Tobacco Documents Online

American Association of Advertising Agencies Inc., Suite 700,1899 L Street, N.W., Washington, D.C. 20036 • (202) 331-7345 File No. 792-3204 Washington Office Fi 1 e No. 2 0 9 - 4 3 December 4, 1981 Office of the Secretary Federal Trade Commission 6th and Pennsylvania Avenue, N.W. Washington, D.C. 20580 COMMENTS OF THE AMERICAN ASSOCIATION OF ADVERTISING AGENCIES, INC. REGARDING THE COMMISSION STAFF REPORT ON CIGARETTE ADVERTISING By formal notice dated June I0, 1981, the Federal Trade Commission requested comments by interested persons concerning its Staff Report on Cigarette Advertising (File No. 792-3204). The Commission alleges that: I) consumers are unaware or underestimate the health risks of cigarette smoking, Z) current cigarette advertising is deceptive under Section 5 of the Federal Trade Commission Act by omitting material information about the asserted health risks of ~garette smoking, and 3) sev4ral remedial alternatives in advertising should be imposed upon the tobacco industry. The most effective options to remedy this alleged deception, as detailed by the Commission Staff Report, include consumer education througk public service announcements, changing the Headquarters: 666 ThirdAvenue. New Yonk N.Y. 10017 • (212) 682-2500 T!05390050

Office of the Secretary Federal Trade Commission size and shape of the current warning in advertising and replacing the current warning with a system of short warnings that rotate quarterly in cigarette advertising. INTEREST OF THE A.A.A.A. The American Association of Advertising Agencies, Inc. ("A.A.A.A.") submits these comments in response to the Commission's invitation. The American Association of Advertising Agencies, Inc. is the national association of the advertising agency business. Its members include more than 530 advertising agencies, located throughout the United States and in virtually every state in the union, which handle about three-fourths of all national advertising placed by advertising agencies as well as a substantial amount of local retail and public interest advertising. Members of the A.A.A.A. are professionals in the art of communicating with the public at large. They design advertising campaigns, creating and placing advertisements on behalf of clients who, for the most part, are business'ca selling goods and services to the public. The A.A.A.A., because of its membership's continuing interest in events of significance to the advertising industry and its involvement with cigarette advertising, presents its view that the Commission should not approve recommendations in the Staff Report. Ti05390051

Office of the Secretary Federal Trade Commission The Commission's Attempt to Impose Undue Restrictions on theFreedom To Advertise Honestly and Freely Violates the First Amendment Privileges of the Advertiser and the Consumer • Advertising of manufactured products increases consumer understanding of availability, allowing purchasers greater options as to products and their uses. From the standpoint of the manufacturer, advertising often results in increased brand sales and reduced per-unit costs, allowing for manufactur- ing on a scale that better serves the public interest and yet, in the aggregate, also serves the manufacturer well. Advertising also speeds the introduction of new products and product improvements. A.A.A.A. member agencies which serve cigarette manu- facturers create and place advertising that is mainly competitive, aimed at advocating a brand preference to gain sales and market shares. Media dollars spent achieve brand competition in mature markets whose size is largely controlled by social and economic forces. Advertising in the tobacco sector is neither a strong i~fluenceon total consumption nor a motivator in the decision whether or not to smoke. (I)(2) (5)(4) Tke freedom to receive brand information through advertising, to be fully informed on matters of interest -- including the pride and quality of available goods -- is as precious an inheritance as the freedom to speak through T105390052

Office of the Secretary Federal Trade Commission advertising. That is why the First.Amendment reaches beyond the individual advertiser to encompass, as well, the recipient of the communication (Exhibit I~. The A.A.A.A. and its members sirongly support a funda- mental principle: that it should be legal to advertise any ~ood or service to the same extent that it is legal to sell that good or service. That basic principle is of significance in these comments because the Federal Trade Commission has, in recent years, imposed restrictions on the nature and content of cigarette advertising. Further undue restrictions on the freedom to advertise honestly and freely -- whether directed at a particular medium or a particular type of message, or a particular industry.-- will inevitably impair the right of the advertiser to convey his or her messagE,- and the right of the consumer to receive information of value in reaching a purchase decision. Moreover, further restrictions on the nature and content of cigarette advertising, as outlined by the Federal Trade Commission, would be counterproductive to the manufacturer's ~lling message, negating the'overall communication effective- ness of the advertising. This might well result in a decision not to advertise or to advertise in a greatly restricted or reduced manner. Research studies (5)(6] have shown in recent years that denying product information to consumers (which effectively T105390053

Office of the Secretary Federal Trade Commission limits competition) can adversely affect the functioning of the market system to a very considerable extent. Further evidence comes from those economies, mainly in totalitarian countries, where advertising is prohibited or severely restricted. Such economies are notorious for the absence of choice, poor quality, and the general low-availability of consumer goods. One further important consequence of tobacco advertising restriction is that such action would almost inevitably lead to a build-up of pressure to restrict advertising on a wide range of other products whose use or misuse is thought to be potentially damaging to consumers. The Commission's Basis for Involvement -- Deception by Omission -- is Supported Neither By the Staff Report Research Nor By Current Consumer Behavior It is the belief of the A.A.A.A. that the Federal Trade Commission's basis for involvement in this issue -- deception by omission -- does not hold up to a rigorous analysis. belief is supported by the following: I. Conclusions of the research conducted by the This Federal Trade Commission Surveys of consumer attitudes and perceptions conducted by the Federal Trade Commission, T!05390054

O££ice o£ the Secretary Federal Trade Commission Q specifically the Chilton and ~ studies, conclude that the overwhelming majority of consumers. associate cigarette smoking with a number Of health-related problems. Furthermore, one is not able to interpret what constitutes expected consumer "knowledge" of smoking risks since the data does not evaluate responses in the context of other comparable subject areas (e.g. automobile fatalities, on-the-job casualties, etc.) (Exhibit 2). Changes in Cigarette Smoking Practices The majority of people who now smoke (the lowest proportion of cigarette smokers since the 1950's) have made at least, one serious attempt to quit -- about 60% of the over 50 million smokers. (7) Additionally, competition through advertising and a growing consciousnessof the industry have led to a substantial share of low-tar and low-nicotine cigarettes, thus causing a dramatic change in the smoking habits of the population within the last '10 to 15 years. Low-tar brands now account for 48% of all cigarettes sold in the U.S. (8) Brand Advertising is Only One o£ Many Sources Of Product Information Brand advertising in a free market system com- municates information about the characteristics TI05390055

Office of the Secretary Federal Trade Commission of tobacco products, which aids consumers in their decision to purchase one competitive brand over another in the same product category. A major contribution of advertising has been the display of tar and nicotine levels in tobacco products -- especially in new product introductions or extensions. Consumers have, at their disposal, a wide variety of other tobacco product information sources which offer the following: I) objective educational programs, 2] differing perspectives on the health risks of smoking, and 3) private consultation as to what effect cigarette smoking might have on a particular individual. More specifically, these sources include the following: -Educational -- formal in-school educational proErams, public awareness programs initiated by community organizations, and government- originated material. -Differing Perspectives -- broadcast and prinZ editorial journalism, public service health campaigns, and advertising for products designed to help consumers stop or restrict their smoking practices. -Private Sources -- consultation with personal physicians, peer analysis of smoking habits. T105390056

Office of the Secretary Federal Trade Commission Brand advertising, as a competitive tool, should not bear the responsibility o~ delivering a total educational effort -- a task more appropriately addressed and shared by the aforementioned sources. Knowledge as a function of behavior The Chilt0n study conducted for the Federal Trade Commission concludes that knowledge of smoking health hazards does not influence behavior: "Factual knowledge about the health consequences of smoking was not found to be significantly related to current smoking behavior." (Exhibit If) Therefore it is inappropriate for the FTC staff to infer that more information on health hazards is necessary on the basis of behavioral change, or lack of behavioral change, The government may well have some role in insuring that sufficient information exists as a basis for consumer choices, but it certainly has no further role, even if the behavior it might argue for is not forthcoming, Freedom .of choice includes t~e freedom to make a choice others might consider unwise. The Decision to Smoke or not to Smoke is a Complex Social/Psychological Phenomenon The behavior of people in relation to smoking is essentially of a social/psychological nature. T105390057

Office of the Secretary Federal Trade Commission This behavior has its origin in a certain skepticism toward any advice or information and depends to a crucial extent on social environment, parents, friends, etc. (9) Moreover, an overwhelming weight of evidence indicates that advertising is not a significant influence on the decision to smoke by young people. To quote a recent study by Kaplan (!0): "...there is insufficient psychological evidence...that cigarette advertising is a significant factor in inducing young people to smoke .... A great deal of evidence points to the conclusion that advertising is one of the least significant factors inducing teenagers to smoke." Experience in Foreign Countries Suggests that Serious Counter-Productive Results Occur When Undue Restrictions are Placed on Cigarette Advertising . The importance of advertising to the functioning of the market system has also been demonstrated in the specific case of the tobacco industry abroad. Several countries have banned cigarette advertising in recent years, and analysis of ;, consumptlon data from such countries shows clearly that not only have total consumption trends remained unaffected, but also the absence of product information has had a major negative impact on the introduction of new products or product improvements. T105390058

Office of the Secretary Federal Trade Commission. 10. More specifically, experience in Norway and Italy, where cigarette advertising in all forms is prohibited and strong anti-smoking campaigns exist, illustrates that media advertising has no affect on total cigarette sales. While consumption has steadily increased in both countries during the ban period, consumers have not had the choice of switching to low-tar/low-nicotine products since they are absent from the marketplace because there is no incentive or marketing apparatus available to introduce them. However, the percentage of low-tar and low-nicotine cigarettes is high in Germany, the largest advertising market in Europe. The introduction of these products was made possible through advertising which created new brand preferences within the category (Germany has a ban on radio and TV cigarette advertising similar to the U.S.). Finally, the most recent survey of all -- produced by ZAW (a federation of advertising industry trade associations in Germany), covering data from 14 countries, concluded that "every country in the world that has tried to reduce ~.moking b~ restricting tobaccd advertisements has been unsuccessful." {3) T!05390059