I was recently listening to The Kojo Nnamdi Show and he had a segment on menthol cigarettes and the urban poor, and it got me thinking. We all know that companies target certain demographics, and part of that targeting is designing their products and tailoring their marketing to appeal to specific groups of people. For example, boxing's heir apparent, Mixed Martial Arts, features unapologetic violence, visually appealing women and aggressive personalities, obviously targeting as their main audience young males. And it has worked; UFC Pay-Per-View events have recently drawn well over a half of a million buys in addition to packed arenas. A more long-standing example is that of food advertising directed at children. Ronald McDonald isn't going to convince me to get a Big Mac, but a happy, playful clown offering a meal and a toy might get a young, non-coulrophobic kid to talk to Mommy and Daddy about picking up some fast food for dinner.
Additionally, there has been a precedent set for marketing limitations, most prominently with alcohol and tobacco products. The Federal Trade Commission (FTC) in the U.S. has set a variety of standards for limiting the advertisement of alcoholic beverages. While beer is less heavily regulated (tune in to any sporting event and you'll see that is in fact the case), spirits have sharp limitations. The current standard is that at least approximately 70% of the individuals potentially viewing the ad must be of legal drinking age, and ads are monitored to ensure that they don't encourage or glorify risky behavior. Also, you may notice that in the liquor ads you do see (and the beer ads, from what I've been able to tell), you won't see the actors actually consuming the alcohol.
Tobacco companies have harsher restrictions. Whereas cigarettes were a stable of 1950's and 60's television ads, restrictions have been put into place over the last 3 decades to severely reduce the number of ads you see. In 1970, Congress passed the Public Health Cigarette Smoking Act, which banned the cigarette companies from advertising their products on television or radio, beginning January 1st, 1971. Smokeless tobacco ads were banned in 1986, and later, all tobacco products were required to display a health warning from the Surgeon General on all print ads. Furthermore, in 2003 tobacco companies and magazine publishers agreed to cease advertising cigarettes and other tobacco products in magazines that have a high appeal to children, such as Sports Illustrated.
With that being the case, a precedent has been set for limiting advertisements for ethical reasons. Marketing to the poor is obviously a different idea, but it shares many of the same properties of the above examples. Large corporations spend an extremely large sum of money for customer analysis and targeted marketing. If their customer analysis yields data suggesting that the vast majority of their customer base consists of consumers living below the poverty line (or who are otherwise struggling financially), is it morally right for them to use that data to specifically target that group? Are there really no morals in business, and if so, does the government have the right to impose advertising restrictions, much in the same way that they've restricted the tobacco advertisements that may be appealing towards children? I certainly hesitate to impose any sort of a moral code on anyone, but it's an interesting question.
Turn in to any late-night television show and you'll see ads for title loans, payday loans, etc... While those types of loans have their own storied past and I could probably devote a whole series of posts to them, they have their own role in the marketing to the poor topic. They are clearly targeted to those who have fallen on hard times, and at first glance, they may appear to be a good idea for those people who need money in a pinch. However, a closer look will reveal a much different reality than what is portrayed in the commercials. Governments on the state and federal level have already been working to corral the business practices of those institutions. But should they also limit advertising?
Advertising affects everyone. Even if you claim to be independent from their influence, you're not (unless you don't watch TV, don't listen to the radio, don't read magazines or the newspaper, don't browse the internet...); if you ingest it, it does affect you (to what degree is a different issue). With that being the case, to what extent should ethics in advertising be enforced?
-Michael
Twitter: @michael_dink
Wikinvest Wire
7 comments
Probably not. There was a good book I read in b-school called "Fortunes At The Bottom Of The Pyramid". It's worth a glance as it gave 8 or so case studies how corporations marketed products to the poor, and benefited, but also HIGHLY benefited the poor.
Soap, was the best example.
Absolutely it is ethical. People are equal in America (or supposed to be). So now we are tossing around the idea about FORCING different marketing practices depending on their income? Please, sounds like people in Washington would like this idea a little too much. Let's keep the government out of the private market as much as possible.
@David,
Amen bro.
FS - I'm glad you like that book; it's one of my favorites. I also read an article about car companies in Brazil and the different programs they had to bring their products to the poor in a way that benefited both parties.
David - I think there are two different issues, one being whether it's ethical to market to the poor (with ethics referring to a more human-to-human interaction), and the other being whether the government should forcefully step in and regulate marketing practices (a policy debate). I'm certainly not advocating more government regulation where it's not needed, but it is interesting to see how current practices - tobacco and liquor marketing restrictions - can be viewed in a different context, or applied to a different domain. I think I would find a marketing campaign that is specifically aimed at selling an non-essential item to the poor distasteful, and I think it's interesting to reconcile that uneasy feeling with a (in general) view that governments should be wary of interfering in the private market.
I think the key issue here is the difference between something "distasteful" and something that ought to be legislated. Let's not confuse the two. The whole point of a free society is that we're allowed to do things that others may find distasteful, so long as we don't trample on their rights in the process.
I think we'd be hard pressed to argue that marketing to the poor in any way violates their rights. Are people affected by advertising? Sure. But they're also affected by faulty decisions, by the opinions of friends and families, and by a million other factors. Some people are more susceptible to advertising than others. But that's their own individual responsibility, not hte responsibility of advertisers.
That's the price of freedom.
@David
Well said. It is getting pretty ridiculous to hear all of this forced bracketing of people into different classes based on income.
I think the question of whether its ethical to market to the poor is precluded by the question of whether its ethical to run a usurious title loan/payday loan. And to that, I'd opine that no, it is not ethical to profit by perpetuating a cycle of poverty. If you really wanted to help those living paycheck to paycheck, you'd look into some kind of non-profit solution - not one that just deepens your clientele's debt.
But as far as marketing practices go, I don't think it is unethical. As long as you do not misrepresent the product, I think it's fair game.
I don't think legislation has a place in saying to whom you can and cannot target your advertising. I think it'd be too difficult to prove intent - a marketing exec can just say, "Poor people? What do you mean, we were just trying to appeal to urban males between the ages of 18 and 30... that whole impoverished thing is just a coincidence."
I do think that title loans and payday loans businesses themselves should be clamped down on significantly, though.
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