ETH-N-04-2-2

Rev. November, 2006

Business Ethics Technical Note No. 2

Advertising

The pervasive presence of advertising is one of the most characteristic features of modern
consumer society. According to informed estimates by the age of 21 the average American has
been exposed to between one and two million advertising messages. It would be strange if such
huge volume of communication were not to have important effects on the people at the receiving
end of it. It is therefore important to examine carefully the relations between advertising and human
fulfilment.

Before going further it should be useful to warn that in what follows we will use advertising as a
generic term to cover all product- and service-related communication efforts by business firms,
ranging from TV spots, through point of sale messages and product labels, all the way to personal
selling.

Advertising and truthfulness

In order to determine what are the duties of advertisers in relation to truthfulness one should first
have a clear idea of what are the general duties of truthfulness of all human beings. As an extended
discussion of this topic belongs in a book on general ethics rather than in a business ethics technical
note, we will simply state that in our view it is unethical to choose to pursue the objective of
inducing a mistaken belief in another human being, irrespective of whether this is achieved by
saying something that is false in itself, or by saying something that could have several meanings
with the intention that the receiver of the message will be deceived. If there is a clear choice to
deceive another one should not quibble about the "method" used to attain this result.

It is a different question when one may reasonably fear, or even be certain, that as a consequence of
one's activities, which are reasonable in themselves and which in no way have the goal of deceiving
anybody, some parties may come to be deceived. This would be a case of an upright activity having
harmful side-effects. In these cases one should try to abstract from the fact that one's own interests
are at stake, and consider whether the good effects that one expects to attain provide a sufficient

This Technical Note was prepared by John M. Elegido..

Copyright © Lagos Business School, September 2006.

No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or
transmitted in any form or by any means – electronic, mechanical, photocopying, recording, or otherwise –
without the written permission of Lagos Business School.
Business Ethics: Advertising ETH-N-04-2-2

reason to accept the harmful effects one also foresees.

How can these general principles be applied to specific advertising problems? It will be useful to
consider separately different problems. .

False Statements

Consider the text of the following ad which appeared in an American magazine directed at the
teenage market:

"...Because you are a woman, you lose iron every month. The question is, are you putting
that iron back? You may be among the 2 out of 3 American women who don't get enough
iron from the food they eat to meet their recommended intake...But One-A-Day Brand
Multiple Vitamins Plus Iron does..."

While this ad claims that most American women do not get enough iron, the American Medical
Association has flatly contradicted this claim and pointed out that "the average diet of Americans is
rich in iron." In other words, in an attempt to induce teenagers to part with their money and buy
One-A-Day Plus tablets, the company has told them a lie. A lie told by an advertiser is as unethical
as a lie told by anybody else.

The selling tactic known as "bait and switch" also falls within this category. It consists in
advertising that a product is available in some stores at bargain prices. In fact the product is not
available, or is stocked only in minimal quantity. This is the "bait" that attracts customers to the
stores. Once they are there salespeople are instructed to tell the customers that the bargain item has
already been sold out and try and get them to "switch," that is to say, to buy other products at
regular or even inflated prices. The lie here is that the advertiser promises that a certain item is
available when really it is not, at least not in reasonable quantity. .

Misleading Statements

From the point of view of an unethical person the problem with statements that are false outright
is not that they harm others, or that they undermine mutual trust in society, but rather that, as
they are definite, it is relatively easy to get caught. That is why, whenever possible,
unscrupulous advertisers will prefer to use statements that are misleading rather than ones which
are definitely untrue. We have already pointed out that so long as the intention is to deceive
there is no ethical difference between false and misleading statements. Most professional codes
of ethics do not hesitate either to put false and misleading statements in the same ethical bag.
Thus, for instance, the Standards of Practice of the American Association of Advertising
Agencies ban outright any "false or misleading statements or exaggerations, visual or verbal."

An example of a misleading statement is provided by an ad which promoted a certain bread as

being less fattening than ordinary bread because it had fewer calories per slice. As the reason why
this was so was that the bread was divided into thinner slices, and in any case the difference in
calories was minimal, the American Federal Trade Commission eventually ordered that the ad be
discontinued.

Up to this point we have referred only to ambiguous or misleading statements in which the
intention in precisely to deceive the customer. A different case is that in which the customer may be
deceived even if that is not the objective of the advertiser. We turn now to such cases.

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Claims susceptible of being misunderstood

Let us think of a finance company that lends $12,000 repayable in 12 monthly instalments and
charges $180 per month (i.e. 1.5% of the sum originally lent). Even though, as any financially
sophisticated person can easily compute, the annual effective interest rate charged in this
transaction is 31.7%, some people will believe that they are paying 18% per annum (i.e.,
1.5%/month x 12 months).

Let us assume that the finance company does not have an intention to deceive its customers. Still, it
is a fact that some, possibly many, will be misled. Does the company have a positive duty to
disclose the effective rate in order to avoid the possible error of some of the customers? Speaking
generally, firms confronting this type of problems should be ready to try and take any practical
ways open to them to reduce the risk of customers being deceived. How far should they be ready to
modify their messages in order to achieve this? It will depend on how great is the likelihood of
deception and how significant the harm that may be suffered as a consequence of it. As usual in
these problems, the only test is to try and abstract from the fact that one's interests are at stake and
try to ask oneself, would I agree that the benefits from this ad justify the foreseeable harms to some
misled customers if I were a disinterested observer?

Testimonials, endorsements and recommendations

Michael Jackson used to feature in Pepsi ads. Did he actually drink Pepsi? When pressed on this
question, the best that a representative of the artist could say was that "If Michael drank any soft
drink, he certainly would drink Pepsi." Is there anything unethical in this?

Some distinctions should be made. In the ads, Jackson never offered a testimonial, that is to say, he
never stated that he drank Pepsi and that he liked it a lot. All he did was to sing that Pepsi was the
choice of a new generation. In fact, anybody who were to conclude from this that Michael Jackson
must personally have loved Pepsi must have been more than usually naive. Accordingly, it cannot
be said that Pepsi did anything unethical in producing these ads.

On the other hand, if a person who does not use the product, or who does not like it, were to offer a
testimonial, this would constitute an outright lie and would certainly be unethical.

Puffing

One engages in puffing when one praises a product or service in vague and general terms
without referring to any specific product characteristics. Examples would be "The right fund at
the right time" or "This auto engine purrs like a kitten." Customers who have been exposed to
over a million advertisements in their lifetime are not likely to take too seriously such claims.
There is therefore room for some poetic licence and even for harmless exaggeration in
advertising language.

The reason for this, let it be noted, is not that "small lies are OK." While small lies are certainly
small, and therefore less bad than big ones, they are still lies, and therefore not OK. The reason is
rather that any statement has to be understood in the context in which it is uttered, and therefore in
the same way in which we allow the poet to describe the teeth of his beloved as "pearls," without
standing up and shouting, "That is a damn lie!" we can allow the advertiser to describe his wares in
somewhat glowing terms, knowing that actually all his listeners are aware of what he is doing and
do not construe his words literally. Also, as Mahoney has pointed out, "A too punctilious or solemn

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approach to advertisements would take all the fun and attractiveness out of them, reducing them to
a mere scrupulous cataloguing of sales features."

But, of course, there is a point beyond which one falls into outright deception, and beyond that
point puffery becomes unethical.

Selective Emphasis

Imagine that you are selling your old car. A prospective buyer has come to enquire and you
enthusiastically extol to her its virtues: the soundness of the engine, the fact that it has only done
37,000 km, the quality of the upholstery..., but you are not keen to mention that as the car has
been used for three years in a sea port, the body is seriously corroded.

Of course, if you were to say that the body is in wonderful shape, that would be a plain lie and it
certainly would be unethical. Therefore, if the buyer asks outright your only alternative consistent
with an ethical stance is to be truthful. But assuming that the prospective buyer does not ask, does
the seller have a positive duty to disclose the defects of the car?

It is not difficult to see that this issue is of interest to many beyond car sellers; the case we have
described represents just an instance of a much more general issue, that of advertisers who praise in
their advertisements all the good qualities of their products and services, but keep a discreet silence
about their less desirable qualities.

Generally speaking it will not be unfair not to point out a defect that prospective buyers can
discover by themselves just by exercising ordinary care; even less will it be required for, say, a car
company to mention in its general advertisements that there are other cars which are either cheaper
or faster or safer. Usually, a seller or advertiser will not pretend to be offering independent and
comprehensive advice. The sellers' function is to point out the things that their products can do
well, and then it will be up to the customers to compare what they have to say with the offers of
other sellers, and, if they so wish, seek independent comparisons from specialised magazines or
experts.

It is a different matter, however, when the product has substantial shortcomings which will make it
perform below the expectations of a reasonable customer and which an inspection carried out with
reasonable care will not reveal. As one would not wish to see one's reasonable expectations
disappointed, it is unfair to disappoint those of others.

The duty to disclose shortcomings is stronger if the life, health or another very basic interest of the
customer could be threatened otherwise. A good illustration of this is provided by the case of
Raudixin, a drug which can be used for treating high blood pressure, but which, as a side-effect,
was found in the U.S.A. to induce such deep depressions that hospitalization was often necessary,
and suicide sometimes followed. As a consequence of this it was used in the U.S.A. only when
safer drugs could not be used. However, in Brazil, where there were laxer regulations, the leaflet
inserted in the package presented it as "the ideal medicine" for a series of conditions and failed to
warn of its powerful side-effects. The producer of this drug was clearly failing in its ethical duties.

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Advertising and the manipulation of desires

A rather common, and often successful, advertising strategy consists in stimulating some
powerful basic urge, such as the sexual drive, the desire to dominate others, or the drive to be
admired, and then trying to create a connection in the potential customers' minds between one's
product and the satisfaction of that urge. Pursuing such a strategy is unethical because it is
manipulative and because the advertiser shows itself ready to harm the customer so long as this
succeeds in getting him or her to part with his or her money. This is the opposite of an attitude
of service to the customer.

At the same time it is important to preserve a sense of balance. Some critics of advertising have
claimed that the solution lies in advertising being "purely informative," eliminating from it all
appeals to emotions. This prescription should be firmly rejected. It is based on a false dichotomy
between intelligence ("good") and feelings ("bad"). On the contrary, feelings, far from being "bad,"
have a very positive role to play in our lives.

Referring specifically to advertising, it is necessary to rely on feelings at least for two purposes. In
the first place, given the very many messages that compete for our attention, an effective advert has
to be catchy: if it does not address some clear interest of ours it will fail to be "seen." Secondly,
very often even after we have come to the conclusion that doing something is in our best interest
we still need a push to overcome lethargy. It is our felt wants, stimulated by messages from the
seller,1 which provide this needed push.

How can these considerations be balanced in practice? Usually, not by trying to apply a set of rigid
rules; it is rather a question of applying common sense criteria to ascertain whether the autonomy
of the customer is respected or whether there is an attempt at more or less disguised manipulation.
We may consider a few examples to see that in practice it is not all that difficult to tell which is
which.

A rather obvious example of unethical manipulation of feelings would be that of the undertaker
who takes advantage of the emotional distress of the widow of a recently deceased man to push on
her the most expensive possible funeral, perhaps one far beyond her means. It is not so difficult to
subtly manipulate the guilt feelings she may be experiencing ("even if it was not possible to give
him the best medical care while alive, there is still the opportunity to give him the best funeral") or
those of affection ("the coffin he deserved") or even her need for status ("that cheaper hearse is the
one usually used by families of less means").

On the other side of the dividing line between ethical and unethical appeals to feelings would be the
salesperson in a department store who tells the client who has tried six different jackets, seems to
have chosen one, but is still procrastinating and looking undecided, "This jacket really fits you very
well." Nobody of even minimal competence as a buyer is likely to be swayed by this into buying a
jacket that he really does not need, and on the other hand, this may well be the nudge the client just
needs to overcome his inertia.

1
It is especially important at this point to remember that, as we pointed out at the beginning of this note,
we are dealing here with all the communication messages from the firm to the customer, up to and
including personal selling, not only with advertising.

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Collateral effects of advertising on society

Adverts are means of public communication. They are seen by many people, and collectively they
tend to create a certain atmosphere in the society, emphasise certain values and promote certain
lifestyles. A responsible firm cannot avoid asking itself what type of influence are its adverts
having. Nowadays, among the most common ways in which adverts can do harm the following
ought to be mentioned:

a) Promotion of materialistic attitudes through a general emphasis on accumulation of

possessions as the way to happiness and fulfilment;

b) Promotion and stimulation of casual attitudes towards sex through a generalised use of
sexual themes to attract attention, or to create a positive aura around products or services.

c) Promotion of sexist stereotypes through a frequent depiction of women in subservient

roles: as sex objects, as subordinate to men, as weak and needing man's protection, and so on.

As in practice, with effort, professionalism and creativity, it is almost always possible to get adverts
that do their job of communicating effectively without exacerbating society's problems, normally
there will not be a sufficient reason to accept adverts that have harmful collateral effects on society.
A responsible firm will simply reject them and ask the advertising people to just produce other
adverts that have the same or better communication effectiveness and do not harm anybody.

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