Dealing with complaints about advertising in Australia: the importance of regulatory self-discipline

Many countries have imposed restrictions on tobacco advertising in the belief that these will curb tobacco consumption. These beliefs rely on the ‘strong’ theory of advertising, which holds that advertising exerts a powerful persuasive influence on consumers' behaviour. However, the research examining the advertising-consumption relationship has reached contradictory conclusions and led some to argue that such bans are ineffective.

In contrast, proponents of the ‘weak’ theory of advertising suggest that advertising reinforces rather than initiates consumers' behaviour. This paper explores tobacco advertising restrictions in the context of the weak theory and suggests that the apparent failure of increased restrictions to depress either juvenile or aggregate tobacco consumption is unsurprising. The paper concludes that decisions about tobacco advertising restrictions are political and should be based on ethical principles and not on assumed behavioural consequences, which are unsupported by modern advertising theory.     

Advertising and the Professions

This article aims to assess the consequences for prices and consumer protection of permitting professional advertising. The need to protect consumers given their lack of knowledge in the buying of professional services is seen as explaining the role of professional self-regulation particularly with respect to entry standards. But the case is not so strong for advertising restrictions, and it is shown that there are logical reasons to expect such restrictions to raise fees without much protecting the consumer. Empirical studies are surveyed confirming the favourable effect of advertising on prices. The conclusion reached is that specific advertising of fees and specialism would not necessarily be costly to monitor and would bring benefits in terms of increased price competition.     

The Impact of Price Advertising: The California Eyewear Market After One Year

Recent judicial decisions and regulatory actions have reversed advertising restrictions enforced in the professions. This study examined the degree to which such regulatory reform has in its first year resulted in increased advertising competition among California eyewear practitioners. It also analyzed price differences between advertising and nonadvertising ophthalmologists, optometrists, and opticians. The study found that while relatively few practitioners engaged in advertising, those that did charged 17 percent less than nonadvertisers.     

Standardized Advertising Campaigns

This empirical study examined U.S. advertising agencies' practices in Europe to decide whether they were promoting products and services the same way everywhere. Information regarding environmental factors and advertising strategy were gathered from 160 European affiliates of U.S. advertising agencies in 16 countries. It was found that in general, agencies were neither standardizing nor customizing their sales platforms and creative contexts. Instead they tended to utilize the adaptive approach-a strategy that seems to viewed as the ontimal approach when dealing in multiple foreign markets. Legal restrictions abroad was one of the major motivators for usage of adaptative strategies. More specifically, restrictions on claims their ads could make and limitations on hiring foreigners were stated as the two top problems facing agencies' operations. Surprisingly, cultural factors presented much lesser problems to agencies.     

Awareness Advertising and International Market Segmentation

In recent years, multinational corporations have increasingly employed advertising in markets where their products are not available. Such ‘awareness advertising’ is only in small part for products that are likely to be introduced in those markets in the near future. A significant and larger part of awareness advertising is for products that are unlikely to be sold in the particular market because of government restrictions on commercial importation and sale. In this paper, we will analyse the motivation behind the use of awareness advertising, the benefits that multinational firms may receive from such advertising and its implications for international market segmentation. The paper concludes with a discussion of areas for fruitful future research on awareness advertising.     

An Empirical Model of Advertising Dynamics

This paper develops a model of dynamic advertising competition, and applies it to the problem of optimal advertising scheduling through time. In many industries we observe advertising “pulsing”, whereby firms systematically switch advertising on and off at a high-frequency. Hence, we observe periods of zero and non-zero advertising, as opposed to a steady level of positive advertising. Previous research has rationalized pulsing through two features of the sale response function: an S-shaped response to advertising, and long-run effects of current advertising on demand. Despite considerable evidence for advertising carry-over, existing evidence for non-convexities in the shape of the sales-response to advertising has been limited and, often, mixed. We show how both features can be included in a discrete choice based demand system and estimated using a simple partial maximum likelihood estimator. The demand estimates are then taken to the supply side, where we simulate the outcome of a dynamic game using the Markov perfect equilibrium (MPE) concept. Our objective is not to test for the specific game generating observed advertising levels. Rather, we wish to verify whether the use of pulsing (on and off) can be justified as an equilibrium advertising practice. We solve for the equilibrium using numerical dynamic programming methods. The flexibility provided by the numerical solution method allows us to improve on the existing literature, which typically considers only two competitors, and places strong restrictions on the demand models for which the supply side policies can be obtained. We estimate the demand model using data from the Frozen Entree product category. We find evidence for a threshold effect, which is qualitatively similar to the aforementioned S-shaped advertising response. We also show that the threshold is robust to functional form assumptions for the marginal impact of advertising on demand. Our estimates, which are obtained without imposing any supply side restrictions, imply that firms should indeed pulse in equilibrium. Predicted advertising in the MPE is higher, on average, than observed advertising. On average, the optimal advertising policies yield a moderate profit improvement over the profits under observed advertising.JEL Classification: L11, L66, M30 M37 R12     

Context effects of TV programme-induced interactivity and telepresence on advertising responses

This article provides an analysis of the relationship between annual advertising expenditures and sales, using a time series regression procedure, for beer, wine, and liquor sold in the United States from 1971 to 2012. Information from these four decades provides a comprehensive analysis of the relationships of numerous variables with aggregate alcohol category sales. Even though per capita alcohol consumption has not changed much throughout this period, alcohol advertising media expenditures for all alcohol beverages have increased almost 400% since 1971. This study has provided evidence of consumption changes across categories of alcohol beverages over the past 40-plus years with the preponderance of those changes significantly correlated to fluctuations in demography, taxation and income levels – not advertising. Despite other macro-level studies with consistent findings, the perception that advertising increases consumption exists. The findings here indicate that there is either no relationship or a weak one between advertising and aggregate category sales. Therefore, advertising restrictions or bans with the purpose of reducing consumption may not have the desired effect. Implications on policy decisions regarding advertising controls are addressed.     

Restricting gambling advertising and the third‐person effect

Along with the rapid growth experienced by the gaming industry in the United States has come increasing calls to restrict or ban gambling advertising. To date, little is known about what motivates people to support such restrictions on advertising. However, one recent theory, the third‐person effect, offers a possible explanation. The third‐person effect states that when confronted with negative messages, people will overestimate the messages' effect on others relative to themselves. Additionally, it suggests that it is this misperception that motivates them to take action against such messages. This study investigates whether a third‐person effect occurs for gambling advertising and if this effect is related to pro‐censorship attitudes for lotteries and casinos. The results suggest there is a sizable gap between perceptions of the effect of gambling advertising on one's self versus others, and that the perceived effect on others is related to a willingness to restrict such advertising. © 2000 John Wiley and Sons, Inc.     

Luxury brand advertising in Argentina: Changes following import restrictions

This study explores how the change of an economic policy affects advertising practices in Argentina. A content analysis of luxury brand ads placed in fashion magazines in Argentina was conducted to investigate changes in the ads in the wake of the import restrictions. The data supports the notion that some ads reflect societal changes. After the restrictions, ads were more likely to be factual, less likely to convey emotional messages, and ad appeals tended to be simple. Additionally, findings indicate that ads used different visual cues to evoke stronger exclusivity, luxuriousness, and global feelings. Ad components that are deeply rooted in local cultures, however, were not influenced by the restrictions.     

Goodwill and dynamic advertising strategies

In this paper, we empirically analyze weekly advertising policies of manufacturing firms in consumer goods markets. We assume firms engage in persuasive advertising, thus policies of firms affect the goodwill of a brand. We introduce a demand and a goodwill production function. A simple transformation of the demand function allows us to identify not only the demand parameters but also the parameters of the goodwill production function. We reconstruct the unobserved goodwill levels using these parameters and past advertising levels. We restrict our attention to Markov Perfect Equilibrium (MPE) strategies which are functions of payoff relevant state variables. Without imposing further restrictions on the dynamic competitive environment, we investigate the relationship between observed advertising strategies—which are assumed to be MPE—and payoff relevant state variables by means of several reduced form specifications. The most important determinant of advertising intensity turns out to be goodwill. We demonstrate that controlling for an advertising campaign significantly improves the explanatory power of the model. JEL Classification L13 . C73 . M30 . M37 I would like to thank Volkswagen Stiftung for the generous financial support which made this research possible.     

Meta-analyses using information reweighting: An application to online advertising

Because technology-enabled marketing research has led to information arriving at a rapid pace, methods in marketing that allow for coherent, sequential and fast information integration are needed. We propose in this research a new approach to information integration: Information Reweighted Priors (IRPs). It is a sample reweighting approach which utilizes the output from a Bayesian model fit using Markov Chain Monte Carlo, with no restrictions on the likelihood, prior distributions, or data structure; hence a general purpose tool. We demonstrate the approach with simulated datasets and an online advertising dataset with external information obtained from i) previous advertising studies in the industry from a major online advertising portal, ii) past academic studies of online adverting and iii) out-of-sample summaries of the dataset.     

Evaluating Cross-Cultural Advertising

Advertising is now considered to be a key part of international trade and essential to the global interchange of goods and services. This paper examines the parameters of international advertising, its impact across world markets and its effect on con- sumer behavior. Currently, there is controversy concerning the benefits of using globalization over localization as an advertising strategy in reaching the consumer. For the multinational f i i making this choice, con- -------- sideration must focus on a number of different factors, including criterion5 of recognition, reach, reaction, size and expenditure. By analyzing the role advertising plays in given societies, international advertising spending, government regulations and the intended use of text and messages, each of these aspects is touched upon as it relates to this framework of decision-making. Overall, as the US market becomes more saturated, firms may be forced to target markets overseas, be it through the globalization and localization routes. Furthermore, successful entry into these markets requires both a clear understanding of the culture, where the devel- opment of advertising differs'in each country, as well as comprehen- sion of its laws and restrictions, an area which places greater limita- tions on advertising practices.     

Likeability as a measure of advertising effectiveness: the case of financial services

Television advertising for financial services accounts for over one-third of total financial services advertising expenditure, yet there is evidence to suggest it is not very well done. Given the difficulties advertisers have to overcome in terms of promoting an intangible product in accordance with tight restrictions on advertising content and format to a largely uninvolved audience, it becomes all the more imperative to study how viewers judge financial services commercials. This paper presents the findings of a study which seeks to establish which elements, if any, of a financial services commercial first make it likeable to its target audience, second motivate the viewer to seek more information about the service being advertised and, third, have an effect on the image the viewer has of the advertiser. Some interesting findings from the research point to the similarities between the emerging factors for viewers' affective reactions to fast-moving consumer goods (FMCG) and financial services commercials and the extent to which likeability mediates the influence which advertisement execution features have on subsequent behavioural intentions.     

Marketing by CPAs

Abstract

Until the late 1970s, the AICPA discouraged commercial advertising and some other marketing tactics by practicing accountants. This study contacted 600 CPAs in the U.S. in an attempt to discover what kinds of marketing they employ, how useful they think it is, and how appropriate do they feel the AICPA's rules and regulations are in regard to marketing an individual CPA's services. Most thought the AICPA was fair. Accountants doing the most marketing tend to be younger males. “Conflict of Interest” was the area of most current concern in light of the ongoing problems of public accounting firms doing both auditing and consulting for the same client. “Newspaper” was the preferred advertising medium. Most of those surveyed were pleased the AICPA relaxed its restrictions on marketing and advertising, even though many CPAs still do not market their services to any great extent. This may change as younger accountants fill leadership positions in U.S. accounting firms.     

Today’s practice of brand placement and the industry behind it

This article presents a content analysis of brand placement on Dutch television, followed by 24 interviews with the parties involved. By combining a content analysis and a practitioners’ perspective, this article offers unique insights into the increasingly popular phenomenon of integrating advertising into television content. Analysis of one week’s television programming showed that programmes with brand placement are growing into a significant part of Dutch television. A fifth of these sponsored programmes can be classified as brand-integrated programmes in which brands are an intrinsic part of the programme. The practitioner interviews showed that these brand-integrated programmes were considered as the future of advertising. Moreover, the interviews gave insights into the mutual relationships between the different parties, showing that practitioners use the law restrictions to estimate the acceptance levels of the audience with respect to television sponsoring.     

Tobacco Consumption and Advertising Restrictions: A Critique of Laugesen and Meads (1991)

The report of the New Zealand Toxic Substances Board (1989) analysed data from most OECD countries over many years, and concluded that a total ban on advertising would reduce tobacco consumption by 7 per cent. The rather simple method of analysis used has been subjected to some criticism. The scientific editor of the report has recently published a paper in a learned journal in which he subjects the data collected for the report to a more formal statistical procedure, with essentially the same conclusion.

This article is an assessment of the recent paper. It demonstrates that the data used are so flawed that no form of analysis could yield valid conclusions. It also argues that the regression model used is based on an invalid assumption, resulting in a mis-specified model which proves only that advertising restrictions tend to be more severe in countries with lower 27-year average tobacco consumptions.     

Consolidation by merger: the UK beer market

This paper examines the determinants of market structure in the UK brewing industry over 1949–1969. Sutton (Sunk costs and market structure: price competition, advertising, and the evolution of concentration, 1991) points to technology and advertising races as two key drivers of market concentration. This study uses an own-built longitudinal data set of the population of firms and breweries, and reveals the importance of institutional factors in explaining the dynamics of market structure. The practice of tying outlets to brewers and legal restrictions on opening retail outlets, together with a permissive policy towards mergers, made acquisition of medium-sized firms and brewery closure (shortly after acquisition) the main driving mechanism towards industry consolidation. During this period, the number of firms and plants fell sharply (by 74% and 60%, respectively) and production rose (by about 25%), with no firm entry and just one new brewery opening. As a result, concentration increased and the market transformed from a highly fragmented one into a stable oligopoly.     

Die geplante neuordnung des konsumentenkreditrechts in der schweiz

The planned reform of consumer credit law in Switzerland. The author discusses the bill of a new Swiss Act on Consumer Credit. It is the intention of the bill to protect consumers engaged in all forms of direct or indirect acquisition on credit of goods and services. The bill contains detailed regulations in order to realize the consumer's freedom of entry into contract. There are rules concerning advertising, the duty to inform the consumer about effective credit cost, the protection against unfair clauses, and restrictions with regard to the duration of the credit period. The bill enacts rules concerning the default of consumers, too: Excessive interest rates in case of default are banned; the consumer may apply for adelai de grâce. Finally, the bill will improve the possibilities of preventive protection and of legal action on the part of the consumer. There will be criminal sanctions if the creditor does not fulfil his obligations. He may also loose his contractual rights. Consumer organizations may proceed against abuses in the advertising by consumer credit lenders.     

Ethics in Food Advertising to Children in India—A Parental Perspective

Marketers are seen to bombard children with advertisements for unhealthy foods using sophisticated promotion techniques that have serious negative effects on health and overall well-being of children. So parents try to mediate children’s exposure to media content and call for governmental regulations in an attempt to shield them. The extent to which they mediate further determines whether they contemplate food advertisements as being ethical or unethical. Therefore, the present study tries to uncover the antecedents to ethical versus unethical perceptions of Indian parents about food advertisements directed at children. No study, to the best of the researchers’ knowledge, has been conducted so far in India in this regard. Using binary logistic regression with mothers, it is found that the mothers who view food advertisements as unethical report their children to watch fewer hours of TV during weekdays and hold negative attitudes toward advertising to children. These mothers, however, do not feel that the government needs to impose restrictions on food advertisements aired on TV since they themselves indulge in mediation of TV advertising as a general parenting responsibility. The implications of the article are finally discussed.     

Promoting Vegetarianism through Moralization and Knowledge Calibration

This research extends the theories of moralization and knowledge calibration to vegetarianism. In two studies involving interviews with vegetarians, and meat-eaters; we investigated consumer attitudes toward vegetarianism. Our text analysis results revealed that emotionally calibrated consumers are ‘moral vegetarians’ who find meat repulsive, and make ethical food choices. In contrast, cognitively calibrated consumers are ‘health vegetarians’ who scan the nutrition information, avoid meat due to health restrictions, and embrace vegetarianism for healthy life. Finally, we provided insights into how faux meat companies can promote their products and transform consumer behavior toward vegetarianism by advertising ethical and environmentally friendly foods, and healthy and anti-obesity foods to moral and health vegetarians, respectively.