Regulatory Ripples: Why Marketers Must Think and Act Locally

Your Lobbyists May Be in Washington, but Activists Are Making Their Marks on the City Council

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A ground zero for the anti-fast-food movement has been California's affluent and health-conscious Santa Clara County, home to Silicon Valley. In 2007, the county followed New York and other cities in enacting a law that chain restaurants must post calorie counts for menu items.

A few years later, Santa Clara County's government voted to forbid restaurants' giving toys with high-calorie kids' meals. The restriction affected only a dozen fast-food restaurants in unincorporated parts of the county, but that didn't stop a possible "Happy Meal ban" from dominating headlines across the nation. Nor did it prevent a rash of copycat proposals in San Francisco, New York and Nebraska.

Ripple Effect

An illustration of the ripple effect.

These are just two examples of the regulatory ripple effect, in which local and state legislative moves have repercussions well beyond their boundaries. The ripple effect is intensified by social media's impact on political conversation as well as the state of the political landscape: With the federal government in a general state of partisan gridlock, it's much easier for activist groups to get things done on a local level, where decision-making is simpler and industry lobbyists often hold less sway.

But the goal often isn't an isolated legislative win. The pinnacle of hope is that local activity will effectively go viral -- from city to city and state to state, maybe even kicking up to the national level. It's the 21st-century way to Think Global, Act Local.

"They watch one another," said Constance Campanella, president-CEO of Stateside Associates, a government-affairs firm based in Arlington, Va. "You know when you look at a map and you see the colors and the lines -- well, they don't really exist. There are legal lines, but in terms of impediments to communication, they don't exist."

Ms. Campanella has been monitoring state and local lawmaking, and consulting with industry on such legislation, for nearly 25 years. But the pace of change has been picking up recently, she said.

"Once upon a time, business was way ahead of nongovernmental organizations in communicating with elected officials. It was a physical, in-person process. Now you have officials tweeting up a storm, and lots of people can be in that conversation never having been in a state capital."

That means that following local politics, even in smaller states, is essential. In addition to the fast-food-related bans, a number of local measures have been identified that might have broader implications:

  • At least 10 U.S. cities have enacted plastic-bag bans since 2007, when San Francisco became the first to do so. The idea spread like wildfire, including in Oregon and Alaska.
  • Smoking bans are often enacted locally, especially when state governments don't act. A 2005 research paper found that restaurant smoking bans were more likely in cities with large neighbors that had already adopted similar laws -- the logic being that there's less likelihood of environmental impact.
  • A 2010 carbon-tax law adopted in Maryland's Montgomery County affected only one plant, but its sponsoring council member suggested that was beside the point, telling InsideClimate News: "I hope this contributes to the conversation at the federal level and creates greater incentive for federal action."

Quick changes
Why do some regulatory ideas take off and others don't?

It turns out that Louis Brandeis' notion that states are the "laboratories of democracy" (where legislative experimentation happens gradually, incrementally and with great deliberation) isn't aging so well.

The reality is that laws are often adopted in other places quickly and without a lot of thought from legislatures. Graeme Boushey, assistant professor at San Francisco State University, has described policy diffusion as a "process of incremental policy adjustments interrupted by sudden movements of policy change."

Mr. Boushey likens the sudden change to the notion of punctuated equilibrium culled from current evolutionary biology, which posits that change occurs in fits and starts.

In political terms, it happens when particular conditions are met -- most especially that issues achieve prominence and resonate emotionally.

For businesses, these situations are often the inverse of viral marketing. Rather than being employed to spread the brand and gain awareness or favorability, networks focus negative attention.

But regulatory ripple effects aren't necessarily always negative for business. For instance, the recession led many revenue-strapped states to lighten restrictions on gambling, creating opportunities for different kinds of gaming businesses, not to mention lobbyists and advertising companies. And New York's decision to legalize gambling outside of Native American reservations will certainly add fuel to the marketing war over customers between Atlantic City and Connecticut.

In any case, it's incumbent on businesses wanting to stay ahead of the regulatory environment to monitor what's going on, tracking both legislation and often-audible conversation around it.

Ms. Campanella recalled a situation this year when legislation that was contrary to a client's interests was posted on Twitter before its introduction. But the client found out after the fact.

"Had our client been monitoring that channel, they would have gotten a significant jump on the process," Ms. Campanella. "How interest groups work is changing and that 's changing how we work. "

The work of the Arizona Restaurant Association is a case in point. Last year, the state passed a law that essentially beat to the punch anyone who might want to ban kids' meals. It prevents counties and cities from regulating toys, games and the like offered to children by restaurants. According to a Reuters story, the head of the association wanted to head off any attempt at a California-style ban.

The story also reported that similar measures had been introduced in Florida and that a number of other trade groups and companies had asked for copies of the bill.

It should come as no surprise that lobbyists can have their own ripple effect.

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