloss over these realities. They pooh-pooh industry self-regulation as public relations puffery. And they rarely acknowledge the complexity and legal give-and-take inherent in the creative process that produces the commercials and print ads everybody criticizes.

We can stipulate that there is no perfect system that will achieve every public policy objective, and the current system has its flaws. In the aftermath of Vioxx both regulators and industry have been chastened on the matter of drug safety.
But Vioxx notwithstanding, disallowing the widespread communication about safe, FDA-approved drugs that stand to benefit millions of people is not prudent public policy.

In giving short shrift to current industry efforts and practices, those who call for the demise of DTC advertising have lost sight of the reality that medicines save lives, and information empowers people.

© 2005, Adonis Hoffman