Ad Industry's New Ethics Code Takes on Brand Integration, Social-Media Disclosure

Getting Adoption From Marketers, Agencies Is First Order of Business for IAE

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The advertising industry has a new ethics code, as the Institute for Advertising Ethics today released a set of eight principles on issues ranging from the blurry line between advertising, editorial and entertainment content to behavioral targeting and disclosure of compensation for social-media endorsements.

The institute, an independent body administered by the American Advertising Federation and the Donald W. Reynolds Journalism Institute at the University of Missouri, next wants to launch a series of webinars and conferences in hopes of making the principles an industry standard, said Wally Snyder, the group's executive director and president emeritus of the AAF.

Ultimately Mr. Snyder hopes other associations, marketers and agencies will adopt the principles and go so far as to get members and employees to sign pledges to adhere to them.

"These are not set in stone," he said, noting that additional principles could be added and current ones changed based on feedback. He hopes to provide both a carrot, in the form of recognizing marketers and agencies that abide by the code, and perhaps someday a stick in the form of reviewing complaints that they haven't.

"But the focus of this is education," he said.

Mr. Snyder led an advisory panel of current and former agency and marketer executives and academics who began work on the Principles and Practices of Advertising last summer.

The principles include several seemingly uncontroversial points -- such as statements that everyone in the industry shares an interest in high ethical standards and should adhere to laws and regulations -- to potentially thornier issues.

One principle says advertisers, agencies and media should give employees permission to express ethical concerns internally, but doesn't tell employees to make those concerns public if their concerns aren't addressed.

That principle "really goes to creating an environment within the agency or company where these things can be discussed," he said. "It has to come from the top down."

Mr. Snyder couched the recent controversy over Groupon's Super Bowl ad from Crispin Porter & Bogusky, Miami, as an ethical issue that should have been discussed prior to the ad running, i.e. whether it was right to make light of the plight of Tibetans in an ad.

Groupon CEO Andrew Mason pointed out in his blog that the ad was part of a marketing program that raised money for the Tibet Fund, which found no fault with the ad.

Another principle is that advertisers should clearly distinguish advertising, public relations and corporate communications from news and editorial content and entertainment. Particularly amid growing numbers of media sources and use of brand integration in entertainment, it's a line that's often hard to distinguish, Mr. Snyder said.

"If consumers are unaware the 'news' or 'entertainment' they are viewing actually is advertising, they are being misled and treated unethically," the IAE commentary states. The group said concerns raised by former Missouri Journalism Dean Walter Williams in 1919 "continue to this day with advertising in the form of news articles, unsubstantiated claims in press releases, and unattributed commercial content on social-networking sites."

The IAE code essentially follows the Federal Trade Commission in saying advertisers should clearly disclose all material conditions, including payment or receipt of free product, affecting endorsement in social and traditional media channels. In commentary on this point, the group quotes P&G Global Brand-Building Officer Marc Pritchard as saying: "It is often not clear whether people are endorsing on their own, or if they are being compensated by a brand/company or are even part of the brand/company organization. The anonymity of the online world requires extra efforts for practicing ethics."

Pete Blackshaw, chairman of the Council of Better Business Bureaus and newly appointed head of global digital and social media and marketing for Nestle, is quoted as saying: "Disclosure with bloggers may well be the easy part. How do you responsibly disclose when 140 million global members of Twitter are restricted to 140 characters per tweet, and any attempts at disclosure gets lost in the first pass-along? Acknowledge -- forcefully -- that responsible advertisers must be extremely proactive on this front, and perhaps even over-compensate."

In several areas, the IAE points to industry self-regulatory solutions as already offering the best option for compliance.

The IAE says "advertisers should never compromise consumers' personal privacy in marketing communications." In commentary on this principle, the institute gives high marks to the "Advertising Option Icon" backed by trade associations that would let consumers click to get disclosure regarding or opt out of use of their online data on sites collecting behavioral data.

On treating consumers fairly based on the nature of the arguments, the IAE lauds the industry's Children's Advertising Review Unit and the food industry's effort to restrict ads to children under 12 to "better for you" products.

Mr. Snyder said the IAE will continue supporting consumer research regarding advertising ethics, building on 2009 research conducted by Missouri journalism students that found consumers ranked honest advertising ahead of corporate social responsibility and environmental marketing claims in considering whether a company is ethical.

"I believe [the code] will lead to a new way of thinking about ethics from, 'Well, we should be ethical' to 'We've got to be ethical to build our business better.'"

Principles and Practices of Advertising

  • Advertising, public relations, marketing communications, news, and editorial all share a common objective of truth and high ethical standards in serving the public.
  • Advertising, public relations, and all marketing communications professionals have an obligation to exercise the highest personal ethics in the creation and dissemination of commercial information to consumers.
  • Advertisers should clearly distinguish advertising, public relations and corporate communications from news and editorial content and entertainment, both online and offline.
  • Advertisers should clearly disclose all material conditions, such as payment or receipt of a free product, affecting endorsements in social and traditional channels, as well as the identity of endorsers, all in the interest of full disclosure and transparency.
  • Advertisers should treat consumers fairly based on the nature of the audience to whom the ads are directed and the nature of the product or service advertised.
  • Advertisers should never compromise consumers' personal privacy in marketing communications, and their choices as to whether to participate in providing their information should be transparent and easily made.
  • Advertisers should follow federal, state and local advertising laws, and cooperate with industry self-regulatory programs for the resolution of advertising practices.
  • Advertisers and their agencies, and online and offline media, should discuss privately potential ethical concerns, and members of the team creating ads should be given permission to express internally their ethical concerns.
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