ANA Regulatory Rumblings

National Medical Association Sees Positive Value in Prescription Drug Advertising

The National Medical Association (NMA) today released the results of a recent survey that overwhelmingly demonstrates that African-American physicians see a positive value in prescription drug advertising. According to the report published in the Journal of the National Medical Association, members of NMA believe that DTC advertising provides substantial educational benefits to consumers, particularly in underserved communities. The African-American doctors also believe that DTC advertising helps, rather than hurts, the doctor-patient relationship.

The new report found that NMA members are even more positively supportive of DTC ads now than in a similar survey in 2001. According to the study, 66% of the doctors surveyed attested to the positive benefits that prescription drug ads provide patients. This is up from the 55% positive finding contained in a survey carried out by NMA in 2001. The report acknowledged the numerous steps taken by the pharmaceutical industry over the last several years to address concerns about some DTC ads.

The NMA report is important news, particularly as some members of Congress are proposing sweeping new restrictions on this important category of advertising.

Given the critical role that DTC advertising can play for patients including those who are poor or in underserved communities, we agree with the NMA that there should be more prescription drug advertising, not less.

The First Amendment and Tobacco Advertising

Senator Ted Kennedy (D-MA), the Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, is holding a hearing today on legislation (S.625, the Family Smoking Prevention and Tobacco Control Act). This legislation grants the Food and Drug Administration (FDA) jurisdiction over tobacco products and advertising. The legislation mandates that the FDA institute and promulgate a rule similar to its 1996 tobacco rulemaking, which was struck down by the U.S. Supreme Court due to the Court’s finding that the FDA had not been provided authority by the Congress to regulate tobacco products. The legislation imposes sweeping and virtually unprecedented restrictions over every aspect of tobacco advertising. While the Congress has the authority to determine which agency should regulate tobacco products, the First Amendment sets strict limits on the types of restrictions that can be imposed on advertising. Unfortunately, S.625 completely violates these limitations.

Experts from across the legal spectrum, from the American Civil Liberties Union to the Washington Legal Foundation, and legal scholars such as Judge Robert Bork, Floyd Abrams, Burt Neuborne, and Larry Tribe have all indicated the severe constitutional problems with the proposed rules. The ANA has submitted testimony to the Senate HELP Committee in conjunction with the American Association of Advertising Agencies and the American Advertising Federation, that spells out the major constitutional infirmities of the legislation. We are calling on the Congress to drop these unconstitutional provisions.

Kessler Misdiagnoses the Role of Direct-to-Consumer Prescription Drug Ads

Dr. David Kessler, former Commissioner of the Food and Drug Administration (FDA), has seriously misdiagnosed the role of DTC prescription drug advertising.

In an editorial in the January/February edition of Annals of Family Medicine, Dr. Kessler attacks prescription drug ads and erroneously compares them to ads for soap or other consumer products that present minimal risks to consumers. Marketers all agree that prescription drug products are not soap. Unfortunately, Dr. Kessler’s false analogy completely ignores the tremendous differences in the way prescription drugs and soap are sold. His editorial also misstates the role that prescription drug advertising plays in educating consumers.

Unlike soap, you or I cannot simply walk into the store to pick up a drug product. They can be purchased only after talking with a doctor and obtaining a prescription. The FDA must approve all drug products before they go on the market. The agency has very specific rules on how drug products can be advertised to consumers; rules which go far beyond those for the marketing of any other product in our society. Also, the pharmaceutical industry has adopted detailed self-regulatory marketing guidelines that substantially supplement the rules of the FDA.

Walking the Tightrope

This morning I gave the following presenation at the ANA's Advertising Law and Business Affairs Conference.

As we begin the new year, the marketing community faces a dramatically altered political environment. After twelve years in the minority, Democrats have seized control of both houses of Congress. Democrats have regained the power to conduct oversight hearings, control debate and set the agenda for the new Congress. At the same time, the 2008 presidential election season already has begun, increasing the stakes for all political participants. These changes present the marketing community with a set of significant new challenges.

First, some longstanding industry critics are now in charge of key committees. For example, Senator Tom Harkin (D-IA), a strong critic of food marketing to children, is the Chairman of the Senate Agriculture Committee and Chairman of a key Appropriations subcommittee. Senator Ted Kennedy (D-MA), a critic of DTC prescription drug advertising, is the Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee. Congressman Pete Stark (D-CA), another DTC critic, is the Chair of the Health Subcommittee of the House Ways and Means Committee, which has jurisdiction over tax policy.

Speaker Nancy Pelosi (D-CA) has outlined an ambitious plan for legislation in the first 100 hours of the new Congress. Marketing issues could be thrown into that mix. The new Senate Majority Leader, Senator Harry Reid (D-NV), has promised that the new Congress will be a “do something” Congress that will work longer hours to deliver real results for American citizens. Many of our industry critics have been emboldened and believe that the new Democratic Congress will be more receptive to calls for new taxes or restrictions on a broad range of marketing categories.

Many policymakers unfortunately have a very negative view of the role of advertising in our society. TV ads are always the most costly part of a political campaign and members of Congress always remember the negative ads their opponents ran against them. Most do not see much distinction between political ads and commercial advertising.

In the past, many of the serious attacks on advertising came from fringe groups that were out of the political mainstream and had limited respect on the Hill. Now, we face serious attacks from major mainstream groups, such as the Institute of Medicine (IOM); the American Academy of Pediatrics (AAP); the American Psychological Association (APA). These groups may not know much about our industry, but their attacks on advertising have much more resonance with members of Congress.

Misperceptions and Misprescriptions

The Committee on Communications of the American Academy of Pediatrics (AAP) today released a sweeping Policy Statement on “Children, Adolescents, and Advertising.” The report unfortunately is extremely disappointing. Its recommendations misdiagnose the advertising marketplace, and the majority of its proposals are counterproductive. It fails to meet the high standards that should be expected from an important and well regarded organization like the AAP.

The Committee is either unaware or completely ignores numerous important self-regulatory initiatives by the ad industry. It lauds highly restrictive advertising policies in other countries and calls on the U.S. to emulate them, but completely fails to examine if these restrictions have been beneficial or effective. It proposes bans or severe restrictions on several categories of advertising without apparently realizing that similar types of proposals have been found unconstitutional by the U.S. Supreme Court.

Reflexively and relentlessly negative, the report attacks a wide range of advertising categories and only expresses support for one segment: advertising of contraceptives. The following are just a few examples of the numerous methodological, logical and factual flaws in the report:

- The Committee once again uncritically rehashes the discredited claim that “young people view more than 40,000 ads per year on television alone.” This claim ignores the testimony of FTC Associate Director of Economics Pauline Ippolito, who noted at an FTC/HHS workshop on obesity in 2005, that the actual figure was less than one-half (17,507) and that since 1977 the amount of ads seen by children on TV had, in fact, declined by “12 percent.” Professor Todd Zywicki, a professor of law at George Mason University and the former Director of Policy Planning at the Federal Trade Commission, examining the 40,000 ads claim noted dryly, utilizing Kaiser Family Foundation figures, that, “If the 2 to 18 year olds were watching 40,000 ads per year, they must have watched 40 ads per hour. If the 4 to 6 year olds saw 40,000 ads per year, they were viewing approximately 94 ads per hour. This seems unlikely.”

- The Committee also states unequivocally that prescription drug companies “now spend more than twice as much on marketing as they do on research and development.” The Government Accountability Office (GAO), however, in a report to the Senate in 2002, found that, in fact, R&D spending by prescription drug companies was “10 times greater than their spending on DTC advertising.”

- The Committee also appears to believe that their proposals for bans and significant restrictions on advertising will be upheld because “Unlike free speech, commercial speech does not enjoy the same protections under the First Amendment of the Constitution.” The Committee, however, seems to be completely unaware that in the last thirty years commercial speech has been increasingly protected. The U.S. Supreme Court, for example, recently held in the Western States case regarding advertising that, “If the First Amendment means anything, it means that regulating speech must be a last-not first resort.”

- In regard to children’s and food advertising, the Committee makes broad, interlocking, ill-defined and short-sighted recommendations. The Committee calls on advertising in children’s programming to be cut by “50 %” down “5 to 6 minutes/hour.” In addition, the Policy Statement calls for “Congress to implement a ban on junk food advertising during programming that is viewed predominantly by young children.” Unfortunately, the Committee fails even to attempt to define what it means by “junk food” or “young children.” More fundamentally, the Committee completely fails to consider the devastating impact that a 50% cut in children’s advertising would have on the economic foundations of children’s programming on the broadcast media. It also ignores the recent pledge by companies that comprise over two-thirds of all children’s food advertising to focus at least one-half of their advertising on healthy life-style or low fat, low calorie food offerings.

- In their recommendation section, The Committee calls for “Congress to implement a ban on cigarette and tobacco advertising in all media.” This proposal conveniently ignores the fact that far less inclusive proposals to ban or restrict these products’ ads based on a child protection rationale have consistently been knocked down in the state courts and by the Supreme Court. These courts have refused to impose these types of limitations pointing out that in furtherance of protecting children discourse in society cannot be lowered to “the level of the sand-box.” See Lorillard v. Thomas Reilly 533U.S.525 (2001)

Regrettably, this list of errors could be substantially expanded. We are hopeful that in the future the American Academy of Pediatrics will be far more careful when it decides to release policy positions on important issues such as the regulation of advertising. The ad community stands ready to discuss advertising issues with all interested groups. For this discussion to be constructive and productive, however, policy prescriptions must be based on fact and sound analysis rather than misguided supposition and finger pointing.

What Does the Election Mean for Marketers?

Democrats seized control of both houses of Congress this week, giving them the power to chair hearings and set the agenda for the 110th Congress.

What does that mean for the marketing community? Most of our controversial issues do not break down along partisan lines, so in many ways, the election of a new Congress means the continuance or acceleration of existing issues.

For example, the scrutiny on direct-to-consumer prescription drug advertising will continue. Prominent members of Congress from both sides of the aisle have proposed taxes or restrictions on DTC advertising. That battle is likely to continue and intensify. Congressman “Pete” Stark has focused on these issues and is likely to be the Chairman of the Health Subcommittee of the House Ways and Means Committee. Congressman John Dingell, who is expected to return to the Chairmanship of the House Energy and Commerce Committee, has stated that DTC advertising will be one of the issues on the agenda of that committee.

Food marketing to children will remain controversial. One of industry’s most vocal critics, Senator Tom Harkin (D-IA), is likely to be Chairman of the Senate Agriculture Committee and remain a senior member of the Senate Health, Education, Labor and Pensions Committee (HELP Committee), giving him a powerful forum for attacking any food marketing to children he finds inappropriate.

Children’s marketing in general will also remain controversial. A bipartisan group of Senators -- Joe Lieberman (D-CT); Hillary Rodham Clinton (D-NY); Sam Brownback (R-KS); and Rick Santorum (R-PA) – have pushed for legislation to study the impact of media and marketing on the development of children (the CAMRA Act). Senator Brownback recently announced a joint working group with several FCC Commissioners to look at these issues. Although Senator Santorum was defeated, the remaining cosponsors will almost certainly push the CAMRA Act again in the next Congress.

Also, Senators John Rockefeller (D-WV) and Mark Pryor (D-AR) have pushed for restrictions on interactive children’s marketing as part of the Senate telecom reform bill. Those issues will be back next year in the Congress and at the FCC, where several Commissioners have called for major restrictions on any interactivity between commercials during children’s programs and commercial websites.

Consumer privacy issues will continue to receive considerable bipartisan attention next year. Senator Hillary Rodham Clinton (D-NY) introduced a major consumer privacy bill this fall and campaigned for re-election on privacy issues. Congressman Joe Barton (R-TX), who will now be the ranking Republican on the House Energy and Commerce Committee, has stated that privacy legislation is a top priority for him. Congressman Ed Markey (D-MA), who is likely to be a subcommittee Chairman at Energy and Commerce, has also focused on these issues in the past. There were numerous bills and hearings this year on data breaches, spyware and other information collection practices, both online and offline. Also, many members of Congress used more micro-targeting technology in their election campaigns. This experience makes them more familiar with the volumes of information about consumers that is available in the marketplace and the value of this information for effective advertising.

There may also be more pressure for restrictions on the full deductibility of advertising costs. Continuing deficits, the growing national debt, the costs of the war in Iraq and bipartisan pressure for greater fiscal responsibility may lead to the reinstitution of the pay as you go or “paygo” policy. This development could lead lawmakers to look at various new revenue sources. Whenever that happens, advertising tax deductibility often is near the top of the potential target list.

The shift in party control of the House and Senate will bring new committee leadership.

At the Senate Commerce Committee, the chair’s gavel will be passed from Senator Ted Stevens (R-AK) to Senator Daniel Inouye (D-HI). Both members work closely together so there will not likely be major changes in the committee’s operations. There may be several vacancies on the committee, since Senators Conrad Burns (R-MT) and George Allen (R-VA) lost their re-election campaigns. Senator Burns came from the broadcasting industry and both were generally supportive of the marketing community.

Senator Ted Kennedy will likely be the new Chair of the Senate HELP Committee. In the past, he has been critical of DTC advertising as well as tobacco and alcohol beverage advertising. The marketing community has worked closely with the current Chairman, Senator Mike Enzi (R-WY), who will become the ranking Republican member of the committee.

At the Senate Finance Committee, Senator Max Baucus (D-MT) will likely be the new Chairman and Senator Chuck Grassley (R-IA) the ranking Republican. The marketing community has a good working relationship with both members.

On the House side, as previously stated, Congressman John Dingell (D-MI) will likely be the new Chairman of the Energy and Commerce Committee, with Congressman Joe Barton (R-TX) as the ranking Republican. At the Ways and Means Committee, Congressman Charlie Rangel (D-NY) will likely be the Chair. Congressman Rangel has always been aware of the importance of the ad community to the national economy. Several more senior Republicans on the committee lost their re-election campaigns, so the ranking Republican on Ways and Means will likely be Congressman Jim McCrery (R-LA).

The close partisan breakdown in the Senate (51 Democrats and 49 Republicans) and the need to build a coalition of 60 votes to avoid a filibuster gives each individual Senator more bargaining power. Thus, someone like Senator Joe Lieberman, who has been very active on media content issues, has more leverage to get his bills moved through the legislative process.

Since most of our issues do not break down along partisan lines, ANA will continue our efforts to work with members of both parties to protect the interests of marketers. We will continue to stress the findings of the Global Insight report on the economic impact of advertising on our nation’s economy. That report found that advertising produces more than $5 trillion in economic activity annually and is responsible for more than 15% of all American jobs. That’s a positive message about the importance of advertising to our economy.

Food Fight! Food Advertising, Kids and the Obesity Crisis

On Monday I spoke at the National Advertising Division's (NAD) Annual Conference. The title of my panel discussion started with the words “Food Fight.” If in fact, the obesity issue degenerates into a true food fight—we can be sure the public loses and that no one wins. Please find my complete speech below that discusses the current issues surrounding this topic.

Childhood obesity is a serious national and global challenge. It’s a complex, multi-faceted problem that will never be solved unless every part of our society works together in a cooperative way.

The U.S. Surgeon General’s groundbreaking report on obesity in 2001 contained a number of specific recommendations on how to address this serious health challenge in a balanced manner. The report called on companies, individuals, families, schools, governments, and the media to work together to build solutions that will bring better health to everyone.

The advertising community and the food industry have accepted the Surgeon General’s challenge. The sad fact however, is that no other segment of society has stepped up to the plate with a commensurate effort. Where are the new bike paths or playgrounds so children can get more exercise? If obesity is a national crisis, why have physical education programs been cut in the schools? If Congress is serious about fighting childhood obesity, why has it eliminated all funding for the VERB campaign at the Centers for Disease Control?

We are committed to working with others to be part of the solution.

In fact, there are no simple causes and no simple answers to the childhood obesity problem. Studies from around the country demonstrate dramatically different obesity rates from county to county and from state to state, while food advertising is generally uniform across the country. Therefore, we need to address childhood obesity in a comprehensive manner if we are going to make real in-roads to combat this problem.

What steps has our industry taken to address this challenge? The efforts are extensive, comprehensive and on-going.

- More than 4,500 new and reformulated products with lower fat and calories have been introduced in just the last three years. Parents have far more options in supermarkets and restaurants than ever before because marketers are responding to consumer demand.

- Earlier this year, the American Beverage Association and the country’s major soft drink companies announced an agreement with the American Heart Association and the Clinton Foundation to remove high-sugar soft drinks from American schools.

- The Ad Council has partnered with the HHS on the “Small Steps” campaign. The campaign’s website receives an average of 80,000 hits each month. Last fall, the Ad Council launched a new multi-media campaign targeted specifically at children, with the message: “Can your food do that?”

- Numerous marketers have partnered with local governments, schools and non-profits for new programs on physical activity and nutrition education.

- Marketers and industry groups have created broad coalitions to focus on real solutions including:

The American Council for Fitness and Nutrition

The Alliance for a Healthier Generation

Action for Healthy Kids

Shaping America’s Youth

These and other industry efforts comprise billions of dollars in expenditures, and these efforts have been virtually ignored by our critics. It’s time for other segments of our society to launch a commensurate effort.

The marketing community has a long-term commitment to seeing that all children’s marketing is fair and responsible. The industry is presently carrying out a top-to-bottom review of the guidelines of CARU, the Children’s Advertising Review Unit. This review is under the direction of Jodie Bernstein, the former Director of the FTC’s Bureau of Consumer Protection. Many of the hot button issues in this area – advergaming, the use of licensed characters, product placement – are being considered by this review group.

These are not easy issues and there are legitimate differences of opinion on specific questions, but there are no differences of opinion on the need to play fair with kids and have strong up to date self-regulatory standards.

It is critical that the debate in this area be based on fact, not hyperbole or misinformation.

Senator Tom Harkin (D-IA) and other critics, for example, continue to argue that children have been bombarded by an explosion of food ads on TV during the period when childhood obesity rates have increased. This claim, that the average child in America is exposed to as many as 40,000 TV commercials a year, has been repeated so often by different groups, including the Institute of Medicine (IOM), that it has now achieved the status of “urban legend.”

In fact, the opposite is true. TV ad spending and the number of exposures for food and beverage products on television have actually declined over the last several years. ANA and the Grocery Manufacturers of America (GMA) used Nielsen Media Research data to analyze food, beverage and restaurant advertising on TV during the decade from 1993 to 2003. We found that TV ads for these products had actually declined by 13% over that time period.

An FTC staff report released at the FTC/HHS Workshop on food marketing in the summer of 2005 confirmed our findings. The FTC report found that TV advertising for food, beverages and restaurants directed towards children has actually decreased by 34% since 1977.

Three FTC analysts compared the “40,000 commercials” estimate to the total number of hours children spend in front of their TV sets. They calculated that children 4 to 6 years old would have to watch 94 ads per hour in order to see 40,000 commercials per year. That’s not very likely and this type of politically motivated exaggeration is not helpful or productive.

Fortunately this fact gap is about to change. Senator Harkin was able to get an amendment on an appropriations bill to require the FTC to carry out a study on the amount of ad spending in all media for food advertising to children. The report was supposed to be completed this summer but now is likely to be available early next year.

We look forward to this report and some hard data on actual spending in various media. Policymakers should act with real data. Without a proper diagnosis - - prescription and cure of the obesity problem is impossible.

While food marketing to children is getting most of the attention, these efforts now are flowing into serious attacks on all children’s marketing in all media. Let me give you a couple of quotes that illustrate the political environment we face in Washington, D.C.

At an advertising conference last year, Senator Harkin said the following about children’s marketing: “We are exploiting our children. We are pouring acid on their innocence.”

At a conference this summer, Senator Hillary Rodham Clinton (D-NY) and FCC Commissioners Michael Copps and Jonathan Adelstein were all very critical of children’s marketing. Senator Clinton argued that marketers are conducting a “massive experiment” on our nation’s children. Commissioner Kopps argued that children have become “commodities” to be sold to marketers. Commissioner Adelstein said: “We are in the midst of a tremendous wave of commercialism in our media and in our culture . . . Nobody suggests that anything good comes from marinating children’s brains in advertising.”

Our industry simply faces the most serious attack on children’s marketing we’ve seen since the late 1970’s.

When the Senate Commerce Committee considered a major telecom reform bill this summer, they adopted two very controversial and ill-conceived amendments that affect food advertising but go beyond to attack children’s marketing in general.

An amendment offered by Senator John D. Rockefeller (D-WV) would require broadcasters and cable providers to “prevent interactivity” with commercial matter during any children’s TV show as well as during ads aired during or adjacent to children’s programming. The definition of “commercial matter” is extraordinarily broad. Under this amendment, no children’s program could include information about that program’s website, even if it contained exclusively educational material. For example, no episode of “Sesame Street” could provide a direct link to the “Sesame Street” website, even if the site did not sell any merchandise, because the website arguably promotes the “Sesame Street” brand in general. This prohibition makes no sense and raises serious First Amendment concerns.

There is nothing inherently dangerous or wrong with interactivity. Millions of children are already choosing interactivity by watching television while they are online. Why should it matter if a child accesses a website directly through his computer, or indirectly through a link in a TV program?

The other amendment was offered by Senators Bill Nelson (D-FL) and Mark Pryor (D-AR). It would extend the time limits on advertising contained in the Children’s Television Act from broadcast and cable providers to all “other video service providers.” It’s not clear how the commercial time limits could even be workable or relevant in new video technologies such as the Internet and wireless services. Extending time restrictions from television media to the 24/7 world of new media simply will not work.

Earlier this month, the Senate also passed an amended version of the CAMRA Act, the “Children and Media Research Advancement Act.” That bill authorizes the Centers for Disease Control to study the role and impact of electronic media in the development of children and adolescents. The bill’s sponsors come from across the political spectrum – Senators Hillary Rodham Clinton (D-NY), Joe Lieberman (D-CT), Rick Santorum (R-PA), and Sam Brownback (R-KS).

We had problems with several parts of the original CAMRA Act as introduced. The original bill contained a specific pilot study on obesity that appeared to be a “verdict first, research later” approach. We worked with the leadership of the Senate HELP Committee to develop an amended bill that should result in fair, balanced and credible research.

The CAMRA bill demonstrates that concerns about children’s media and marketing are not a partisan issue. We will continue to face attacks on food marketing and on children’s marketing regardless of which party controls the Congress next year.

Let me conclude with our bottom line – the marketing community recognizes that childhood obesity is a serious challenge and we are committed to working hard to be part of the solution. We challenge other segments of society to finally step up and provide a commensurate effort. We also recognize that marketing to children raises unique concerns. We are continually working through CARU to see that children’s marketing is fair and responsible.

Children's Marketing and Interactivity Under Attack

Children’s marketing in general and interactive commercials were both on the hot seat yesterday at a conference sponsored by Children Now, a children’s advocacy group based in California

Senator Hillary Rodham Clinton (D-NY) and FCC Commissioners Michael Copps and Jonathan Adelstein were very critical of the impact of advertising on our children. Senator Clinton argued that marketers are conducting a “massive experiment” on our nation’s children. Commisioner Copps argued that children have become “commodities” to be sold to marketers. Commissioner Adelstein repeated a comment made to other audiences that “nothing good comes from marinating our children’s brains in advertising and violent programming.”

The three policymakers were also very critical of any interactivity in commercials during children’s programming. In 2004, the FCC reached a “tentative conclusion” that there should not be interactive links from children’s programs to commercial websites unless parents opt in to such services. The Commission asked for further comments on how to implement such a policy but has never followed up on this “tentative conclusion.” Senator Clinton and the two FCC Commissioners all argued that the FCC should finalize that policy and ban or seriously restrict any interactivity between commercials in children’s programs and commercial websites. Commissioner Adelstein argued that interactivity must be restricted because “the transition to digital television provides new opportunities for marketers to exploit children.”

The rhetoric of the three policymakers illustrates the challenging political environment facing children’s marketers. Unfortunately, some of the rhetoric is based on fiction, not fact. For example, Senator Clinton and Commissioner Adelstein both repeated the “urban legend” that the average child in America is exposed to as many as 40,000 television commercials a year.

That’s an incredible number that gets headlines and raises eyebrows, but it is simply not true. Three FTC analysts compared the so-called “estimate” to the total number of hours children spend in front of their TV sets. They calculated that children 4 to 6 years old would be watching 94 ads per hour in order to see 40,000 commercials per year. All children 2 to 18 would be watching 40 commercials per hour to see that many TV ads per year. See Todd Zywicki, Deborah Holt, Maureen Ohlhausen, Obesity and Advertising Policy, Law and Economics Working Paper Series, (George Mason University School of Law).

There are serious and legitimate policy issues about the role of children’s marketing in the online world and in the digital TV transition. Debate on those issues should be based on fact, not fiction.

Kaiser Family Foundation Report Focuses on Online Food Marketing and Advergaming

The Kaiser Family Foundation released an important report today entitled, “It’s Child’s Play: Advergaming and the Online Marketing of Food to Children.” They also held a panel discussion, on which I participated. The panel, which also included William Dietz of the Centers for Disease Control and Prevention; Dale Kunkel of the University of Arizona and a member of the Institute of Medicine Committee on Food Marketing to Children and Youth; Margo Wootan of the Center for Science in the Public Interest; and Nancy Daigler of Kraft Foods, provided an opportunity for me to point out some of the positive things food and restaurant companies and the marketing community are doing to address concerns about childhood obesity in general and on the internet in particular.

Kaiser has performed a valuable service by initiating research on online marketing of food to children. It’s important to have concrete data rather than rhetoric and hyperbole that too often surrounds these issues.

From my perspective, there are two important findings in the report that should be noted and that may not get the attention they deserve. First, the study found that websites for 72% of the brands surveyed included some type of nutritional information about the product. This highlights the potential of the Internet as an important source of health and nutrition information for parents and children. Second, all of the websites reviewed were found to be in compliance with the Children’s Online Privacy Protection Act (COPPA). In fact, through blocking and filtering technology, parents have more control over what their children see online than in any other media.

It’s important to put online marketing in its proper context. While growing, online advertising still constitutes only about 4.7% of total ad spending. Online food marketing to children is an even smaller percentage of this total. The report claims that food and restaurant websites aimed at children receive a total of 12.2 million visits per quarter from children 2-11, or approximately 48 million visits per year. By contrast, our own review of Nielsen data showed there were more than 204 billion TV impressions for all food and restaurant commercials for kids in 2004. Thus, the exposure of children to food ads online is still quite miniscule compared to what is seen on TV commercials.

At the panel, I noted that online advertising to children is not the “wild west.” The self-regulatory guidelines of the Children’s Advertising Review Unit (CARU), the ad community’s self-regulatory arm that oversees children’s advertising, and the Federal Trade Commission’s (FTC) enforcement authority, apply in the online world as well as offline. CARU already has brought cases against companies for online marketing efforts and routinely monitors ads in all media, including the Internet.

Furthermore, all of the issues discussed in the Kaiser report (adver-gaming, use of licensed characters, viral marketing, etc.) are being reviewed now by a special CARU working group led by Jodie Bernstein, former Director of the FTC’s Bureau of Consumer Protection. These are complex issues but CARU and the National Advertising Review Council (NARC) are committed to carefully examining them. We are going to continue our commitment in making sure that advertising to children in all media meets high standards of accuracy and takes into account children’s developing cognitive ability.

The marketing community recognizes that childhood obesity is a serious challenge and we are working proactively to be part of the solution. These efforts are extensive, comprehensive and on-going:

- Numerous companies have responded in the marketplace to concerns about obesity by developing menu alternatives, serving size changes and product reformulations. More than 4,500 new and reformulated products with lower fat and calories have been introduced in just the last three years. Parents have far more options in supermarkets and restaurants than ever before because marketers are responding to consumer demand. These marketplace imperatives continue to drive the business community’s efforts to meet the public’s demand for food options to help combat the obesity challenge.

- The American Beverage Association and the country’s major soft drink companies recently announced an agreement with the American Heart Association and the Clinton Foundation to remove high-sugar soft drinks from American schools.

- The advertising community also is using the power of the Internet to respond to the obesity challenge through the efforts of The Ad Council. The Ad Council has partnered with the HHS on the "Small Steps" program. The campaign’s website receives an average of 80,000 hits each month. Last fall, the Ad Council launched a new multi-media campaign targeted specifically at children, with the message: “Can your food do that?”

- Numerous marketers have partnered with local governments, schools and non-profits for new programs on physical activity and nutrition education.

- Marketers and industry groups have created or joined broad coalitions to focus on real solutions. A few examples include the American Council for Fitness and Nutrition, Alliance for a Healthier Generation, Action for Healthy Kids, and Shaping America's Youth.

These and other industry efforts, which comprise billions of dollars in expenditures, have been virtually ignored by our critics, even though this is one of the largest industry driven responses in recent memory. We are committed to working with others to be part of the solution. The Kaiser report demonstrated that the Internet can play a critical role in that effort.

Senate Telecommunications Bill Stifles Development of New Communications Technologies

The ANA sent a letter to the members of the Senate Commerce Committee that stated, “new media innovations and communications technologies will be strangled or severely damaged by the Senate Commerce Committee’s reform bill (H.R. 5252, Advanced Telecommunications and Opportunity Reform Act).”

The ANA called on the Senate Commerce Committee to drop two provisions of the communications reform legislation that was passed by that Committee on June 28th when it goes to the floor of the Senate. The two provisions include:

- Prohibiting interactivity with any commercial matter during children’s TV programming.

- Mandating broadcast-type commercial time limits during children’s programming on all video media.

We also raised serious questions about a further provision concerning violent television programming. These provisions would have a far-reaching impact on the media and could thwart the development of new communication innovations. They also raise fundamental policy and constitutional questions that demand a thorough analysis. Unfortunately, all these provisions were simply folded into the Senate bill without any opportunity for hearings or debate. The interactivity and time limit provisions must be removed when the full Senate considers the communications reform bill or they will severely damage development of the media marketplace.

An amendment successfully offered by Senator John D. Rockefeller (D-WV) to H.R. 5252 would require broadcasters and cable providers to “prevent interactivity” with commercial matter during any children’s TV programming as well as during ads aired during or adjacent to children’s programming. We believe this provision is aimed at stifling the development of new technologies and innovative forms of programming even before they exist, and long before any problems have arisen. As such, this far-reaching legislative language is a ‘solution’ in search of a problem. Such preemptive regulation is almost always bad public policy simply because of the unanticipated consequences of restricting the development of new technologies and services.

The definition of “commercial matter” in the amendment is significantly overbroad. Under this provision, no children’s program could include information about that program’s website, even if it contained exclusively educational material. For example, no episode of “Sesame Street” could provide a link to the “Sesame Street” website, even if the site did not sell any merchandise, because the website arguably promotes the “Sesame Street” brand in general. This prohibition makes no sense and raises serious First Amendment concerns.

It is virtually impossible to restrict “interactivity” because children may choose interactivity by engaging in more than one media experience at a time. There is nothing inherently dangerous or wrong with interactivity. Many children engage in ‘media multitasking’ by watching television while they are online. Why should it matter if a child accesses a website directly through his computer, or indirectly through a link in a TV program?

The ANA also opposes an amendment offered by Senators Bill Nelson (D-FL) and Mark Pryor (D-AR) that would extend the limits on advertising contained in the Children’s Television Act from broadcast licensees and cable providers to other video service providers. This proposal has potentially vast ramifications in light of the development of new video services such as online video and mobile wireless services. It’s not clear that the commercial limits would even be relevant or workable in these new video technologies. The courts have permitted the government to impose more intrusive content regulations on broadcast licensees on the theory that they were using a scarce public resource, the broadcast spectrum. But there is no constitutional justification for extending the commercial time limits across the board to all video service providers.

Another amendment by Senator Rockefeller would require the FCC to complete its inquiry on violent television programming. The ANA does not oppose further study of this issue or having the FCC complete its two-year-old inquiry. However, we would strongly oppose any effort by Congress to dictate or suggest how the FCC should conclude that inquiry. Every court considering this issue has struck down efforts to regulate violent programming, regardless of the medium of communication.

These provisions may be well-intended, but they would make sweeping and misguided changes in the media landscape and raise serious First Amendment concerns. It is critical that these provisions be removed from the communications reform bill when H.R. 5252 bill goes to the Senate floor.