THE BATTLE OVER TRUTH AND FAIRNESS IN ADVERTISING LED TO CLOSER GOVERNMENT EXAMINATION OF BUSINESS: 'PROTECTING' CONSUMERS

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By the middle of the 20th century, America was firmly on the road to a new kind of society where everyone could aspire to a lifestyle once available only to the privileged. A confluence of forces was creating markets of unprecedented size and richness. Advertising, already a valued member of the sales team, took on an additional role: legitimizing lifestyles that encouraged impulse buying by pre-sold shoppers.

Advertising also had become a lightning rod for those who felt aggrieved by an increasingly impersonal market. Yet the industry had no provision for keeping its house in order and continued to resist all proposals for self-regulation.

The impact of advertising on the public had vastly increased. Beginning at mid-century, the availability of TV networks that delivered sales messages directly into the living room enabled advertisers to achieve an intimacy with consumers unequaled since the days of traveling salesmen.

The TV tube projected demonstrations as convincing as any performed by the most skilled street corner pitchman. And it spawned a new art form: mini-dramas that artfully blended music, pre-tested sales phrases and skilled professional acting to conceal the motivational intent.

This had become accepted practice on Madison Avenue during the eight years of the Eisenhower presidency. So contemplate the shock when John F. Kennedy announced from the political stump during the 1960 campaign that his administration would include a consumer representative at the policymaking level in the White House. How could anything advertisers were doing matter that much?

For industry leaders and trade associations, it was war. A freshly rejuvenated consumer movement had targeted breakfast cereals, packaged in odd sizes that defied price comparisons with labels that said less about package size than the flamboyant phrases implied.

Was President Kennedy planning to resume the prodding from Washington that advertisers successfully resisted during the New Deal era, when an earlier consumer movement wanted government grade labels on canned fruits and vegetables?

On one ledge of this political chasm was Madison Avenue, buoyed by its conviction that those fractional-ounce packages were merely ploys in the competition for market share and that the extravagant labeling phrases were nothing more than harmless puffery.

On the other were consumer organizations, which saw fractional-ounce packages as symbols of a marketplace booby-trapped to ensnare the unwary consumer. The decibel level of the dispute became deafening.

In due course over the following years, the advertising industry discovered the shouting about odd-ounce cereal packages was barely the tip of the iceberg.

President Kennedy's political insights had persuaded him that business practices needed to be re-examined in terms of the kinds of products that were being offered and the relative innocence of shoppers intent on achieving a more affluent lifestyle.

It was inevitable the new strategies of advertisers and marketers headed the list. What passed as puffery in an era when consumers dealt face-to-face with sales clerks was less benign in a marketplace where consumers relied to a much greater degree on what they learned from advertising.

Advertising not only controlled the primary sources of product information but, in its new role, it influenced the consumer's concept of the very definition of the "good life."

The industry's leaders were to discover that the warfare in Washington would expand beyond "truth" and "fairness," that they would be called to account on issues they had never contemplated -- such as the social consequences when children are exposed to so much salesmanship, or the cumulative impact of advertising that focuses product design on marketing considerations at the expense of product and environmental safety.

One of the first shocks after President Kennedy organized his administration was a speech by Federal Communications Commission Chairman Newton Minow, who won acclaim by denouncing TV as "a vast wasteland." But President Kennedy moved cautiously, and he did not live long enough to get beyond creating an advisory committee to develop ideas.

Among the first acts of his successor, Lyndon Johnson, was the designation of Esther Peterson as the first consumer adviser to the president. In the years that followed, Congress passed a host of laws -- regarding packaging and nutritional labeling, truth in warranties and truth in consumer credit advertising; imposing tough controls over the marketing of over-the-counter drugs and on automobile safety; creating a commission on product safety and modernizing the 50-year-old Federal Trade Commission Act.

For all the activity of President Johnson and the Congress during his administration, the events of greatest importance to modern government controls over advertising occurred during the administration of a Republican president, Richard Nixon.

Soon after taking office, President Nixon had asked the American Bar Association to evaluate Ralph Nader's report contending that the FTC should be revitalized or simply shut down. President Nixon opted for revitalization and provided leadership and funding to get the job done.

The new FTC management got the ad industry's attention in the late 1960s and early '70s with a series of widely publicized legal cases challenging TV ad demonstrations by blue-chip advertisers. And it adopted important new procedures: the opportunity for intervention in FTC proceedings by groups that represented the public, the elimination of a long-running understanding that advertisers should not attack each other's performance claims, and new penalties, including government-ordered ads that specifically corrected previous false claims.

But most important was a new requirement that advertisers must have supporting data in hand before making a performance claim.

By mid-1970, the Nixon administration was aware of increased recognition within the ad world that the industry could not afford to go on losing highly publicized challenges to the honesty of its work. But there could be no way out of further confrontations with the government without assurance the industry was prepared to accept responsibility for keeping its house in order.

U.S. Commerce Secretary Maurice Stans and FTC Chairman Miles Kirkpatrick floated trial balloons about a self-regulation alternative. But there were no signs that the most powerful of the ad industry associations -- the Association of National Advertisers and the American Association of Advertising Agencies -- were prepared to retreat from their traditional opposition to any form of self-regulation.

Despite their qualms, however, the ANA and Four A's were not prepared to stand in the way when the American Advertising Federation entered the lists. So to AAF, the least prestigious and affluent of the industry associations, goes the credit for leading the business out of its governmental quagmire and into a new order, where advertisers and agencies regained greater control over their own destiny.

It was not an unanticipated window of opportunity for AAF. In 1968, when it was still a distant third in status among the advertising associations, it had hired Howard Bell as president. At Bell's urging, AAF moved its headquarters from New York to Washington, where the battles were being fought.

As the former director of the National Association of Broadcasters' self-regulatory TV Code program, Bell understood the hazards and limitations of self-regulation but did not fear them.

By the time the Nixon administration floated the idea of self-regulation for national advertising, the AAF leadership included Victor Elting of Quaker Oats Co., Jim Fish of General Mills and Fred Baker, chairman of N.W. Ayer-F.C. Baker, Seattle, all advocates of self-regulation.

By late 1970, there had been private meetings with FTC Chairman Kirkpatrick and Robert Pitofsky, director of the FTC bureau of consumer protection. The formation of the national Council of Better Business Bureaus as an umbrella organization for the self-regulatory programs of local BBBs around the country tapped a broad pro-self-regulation constituency reaching deep into the business community.

By February 1971, Quaker's Elting presented to the AAF legislative committee the format for what became the National Advertising Review Board.

It was a gloriously simple plan. Self-regulators would apply legal precedents established by FTC for deceptive ad law, but they would not initiate new concepts or attempt to deal with such issues as taste.

Because FTC now required advertisers to have proof in hand before making a claim, cases would not require costly or time-consuming processing. Advertisers would be under no coercion. Confronted with requests to participate in the new self-regulatory program, they were free to walk out -- and take their chances with the FTC.

The results speak for themselves. With the creation of the advertising self-regulation system, the Nixon administration could claim the renovation of the marketplace safety net was completed. With advertising no longer such a contentious issue, agitation for further action against advertisers lost its political urgency.

Among the issues left to die on the vine was the proposal to create a new federal government organization, a Consumer Protection Agency, that could intervene with other federal government units on the consumer's behalf. Creating the agency had been No. 1 on the consumerist agenda, and No. 1 on the list of consumer "wants" feared most by the advertising industry.

For 25 years the self-regulation system has stood the test of time. And, with few exceptions, so have the other new marketplace behavior norms that emerged from that period of bitter bickering.

It is a monument to hard work and a reminder that reasonable people can find ways to reconcile conflicts between the public welfare and the essential freedoms of a responsible free enterprise system.

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