"I've often said it's the best and most reliable industry self-reg-ulation program I'm aware of," Robert Pitofsky, chairman of the Federal Trade Commission, told Advertising Age last month. "From my point of view it was well conceived in the first place and is a first-class operation today."
OUTSIDE THE SPOTLIGHT
For most of its history the NARC and its three ad review units-the National Advertising Division (NAD) and Children's Advertising Review Unit (CARU), both parts of the Council of Better Business Bureaus, and the National Advertising Review Board, which hears appeals from decisions of the NAD and CARU-have worked largely outside the public spotlight. But their influence has been substantial.
Even in relative anonymity, they have been the most effective mech-anism devised to shield national advertising from ever tighter regulatory control from Washing-ton or, worse still, from the 50 individual states. And the industry accomplished this by directly addressing issues of truth in advertising in case after case in which advertisers voluntarily submitted to peer review and criticism.
Some background: The American Association of Advertising Agencies was born in 1917 amid talk of ethics and self-regulation. But such talk of mutual restraint was no match for the sovereign might wielded by major advertisers in the corporate-friendly '20s.
With the New Deal, Franklin Roosevelt made the federal gov-ernment an instrument of consumer interests. A bill to move advertising oversight from a comatose Federal Trade Commission to the more activist Food and Drug Admin-istration sufficiently alarmed advertisers to revive talk of self-regulation. In 1938, Congress opted to leave national ad regulation to the FTC and gave it new powers to seek federal court injunctions against deceptive ads-such as Fleisch-mann's Yeast and its claim to straighten crooked teeth.
After a flurry of activity, the threat of enforcement relaxed during World War II, when wartime mobilization of the economy meant there were few consumer goods to advertise.
After the war, the FTC occasionally struck at an easy target such as Carter's Little Liver Pills, which had nothing to do with liver ailments; Geritol, which claimed to awaken "tired blood"; and doctored ad demonstrations and rigged photos, such as a TV commercial for Rapid Shave, which showed a razor "shaving" sandpaper after Rapid Shave had been applied; or an ad for Campbell's soup, attacked as deceptive for displaying soup in which glass marbles were used to push vegetables to the surface.
NEW PROBLEMS LOOM
As the '70s began, new problems loomed.
A sugar industry campaign implied that nibbling candy and ice cream between meals could "help" control weight. The FTC, under pressure again to get tough on unsupported advertising claims, in December 1971 not only challenged the claim but ordered the industry to publish a "retraction" in each magazine where the original ads ran. The specter of the government ordering marketers to run "corrective" ads added fuel to the push then underway in the industry to construct a self-regulation system that could address problems before the government intervened.
New ideas about self-regulation had to overcome skepticism and opposition within the industry. One problem, according to historian Stephen Fox, was that the industry "lacked a tradition of internal dissent. .*.*. Reformers. . . risked being dismissed as heretics and gadflies, disloyal, not team players."
By 1969, however, some ad industry leaders started making the case the time had come to address the self-regulation issue head on. The chairman of the American Advertising Federation, Victor Elting, VP-advertising at Quaker Oats, began making speeches on the issue. AAF's president, Howard Bell, had joined the ad industry group the year before from the National Association of Broad-casters, where he had extensive experience with self-regulation in the broadcast industry.
In the spring of 1970 an alliance of trade associations-AAF, Amer-ican Association of Advertising Agencies, Association of National Advertisers-approached the re-cently formed Council of Better Business Bureaus as a potential partner in the new self-regulatory effort. On the local level, individual Better Business Bureaus had conducted ad self-regulation pro-grams for many years.
CBBB GETS INVOLVED
CBBB involvement would answer an important concern about the new self-regulation program, Mr. Bell recalled recently. "This program would be regulating its own members," he said, "and probably telling them things they wouldn't want to hear. So we had to be certain it was insulated against influence from the advertising trade associations and their members."
Late in 1971, the industry's plan was laid out for FTC. Part cop, part conscience, it called for a National Advertising Division to be set up as an agency of the CBBB to investigate and settle complaints against national and regional advertisers brought by consumers and other advertisers.
If a defendant didn't agree with an NAD decision, the dispute would go through an appeals process built around a separate and independent National Advertising Review Board. The review board would assemble panels drawn from a pool of industry executives and representatives of the public to render their own findings on contested ads.