WFA Comment & Analysis: "Time to stop being society's scapegoat"

Date: 30/07/2008

A quarterly article from WFA Managing Director Stephan Loerke (.doc file available at bottom of page).

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Time to stop being society's scapegoat

"Laws are like sausages. It's better not to see them being made." So exclaimed a famous German statesman, who could have had little notion that, 200 years on, regulating advertising would be touted as a solution to childhood obesity.

Yet those who have witnessed efforts to restrict advertising of late might empathize with this unsavory image. Our business has fast become the instinctive regulatory target for society's problems, regardless of whether the evidence base supports legislation.

Alcohol abuse, childhood obesity, gambling addiction, excessive materialism among children, sexual discrimination, even CO2 emissions and global warming: the blame has been laid at advertisers' door for all of these to a greater or lesser extent. Largely unsubstantiated claims have led to concerted attempts, many of which have been successful, to pass laws on advertising in countries all over the world.

The US is the only country to constitutionally protect commercial speech. But even this has not prevented attempts by pressure groups and regulators from proposing ad restrictions and bans. In countries where advertising does not enjoy the same protection, we are witnessing a gradual erosion of advertising freedoms that will cost industry and, ultimately, society and the consumer.

So what is driving this anti-advertising sentiment and how can we address it head on?

The first cause lies in a frightening lack of understanding about how advertising benefits the consumer and the societies in which we live. Most worryingly, this lack of understanding can be witnessed in increasingly important circles among those who make the decisions about what we can and cannot do.

A recent poll conducted amongst regulators of one European member state showed that almost half the respondents thought a newspaper would be cheaper without advertising since there would be less paper! This exposes not only an astonishing misunderstanding of how advertising can benefit us by providing cheaper or free content but a lack of cognizance of some very basic business precepts.

Research recently conducted for the Financial Times demonstrates how most UK and European Parliamentarians have no business experience whatsoever. Less than one in seven in the UK have 10 years or more experience of private sector management, according to comprehensive analysis of politicians' CVs. Almost three-quarters have no business experience whatsoever. In Brussels, only one in 20 of the Members of the European Parliament can lay claim to at least a decade in business, while 86 per cent have no experience of any duration.

This is a major concern when reflecting that the vast majority of law in Europe on advertising comes from Brussels. Even more so, when we see proposed ad restrictions in Brussels being transported around the world. Just witness how European approaches to food advertising in light of the obesity epidemic have become the regulators' reference in South Africa, Latin America and Asia-Pacific. More and more, this will be the case as trans-national institutions, such as the World Health Organization, are increasingly called upon to address issues which are global in nature, such as obesity.

My guess is that the number of US senators with business experience would be much higher. But the propensity for "career politicians," selected for their perceived election-winning ability rather than their industry experience, risks impacting US multi-nationals, particularly in the growth markets of tomorrow.

The second cause derives from global activists who successfully fuel people's misgivings or preconceptions about advertising. Just as globalization and new technologies have spawned a wealth of opportunities for businesses and consumers, naturally perhaps, they have also led to the creation to a new breed of "consumer watchdog."

Many of these non-governmental organisations have understood better than most how to leverage globalisation and new technologies to monitor industry, propagate their messages and help shape societal expectations as a result. Their single-issue agenda, closely-knit (and largely unaccountable) networks and savvy use of the press allow them to scrutinise and publicize corporate activity to an unprecedented degree. Advertising, as the most visible of corporate activities, is invariably the first target.

Hence the sensationalist sound bites; food advertisers will "[condemn] children to an early death," misleading environmental claims (or "greenwashing") will result in "the destruction of the world's rainforests" and online behavioural targeting will lead to a "marketing Big Brother".

The opportunities afforded by new technologies come with the on-box warning that corporate dirty washing, real or perceived, will be hung out for all to see. And while the activists have an agenda and will go out in search of foul play, the average consumer with broadband is equally empowered to have their say. Companies must fast adapt to a world in which there is an open global discourse going on about their brands 24/7.

The good news is that industry is fast learning that in an era of heightened corporate scrutiny that genuine social responsibility, consumer and stakeholder engagement, joined-up policy-making across all markets, open communication, transparency and sincerity are all imperatives for good business in the 21st Century.

But, as an industry, we can and must go further. For the calls to regulate our business are getting louder and the regulator - and even the public at large - continue to see advertising restrictions as quick fixes to societal problems, with little heed for the potential consequences.

The World Federation of Advertisers has just launched an ambitious campaign with our partners in the agencies and the media to champion the role and value of advertising worldwide. We have assembled a toolkit which - through our national associations in 55 markets and 50 Fortune 100 corporate members - can be tailored to local realities and communicate the benefits of advertising to regulators and key decision-makers.

We must educate policy-makers and some sections of the media (who sometimes forget they largely depend on our revenues) about the potential unintended consequences of restricting advertising. It is not good enough to stand aside and watch as our advertising freedoms are slowly whittled away. Bismarck might have coined the reference to the "salami effect;" single ‘slices' of legislation passing largely unnoticed until we are left with nothing at all.

We are proud of what we do and rightly so: advertising provides unprecedented consumer choice, allows innovation to be brought to market, encourages competition, drives economic growth and wealth creation and funds large sections of the media, sports, arts and culture. Not forgetting it is often so immensely creative, engaging and entertaining.

This may all seem obvious to those within our community. But it is not always the case for those on the outside. And if we don't champion what we do, no one else will do it for us. Better we act now than face more of the unsightly process of seeing how hot dogs are made.

Stephan Loerke,
Managing Director, World Federation of Advertisers


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Documents:
WFA MD - Time to stop being society's scapegoat - July08.doc