Ben Cooper

Focus - FTC to Provide Test of Industry Control of Online Marketing

By | 31 March 2011

In its forthcoming review of alcohol advertising self-regulation, the Federal Trade Commission will look at digital and social media for the first time. Ben Cooper believes that, in spite of the industry expanding its codes to cover these media, the review may shine a spotlight on an area of particular sensitivity for the alcohol sector.

Later this year, the Federal Trade Commission (FTC) is to undertake a review of alcohol advertising self-regulation. This is in itself not an alarming matter for the industry, even though it is the fourth such review since 1999.

Indeed, the fact that this has happened four times in 12 years could be seen as encouraging. The regulator is committed to monitoring how the industry polices advertising on a regular basis, and the last such probe gave the industry a comparatively clean bill of health.

The 2008 review found that 97% of total advertising impressions were due to advertising placements which met the 70% rule, whereby the audience has to be at least 70% legal drinking age. It also showed that industry had acted on FTC recommendations.

The Distilled Spirits Council of the US (DISCUS) says that, each time the FTC has reviewed the controls in place, it has “praised the spirits industry for its rigorous code and self-regulation”.

However, there are two reasons why the drinks industry may be a little more anxious now than in 2008.

Crucially, this review takes in digital and social media, an area of considerable sensitivity for the alcohol industry and one where campaigners have been focusing a lot of their energy. The FTC has said that it is likely to concentrate on how companies avoid collecting information from users under the age of 21 and the credibility of age registrations.

Secondly, the 2008 review was carried out under the Bush administration, which took a rather laissez-faire view of commercial regulation. The influence of Obama appointees at regulators like the Food and Drug Administration and the FTC may not have resulted in the changes some activists hoped for at the outset, but the priorities have definitely shifted.

So far, the alcohol industry has not been a major focus, but it will be interesting to see whether a new leadership at the FTC results in a more exacting approach to alcohol marketing this time round.

Neither the FTC's chairman, Jon Leibowitz, nor David Vladeck, director of the FTC’s Bureau of Consumer Protection, has had a huge amount to say about alcohol since their arrival, but both have taken a keen interest in consumer protection issues around digital technology and the Internet, and the protection of children from inappropriate marketing.

While internet marketing of alcohol has developed significantly since the 2008 review, so have the industry’s self-regulatory controls of this form of marketing. Only last month, the Beer Institute, the US national trade association for the brewing industry, added new digital media provisions and a new Internet privacy policy to its Advertising and Marketing Code.

In fact, the alcohol industry was relatively slow in comparison with other sectors to embrace digital marketing, quite possibly due in part to the responsibility issues surrounding it. In addition to the attention of public health campaigners, the issue of alcohol on the Internet has also been taken up by groups pushing for greater controls on the Internet in general, such as the Center for Digital Democracy (CDD).

Last year, a report from the CDD and Berkeley Media Studies Group of the Public Health Institute, entitled 'Alcohol Marketing in the Digital Age', noted the increased use of social media and other digital tools by alcohol companies, raising concerns about how behavioural and other data were being gathered and used and the possible effects on underage drinking.

CDD executive director Jeff Chester said at the time that the alcohol industry’s digital and social media marketing tactics were “blurring the boundaries between advertising and content with unprecedented sophistication”. The authors passed a copy of the report to the FTC, urging immediate action.

In its response to the new FTC review, Dr David Jernigan, director of the Center on Alcohol Marketing and Youth (CAMY), says the move to collect information on industry practices in digital and social media was “a significant development”, adding that it was “unclear” whether the industry’s codes or government oversight had kept up with the industry’s move into social media.

Industry groups may be confident that their members are abiding by voluntary codes regarding brand websites, but a further worry is whether the review will shine the spotlight on user-generated material featuring alcohol. In particular, the presence on the Internet of countless homemade videos depicting alcohol abuse – nearly always with brand names prominently featured – is a considerable concern.

Brand marketers know only too well that the image of someone ‘chugging’ a bottle of Jack Daniel’s does the brand’s image no good, regardless of where the video originated. By the same token, the overall image of alcohol as a product to be enjoyed responsibly and in moderation is hardly reinforced by the thousands of video clips on the Internet featuring excessive and dangerous consumption.

However, drinks companies face a problem, as Phil Lynch of Brown-Forman explains: “We abhor such depictions of irresponsible, stupid behaviour, but because of the freedom of speech we enjoy in this country, we don’t have the legal ability to prevent people from expressing themselves in such foolish and potentially dangerous ways in the literally millions of websites, blogs and other forms of social media that exist.”

It is a difficult situation for the industry. Because, while it may be that irresponsible user-generated material is beyond its control, issues of corporate responsibility and reputation do not always work along such demarcated lines. Notwithstanding the issue of freedom of speech, whatever can be done within the law to restrict depictions of alcohol abuse on the Internet will be firmly in the drinks industry’s interest.

Engagement with the Internet providers themselves is also crucial. DISCUS says it has had meetings with social media players, which were also attended by FTC representatives. The fact that alcohol companies are now using Internet advertising so much more should, in theory, give them greater leverage in urging service providers to screen more effectively for harmful content.

The FTC review may well show that alcohol companies are abiding by sufficiently rigorous standards in their own Internet communications, but the fact that the Internet remains awash with images of alcohol abuse surely leaves regulators and service providers with further questions to answer.

Sectors: Beer & cider, Corporate social responsibility (CSR), Legislation, Marketing – advertising & promotions, Spirits, Wine

Companies: CAMY, Brown-Forman

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