Truth in Advertising: A Social Necessity or a Big Ball of Red Tape?

Communicating with consumers is not always the easiest task. Developing an engaging message about a useful product or service is often the easiest part. Getting past all the hurdles afterwards like competing with competitors’ efforts, finding the right avenues to deliver it and making sure that you stay relevant, are often the hardest parts. One other issue that can sometimes seem like a hurdle is ensuring that what you say complies with regulation.

The Federal Trade Commission regulates what we as marketers can say and how we can say it. One of their focus points is “deceptive” messages. They focus on:

  • Whether the message itself is accurate
  • How a consumer is likely to interpret the message
  • Whether a misleading message “materializes” in the form of producing sales or consumer action

By no means should marketers be outright lying for sales. Not only is it entirely lazy, but it will ruin branding efforts when the market figures it out and ultimately stops buying.

But where is the line? How much information should be provided in an advertisement? In some cases the costs associated with buying longer TV and radio spots would drain budgets. In others, the message itself might get lost in the wealth of information provided. And how do advertisers decide how individual consumers will interpret what they hear or see? It is interesting to look at how some companies approach the issue.

The FTC now requires that many food marketers have their health based messages evaluated by the Food and Drug Administration. Pom Wonderful, makers of a variety of pomegranate juices, recently filed suit against the FTC. Their claim is that stringent regulations aimed at consumer protection have impeded on their right to free speech. Specifically they have taken issue with their now inability to make claims about the health benefits of their juices. (Keep in mind that while Pom is “fighting for freedom” today, they have sued multiple competitors in the past based on their competitor’s claims of health benefits in their products) Pom feels that they are being unfairly silenced and that they have done enough to substantiate their claims. The FTC has passed the buck to another government entity. It is difficult to decide who is and is not right in a case like this.

For another angle we can look at General Motors. Back in May, The Competitive Enterprise Group filed a suit against GM based on some of their advertising. GM put out a commercial claiming that they had paid back their government loaned funds, with interest, 5 years ahead of schedule. In reality they had paid back a loan, just not the TARP money that most consumers would interpret them as having spoken about. Some feel that this is deceptive advertising and that it also has the ability to “materialize” in the form of sales for GM. It’s not as if this is a bad argument. People were not upset about the initial loan (mostly because most people didn’t know about it); they were upset about the $52 billion in TARP funds. The ad implied by omission that GM had repaid the TARP funds.

Consumer interpretation is a gray area at best that will dictated by the personal opinions of the committee that the FTC assigns each individual case. It will be very difficult to streamline legislation on a subject, such as this, that favors qualitative opinion over quantitative fact. Regardless, advertisers must stay on the correct side of the law, lest they or their clients have to deal with fines and public relations disasters.

So how do we fix it?

  • Use disclaimers– They are your friends and will provide your attorneys with ammunition when they have to earn their retainers and fight for you.
  • Be reasonable– If something seems like a stretch, it probably is. Sound judgment can prevent many mistakes.
  • Take a poll– Interpretation is an individual factor. Ask multiple people, and try your friends who work outside of the industry and do not think like marketers. During the research phase, ask focus groups questions that could point to deceptive or unclear wording.
  • Follow the rules– Regulation is a part of doing business. We can complain, but in the end governing bodies are there to represent the people. These same people whom advertisers work hard to reach every day. Nothing fuels compromise like finding common ground.
  • Be Creative– Multiple marketing messages can be created around any given trend. Take the “healthy food” trend that has Pom upset. Instead of making statements that might be too general or unfounded, list the healthy ingredients on the front of the package and then quote the FDA about how good these nutrients are for you.

Take time to make sure that you comply with necessary regulation. Eventually it will pay off, when your company has built a reputation for honesty and integrity.

Advertising Age
Federal Trade Commission
The Truth About Cars
Federal Trade Commission- Policy on Deceptive Advertising
AMA Tampa Bay