American Advertising Foundation. Newsletter


Forwarded message:
Date: Thu, 16 Nov 1995 20:40:28 +0100
From: (Michael Uwe Moebius)
Subject: Newsletter from The American Advertising Foundation

Date: Wed, 15 Nov 1995 12:48:53 -0400
From: (Sam Sternberg)
To: Multiple recipients of list <>

Item; Newsletter from The American Advertising Foundation
(Link inactive 29 September 2005)
(Link active 29 September 2005)

Contents: The foundation provides its members with a montly legislative
report on state and federal legislation and court cases effecting
the ability of advertisers to shade the truth. A very thorough
report that unabashedly presents the views of the industry to
it members. A copy is attached.

November 1995


FDA Solicits Tobacco Comments
The FDA has extended the deadline for public comments on its proposal
to limit tobacco advertising until January 2, 1996. As reported in
recent issues of Government Report, the tenets of the proposal would
constitute a de facto ban on most advertising directed at adult

While the FDA's goal is to curb illegal cigarette consumption among
minors, AAF has argued that the proposed restrictions would affect
almost exclusively legal, adult smokers. The restrictions are not
"narrowly tailored" (as required by law) to block advertising only to
underage users. Under the Constitution, limitations on speech are
permissible only if the regulations are "narrowly tailored" to serve
the relevant group. AAF contends that the FDA proposal would adversely
infringe on the rights of legal smokers, and moreover would not deter
underage smoking.

Under the FDA proposal:

* Almost all tobacco ads would be limited to a "tombstone" format
(black and white text only with no colors or pictures).
* Tobacco brands could no longer sponsor sporting events.
* Tobacco advertisers would be required to dole out $150 million
annually to fund anti-smoking campaigns. Contributions would be
contingent on each brand's pro rata share of all tobacco
advertising expenditures.
* Outdoor ads for tobacco would be banned within 1000 feet of all
schools, churches and playgrounds - even if the ads were not
directly accessible from the institution.

AAF President Wally Snyder has commented that the proposal is a clear
infringement of Constitutionally-protected speech, which, if
implemented, will likely to lead to further attacks on commercial
speech in the future. AAF has called for industry support of other,
more promising proposals aimed at curbing teen smoking: limiting
access to vending machines; halting tobacco "sampling" via mail; and
strongly enforcing fines against retailers who sell cigarettes
unlawfully to minors.

The AAF most strongly urges its members to write to the FDA in
opposition to these unconstitutional limitations on free speech. Send
your letter to: Dockets Management, Branch HFA-305, Food & Drug
Administration, Room 1-23, 12420 Parklawn Dr., Rockville, MD 20857. In
other tobacco-related news:

Senator Wendell Ford (D-KY) has introduced legislation as an
alternative to the FDA proposal. The bill is intended to minimize
limits on tobacco advertising directed at adults while still
preventing any problematic advertising to minors.

Among the major provisions:
* Tobacco ads would be outlawed within 500 feet of schools unless
they appear on interstate highways not visible from the schools.
* Tobacco ads would be prohibited in publications for which
subscribers aged 18 and younger constitute more than 15% of the
total readership.

Senator Ford's bill also includes a number of actions designed to keep
tobacco products away from minors. The measure would require that all
cigarette vending machines be situated in plain view and under the
direct control of a location supervisor. The proposal also restricts
the distribution of free tobacco products.

No hearings have been scheduled on this bill. While it represents an
obvious improvement over the FDA proposal, it continues to raise
Constitutional concerns about speech. The AAF is studying whether
these problems can be cured.

Tobacco Ad Tax Bill Defeated in Senate
In the closing moments of the Senate's debate over the budget, Senator
Bill Bradley (D-NJ) offered an amendment proposing to disallow the tax
deduction for tobacco advertising. The amendment was challenged by
Senator Wendell Ford (D-KY) on procedural grounds as a violation of
the Budget Act.

Under the ground rules of the debate, the two senators each were given
30 seconds to state their cases. Ford argued that it was inappropriate
to target a specific product through the tax code. He said that a
successful assault on tobacco would lead to further attacks against
other products.

The vote to waive the Budget Act (which would have permitted Bradley
to go forward with his effort) was defeated 77-23 and the amendment

AAF president Wally Snyder recognized that positive responses from AAF
member federations helped defeat the proposal.

Bradley may attempt to resurrect the proposal as a free-standing bill
or as an amendment to another piece of legislation. AAF will continue
to lobby the situation.

AAF Speaks to FDA About Drug Ads
On October 18, AAF senior vp Jeff Perlman testified at an FDA hearing
on the subject of direct-to-consumer advertising of prescription
drugs. He called on the FDA to encourage, rather than discourage, the
amount of truthful information made available to consumers through

Perlman described a number of situations in which advertising could
fill an obvious vacuum and promote patient health. Through
advertising, a consumer may be alerted about a new treatment, or may
learn that a symptom he/she is experiencing is a warning sign of a
serious disease.

Perlman noted that the FDA's current limitations on drug advertising
do not pass Constitutional muster, as they are not "narrowly
tailored." Furthermore, the restrictions achieve little in terms of
protecting consumers, he said - although as a negative consequence
they may perpetuate higher product costs. (Advertising normally
encourages competitive pricing.)

The current restrictions also make broadcast advertising almost
impossible, because the volume of required information renders ads too
expensive. The required summaries are excessively technical, he said,
and the format makes it nearly impossible for consumers to weed out
relevant information before seeing a doctor.

Finally, Perlman suggested that the ad industry and the FDA should
work together to educate consumers about health options. New
technology is making information more accessible and consumers are
inevitably becoming more involved in their health care decisions. The
advertising community can help the FDA promote essential health
information to consumers, he said.

AAF Gives Green Thumbs Up
In comments filed with the FTC on October 2, AAF stated that the
agency's Environmental Guidelines appear to have helped lessen
consumer confusion associated with some environmental claims. Citing
anecdotal evidence from AAF members, AAF president Wally Snyder wrote
that the guides have provided direction to advertisers wishing to
promote the environmental aspects of their products. Also, he wrote,
the guides have bolstered confidence among manufacturers who have not
previously advertised environmental attributes, but are considering
doing so.

AAF believes, in fact, that the FTC Guides could have been even more
effective were it not for some inconsistent state laws that remained
unchanged until recently. The last of these state laws (in California)
has been amended in accordance with FTC standards (see related story
on page 1). As a result, AAF expects to see an increase in the use of
environmental marketing claims in the near future.

AAF comments were filed in response to the FTC's decision to review
their Environmental Guides three years after publication. While some
fine tuning could possibly occur in the coming months, no significant
changes are expected.

AAF Strengthens Ties with FTC
October 2, AAF president Wally Snyder received a letter from FTC
chairman Robert Pitofsky which read, in part:

As you may have heard, the full Senate, in a floor vote, restored 10%
of the budget cut proposed by the Senate Appropriations Committee. In
the floor debate, several senators singled out the FTC as an agency
doing the kind of work that should not be reduced drastically at this

I feel sure that the kind of letters written by you and others in
support of the FTC's budget made a difference in the appropriations
debate. The argument that you advanced - that successful voluntary
regulation depends on a forceful FTC presence - was both powerful and
true. I found the willingness of the AAF to take that position
especially gratifying. Please pass along my thanks to your colleagues
for coming to our aid in this matter.


California OK's Green Marketing Guides
In a major victory for the advertising industry, California Governor
Peter Wilson has signed into law a bill that conforms California
restrictions on environmental marketing claims with those in other

Senate Bill 426, which was signed into law on October 6, requires that
environmental marketing claims in California comply with uniform
standards contained in the FTC Guidelines for Environmental Marketing
Claims. Prior to enactment, California standards were considerably
more stringent than FTC standards. The regulations made it difficult,
if not impossible, for national advertisers to market the
environmental attributes of their products in California. The new law,
referenced in the California code as Chapter 95-642, goes into effect
January 1, 1996.

AAF California members played a significant role in this victory by
sending numerous telephone calls, faxes and letters in support of the
legislation. The campaign helped solidify significant support for the
measure in both chambers. The Assembly voted 41-27 in favor of the
bill; the Senate tally was 22-9.

New York. Spurred by recent controversy over the Calvin Klein
campaign, the New York City Council Committee on Transportation
conducted a September 11 hearing on the Metropolitan Transit Authority
advertising policy. Specifically at issue was a measure (Int. No. 381)
proposing to prohibit advertising in the transit system deemed
"harmful to minors." The hearing was chaired by Council Member Noach
Dear, primary sponsor of the legislation. Ron Fierman, executive vpP
general manager of Warwick, Baker and Fiore and president of the
Advertising Club of New York, testified against the bill.

No vote was taken and no further action is currently scheduled.

Florida. On October 2, the city commissioners of Lakeland, Florida
voted to restrict methods of distribution for free commercial and
non-commercial handbills. The ordinance is reportedly targeted at
advertising "shoppers" distributed in the city.

AAF's fourth district governor, Art Rowbotham, testified against the
proposal in person. AAF president Wally Snyder wrote to the city's
mayor and commissioners, arguing that the ordinance violates the
First Amendment by restricting speech unreasonably. The letter also
explained that the ordinance places many small, local advertisers at
a competitive disadvantage, as these advertisers depend on handbills
as the most efficient and affordable way to reach consumers.

Michigan. The Michigan House of Representatives has passed
legislation clarifying the tax status of photographic, artistic and
other creative-related advertising services.

The legislation emerged following negotiations between the Michigan
Advertising Industry Alliance (supported by the Detroit Adcrafters
and other AAF Michigan members) and Department of Treasury officials.
Representatives of the AAF worked with the in-state industry to help
craft a lobbying strategy.

Senate consideration of the bill has not been scheduled but is
expected in the near future.


Baltimore Restrictions Set Stage For Supreme Court Showdown
In twin setbacks for advertising interests, a federal court of appeals
recently upheld Baltimore's restrictions on billboard advertising for
tobacco and alcohol products. AAF filed briefs in both the tobacco
case, Penn Advertising, and the alcohol case, Anheuser-Busch, in
support of the freedom to advertise. After conducting studies and
public hearings, Baltimore officials concluded that ads for tobacco
and alcohol played a significant role in stimulating illegal
consumption of the products by minors. The city then enacted two
ordinances. The first prohibited the placement of any sign that
"advertises cigarettes in a publicly visible location," such as
billboards, sides of buildings, etc. The second ordinance, directed at
alcohol advertising, closely paralleled the mandate established in the
tobacco law.

Advertisers challenged both measures as unconstitutional restrictions
on commercial speech. The parties agreed that local officials had a
substantial interest in reducing alcohol and cigarette consumption by
minors. They disagreed, however, about whether the means chosen by
Baltimore (billboard bans) provided a close enough "fit" to serve the
city's goals of reducing minors' illegal consumption of these
products. The appellate panel held that the First Amendment requires
only "an assessment of the reasonableness of the legislature's belief
that the means selected will advance its ends." This standard granted
city officials considerable latitude in crafting the restrictions.

In Penn Advertising, challengers also argued that the tobacco
ordinance was "preempted" by a decades-old federal law that forbids
local governments from attempting to restrict cigarette advertising.
The federal law - which mandates warning labels on cigarette packages
- also provides that "no requirement or prohibition based on smoking
and health shall be imposed under State law with respect to the
advertising or promotion of any cigarettes" if the packages contain
the requisite warnings.

Nevertheless, the appellate court in Penn Advertising held that the
federal law did not apply because Baltimore's regulation did not
restrict advertising content or tobacco companies' general ability to
advertise. The court concluded that the Baltimore regulation had "such
a general relationship to cigarette smoking - in contrast to a
specific advertising 'prohibition based on smoking and health'" - that
the city law was not preempted.

The rulings in Penn Advertising and Anheuser-Busch illustrate the
problems created by the Supreme Court's Central Hudson balancing test
- and by the Court's inconsistent pronouncements about speech. The
Court, properly, has been unwilling to create a special First
Amendment rule for "socially harmful" products. Given the difficulty
of defining such products (and the fact that all products are
potentially harmful if abused) such a rule would be entirely
unworkable. Instead, the Court has afforded lower courts enough
flexibility to justify upholding (albeit incorrectly) restrictions on
advertising that they dislike.

These two cases squarely present the issue that the Supreme Court may
resolve this term in 44 Liquor Mart; must the government prove that
advertising stimulates consumption or can it merely assume such a
relationship? If the Court does not settle the issue this term, the
Baltimore decisions may well lead to another round of First Amendment
battles in the High Court next year.

Richard E. Wiley
Howard H. Bell
Wiley, Rein & Fielding
AAF Legal Counsel

Original posting date: 
Thursday, November 16, 1995
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