The politics of marketing

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Eustace Parsons
7 years ago
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1 January 2014 The politics of marketing

2 Overview Marketers are losing the regulatory war. Around the world a clear trend away from self-regulation to increased government oversight is apparent. Mexico s recent introduction of a fat tax in an effort to address that country s obesity epidemic is just the most recent example of government efforts to influence consumer behavior through public policy. And the risks are not confined to foodstuffs. Increasingly governments are looking at ways to recoup the societal costs of marketing across a broad spectrum of goods and throughout the product lifecycle, including disposal. Australia is not immune to these risks and indeed has been at the forefront of some of these efforts, most notably with regard to tobacco advertising and labeling. Yet the risk of government intervention goes beyond tobacco and marketers are exposed to a heightened level of regulatory incursion as governments at all levels seek to deal with the rising costs of consumption and the role marketing plays in consumer choices. Risk summary Political risk 1: Trend from self-regulation to full government oversight Public health and consumer advocates have demonstrated a firm belief in the failure of selfregulation across all categories. Their solution both globally and in Australia is to push for a move away from self-regulation to either co-regulation or full oversight by government. Political risk 2: Increased use of taxation to shape behaviour and recover health and environmental costs

3 Marketers can expect to see an increase in calls for new taxes to tackle obesity and an enhanced role for taxes to address alcohol consumption. Furthermore, marketers will be exposed to the use of taxation to address the environmental impact of product development and consumption. Political risk 3: Advertising restrictions Alcohol marketers in particular should prepare for further restrictions on advertising and sponsorship, particularly related to sports and other entertainment activities. Food marketers will also continue to be at the forefront of calls for increased regulation of marketing activities, particularly those related to children. Food marketers can expect to see a trend towards enhanced oversight of non-traditional advertising, such as the use of social media, public relations and community activities. Political risk 4: Content mandates While an early focus of content mandates was public education the trend is now towards more prescriptive requirements about content and the outright banning of some food components such as trans fats. Key numbers what s at risk? $500m+ pa spent on marketing of food and nonalcoholic drinks $127m+ pa spent on alcohol advertising $300m+ pa spent on alcohol sponsorship and other non-traditional marketing activities. Increased regulation threatens to impose new costs and restrictions on a long product and marketing supply chain worth billions of dollars. Beyond the implications for in-house marketers are the risks for agencies that generate revenue in excess of $2bn pa and employ more than 12,000 people in over 900 businesses. Media buyers, media companies and publishers, and service providers to these sectors are in addition to

4 these numbers. Key influencing trends global Self-regulation is being increasingly rejected by public health and consumer advocates in favour of co-regulation and / or full government oversight. This reflects a view that regulation is the most efficient way to ensure marketers act in consumers best interests. As one leading public health advocate in the United States argued with regard to food marketing regulations make it easier for people to eat healthfully without having to think about it. (Marion Nestle, professor in the Department of Nutrition, Food Studies, and Public Health at New York University). Sin taxes have continued their inexorable march despite setbacks in some jurisdictions. Mexico is the most recent market to introduce a so-called fat tax in an attempt to combat one of the world s highest levels of obesity. Coca-Cola reportedly believes the tax will result in over 20,000 job losses, predominantly among sugar cane cutters. Of particular note for marketers is the role played by the World Health Organisation (WHO), which actively campaigned for the introduction of the fat tax. This signals a significant new development in the campaign against sugar with the international agency lending its scientific and lobbying heft to local efforts. The introduction of a fat tax in Mexico is just the latest in a series of jurisdictions, many within the United States, that have elected to levy taxes on food marketers in an attempt to influence consumer choices and help recover some of the health and environmental costs associated with consumption. Content mandates have emerged as a new battleground in the marketing wars with public health advocates making significant advances in efforts to influence the content of products, particularly foodstuffs. Most recently the U.S.

5 Food and Drug Administration released proposals to ban trans fats in processed foods throughout the United States. This follows an earlier ban in New York City initiated by Mayor Michael Bloomberg and similar efforts across Europe. Key influencing trends - domestic Self-regulation is being increasingly rejected by public health and consumer advocates in favour of co-regulation and / or full government oversight. The Cancer Council of Australia has argued Legislation is sovereign, and as such, the best legal interventions for public health are to be found in reform of existing laws, or the introduction of new... Similar views have been expressed by other advocates in regard to general foodstuffs and financial products. Advertising restrictions have been prominent in the Australian market and public advocates continue to push for further efforts in this area. The Australian Medical Association (AMA) has called for extensive restrictions on the marketing of alcohol, including prohibiting all sporting sponsorship, and greater transparency in the marketing budgets of alcohol producers. Advertising restrictions have also gained favour in other sectors such as credit and financial services where the Australian Securities and Investments Commission (ASIC) has issued guidelines on the marketing of financial service products. Implications While marketers across multiple sectors have dealt with regulation for many years the trend away from self-

6 regulation has heightened the level of political risk and increased exposure to government interference. Not only will this increased risk be evident in traditional areas of exposure such as TV, radio and print advertising but may also become prevalent in currently less regulated areas such as social media, sponsorship, public relations and events. Perhaps more significant will be efforts to extend the reach of government into other areas of marketing such as product development, particularly through content mandates, and disposal. The latter may emerge as a critical new field of battle as governments seek to recover environmental and waste management costs through new taxes on consumption. However, the manner in which regulation occurs is less significant than the broader trend away from self-regulation and it is here that marketers should primarily focus. Recommendations Review global trends in respective industry, assess the risk of those trends emerging in Australia and conduct impact analysis Determine the potential for self-regulatory model that limits scope of government regulation and oversight while addressing community concerns Develop appropriate government and public relations strategy.

Public Health Association of Australia: Policy-at-a-glance Alcohol Policy

Key message: Public Health Association of Australia: Policy-at-a-glance Alcohol Policy 1. Alcohol is responsible for a substantial burden of death, disease and injury in Australia. Alcohol-related harm