10 Advertising Legal Issues

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1. Children's advertising

2005 will be the Year of the Child. Sens. Hillary Clinton and Joseph Lieberman want to fund millions of dollars for research that will determine if advertising is re-wiring the brains of our children, spawning adolescent and adult automatons. Advertising to children that hawks fast-food, toys, or contains content deemed violent or inappropriate will come under legislative and regulatory attack as legislators look to placate frustrated parents of overweight children with too many toys who act out at the most inappropriate times. The government Nannies of the 1970s may be back.

2. Privacy

As technology continues to move forward, it attracts advertisers to new media, particularly cellphones as broadband, MMS and SMS become acceptable advertising platforms. This creates great consternation among privacy advocates who continue to see such advances as a never-ending erosion of privacy rights. Look out for Congressional hearings, proposed legislation and some litigation.

3. Audience measurement

Nielsen is under attack as it rolls out its people meters. Congressional leaders, most notably Ms. Clinton and Congressman Charles Rangel, have protested, claiming people meters do not properly measure ethnic groups. Advertisers, in turn, are demanding that commercials be rated. Nielsen, undaunted, continues to roll out the meters. The industry seems to agree, however, that whatever problems people meters present, they give better measurement than the current system.

4. Gift cards

Gift cards have become the gift of choice-and ease. But regulators remain concerned about lost cards and security. Look for folks like New York's Eliot Spitzer to take another look at the gift card industry. Gift cards will be the legal hot spot in promotions for 2005.

5. Return on Marketing Investment

The latest acronym-ROMI-has become the mantra of nearly every CEO and chief financial officer-and the mission for their chief marketing officers and procurement departments. The old joke-"I know I'm wasting half my marketing budget, but I just don't know which half"-no longer flies. Look for more incentive compensation in agency agreements, increased audits and more dominance by procurement departments in negotiating with ad agencies as advertisers try to find ways to account for the millions they spend.

6. Branded Entertainment

Will advertisers jump on the branded-entertainment bandwagon like they did on the Internet before anyone is sure if it works? In a word: yes. But look for continued outcries from consumerists who object to subliminal advertising and erosion of the line between entertainment and advertising. The FTC and FCC have petitions before them demanding more disclosure. But the flow of money will keep TV networks clamoring for more branded entertainment and product placement.

7. Comparative advertising

Comparative advertising remains a popular form of battle in the marketplace. In the last few years, lawsuits between competitors over allegations of false or deceptive claims have increased as have challenges before the National Advertising Division. Look for all of this to increase. The challenge will be for the NAD to move advertisers from the courts and into the private arena of self-regulation-away from the negative industry publicity these lawsuits create.


The National Association of Attorneys General has been relatively quiet this past year. But don't take any comfort in its silence. Look for NAAG to form multi-state task forces to attack a variety of marketing practices more in the mainstream than those they've attacked in the past. Expect them to look at children's advertising, alcoholic beverages, promotions, credit and lots of other practices near and dear to the hearts of advertisers.

9. Ethnic marketing

Ethnic marketing, particularly campaigns addressing the Hispanic market, are increasing substantially as advertising messages follow the demographics with buying power. While that's great for marketers, it's caught the attention of regulators like the FTC. Their curiosity will lead to regulatory scrutiny so marketers are well advised to be certain nothing is lost in the translation.

10. DTC drug advertising

Sen. Edward Kennedy will lead the legislative pack that will examine the DTC issue and determine if advertising dollars are driving up the cost of prescription drugs to consumers. They'll debate restrictions or propose taxes as ways to stem the proliferation of prescription drug ads.

Source: Doug Wood, partner, Reed Smith, and general counsel for the ANA and ARF

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