The recommendation is perhaps the most controversial aspect of a 106-page report on minority media issued last week by the FCC. It raised eyebrows among advertising executives, even as they praised the overall study.
The proposed code would eliminate so-called "no urban" and "no Hispanic" dictates by limiting marketers' media-buying flexibility; buys would need to be based on third-party research that shows the ads would reach target consumers. So carmakers that sell most of their vehicles to families with $60,000 incomes, for example, would have to do research to justify buys reaching higher-income consumers.
"The broadcast and advertising industries should develop a code of conduct. The code should indicate that decisions about buying ads should be based on market research supplied by accredited ratings services," the report said. "Such research should take consumption patterns into account [and] prohibit the practice of `no urban/Spanish dictates' and `minority discounts.' "
DOUBTS AMONG AD LEADERS
But ad industry leaders said they doubted it is possible to develop such a code.
"It may be impossible to craft," said Wally Snyder, president of the American Advertising Federation. "I don't think any code we would write could have all decisions based on research. I am not in favor of interfering with buys, and there are good reasons to make subjective decisions."
The American Association of Advertising Agencies already has its own code prohibiting discrimination against any medium or audience, said Four A's President O. Burtch Drake. "There is no question that `no urban/no Spanish' dictates are wrong and we do not condone them," he said. "But I don't see a code that cuts across media, advertisers and agencies happening."
The report's author, Kofi Ofori, principal investigator for the advocacy group Civil Rights Forum, said a code isn't intended to reduce marketers' choices, but to ensure media outlets that reach the target audience can't be excluded arbitrarily.
"It is not my recommendation to put private industry in a straitjacket and say that they can't go after a segment they want to go after," he said. "What I'm trying to address is the 25-years-olds way down the chain of command when they depart from the marketing plan based on their own preconceived ideas of racial stereotypes."
The FCC report, "When Being No. 1 Is Not Enough," said 91% of minority radio broadcasters surveyed had been affected by "no urban/Spanish" dictates, and it estimated that 61% of ads bought on the stations were discounted. But while noting that minority stations get less ad revenue than general-market stations and are forced to offer deeper discounts, the report said factors other than racial discrimination may account for the disparities.
"Anecdotal data suggest that in certain instances, the media-buying process is guided by ethnic/racial stereotyping, underestimations of disposable income, the desire to control product image [and] unfounded fears of pilferage," the study said.
Besides the code, the study suggested the FCC join with the Federal Trade Commission to develop a policy statement for "acceptable advertising practices." And it recommended that the president issue an executive order barring federal agencies from awarding work to ad agencies that discriminate against minority media in buying.
The study is part of an FCC attempt to determine barriers to the growth of minority media. In addition to presenting statistical evidence of discrimination, the report also cited several examples of advertisers that shunned minority media outlets despite research showing those outlets reached the target audiences.
Among those named are BMW of North America and the New York Volvo Dealers Association.
Bob Austin, director of marketing communications for Volvo, said he couldn't comment directly on the report since he hadn't yet seen it. But he said regional radio buys are controlled by local dealer groups. Volvo, he said, makes media buys "based on the demographics of our target audience. . . . Most of our owners are college graduates and are comprised of a great variety of ethnicities."
FCC Chairman Bill Kennard called the study "very historic," and said it shows a "pervasive" problem in the advertising industry. But he was less specific