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Alcohol Advertising in Digital Media, Part 4: Industry Self-Regulation

Alcohol beverage suppliers were among the first U.S. business sectors to embrace self-regulation of advertising and marketing in the 1930s and 1940s.  Voluntary codes have evolved from simple commitments to truthful advertising to comprehensive guidance documents containing mechanisms for independent review of consumer complaints.

Compliance with voluntary industry codes does not absolve an advertiser from compliance with laws and regulations covered in Part 2 and Part 3 of this series.  The codes cover areas that would be difficult for government to regulate such as non-misleading advertising content, which enjoys significant First Amendment protection.  The codes also provide best practices in minimizing exposure of persons under the legal drinking age to alcohol advertising.

As indicated in Part 1 of this series, the Federal Trade Commission (FTC) views compliance with voluntary codes as an essential part of an alcohol beverage advertising and marketing function.  A detailed FTC review of advertising practices initiated in 2012 will likely result in a report to Congress by the end of 2013.  That report will include a detailed analysis of digital advertising activities and expenditures along with recommendations for future code enhancements.

The codes subject the digital marketing space to the same list of traditional “dos and don’ts” in advertising content that apply to all other media.  Beyond those fundamentals, digital advertising is subject to unique placement and audience measurement requirements that require communication with host networks and/or advance research on the audience demographics of traditional web sites or networks.

Voluntary industry codes are developed and disseminated by trade associations for distillers, vintners, and brewers.  Similar guidelines exist across all codes for advertising content.  Audience demographic standards are included in the codes of the Distilled Spirits Council of the United States, Beer Institute and Wine Institute.  Those standards are the same as they are based on U.S. Census data.  Links to major industry codes and examples of media policies follow:

Beer Institute Advertising and Marketing Code and Buying Guidelines

Brewers Association Advertising Code

Distilled Spirits Council of the United States Code of Responsible Practices and Note on Responsible Digital Marketing Communications

Facebook Alcohol Advertising Policy

Google Alcohol Advertising Policy

Wine Institute Code of Advertising Standards

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Alcohol Advertising in Digital Media, Part 3: State Regulation

In Part 2 of this series, we highlighted recent developments in federal regulation and oversight of alcohol beverage advertising with implications for digital media.  State alcohol and consumer protection laws also apply and can make regional or national ad campaigns challenging.

An overarching concern to state officials is the potential appeal of alcohol beverage advertising to persons below the legal drinking age.  In the digital space state attorneys general and regulators quickly responded to the advent of social media and asserted authority to prevent dissemination of inappropriate advertising content to children.  Attorneys general signed consent agreements on alcohol and tobacco advertising with Facebook, MySpace and several other social networks in 2008.  As a result, the networks developed technology to limit access to alcohol advertising content to registered users over the age of 21.  Advertisers must ensure that they set up their social network pages properly so that the technology limiting access to alcohol ads is functioning.

The 21st Amendment to the U.S. Constitution grants states a degree of unique authority over alcohol beverages that does not apply to most other consumer products.  In advertising, that authority has been somewhat eroded by the First Amendment’s commercial speech doctrine and other case law, but most states continue to actively regulate the source of funds used to pay for advertising based on older legal concepts designed to protect the independence of retailers from domination by manufacturers.  In the post-Prohibition period, officials feared that large brewers and distillers would dominate local grocery stores, bars and other retailers, most of which were then “mom and pop” operations.

While the retail sector has changed dramatically, many state laws still contain restrictions on advertising or promotional activities by manufacturers that benefit specific retailers.  Recent examples of these trends are found in changes in Texas law effective September 1, 2013 that have significant implications for regional and local advertising via digital media in a large and diverse state.

In response to a 2011 court decision (Authentic Beverages Company, Inc. v. Texas Alcoholic Beverage Commission), the Texas Legislature repealed longstanding advertising restrictions and authorized prearrangement and preannouncement of promotional activities to be held on a retailer’s premises.  Texas law now permits manufacturers and wholesalers to utilize digital media to inform consumers of the identity and location of retailers where their products are available.  Restrictions apply to payments or reimbursements to retailers for the cost of an alcohol beverage ad.  Finally the Texas Legislature repealed a prohibition on advertisements that refer to the alcohol content of beer as well as a requirement to label malt beverages as “beer” or “ale” based on the alcohol content even where that designation (from an industry understanding) was inaccurate.  Those types of archaic restrictions made it difficult to run national or regional digital advertising campaigns without technical violations of Texas law.

While you can now use factual statements about product availability and attributes in digital and other media in Texas, many analogous state restrictions remain on the books.

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Alcohol Advertising in Digital Media, Part 2: Federal Regulation

This past year brought examples of federal regulation and oversight of social media.  Both illustrate the general policy concerns of federal agencies that regulate alcohol beverage advertising.

TTB Industry Circular 2013-1, reviews the application of TTB regulations to beer, wine and spirits advertising in social media and other forms of digital advertising.  TTB’s primary concerns are the clear disclosure of the company responsible for an advertisement and prohibiting communication of false and misleading information.   The circular makes clear that TTB’s advertising regulations apply to digital advertising, including user-generated content.  Helpful references are provided to key sections of TTB advertising regulations for beer, wine and spirits.

FTC 2012 Special Order (FTC Matter No. P104518) requested a broad range of information on advertising expenditures and practices from companies in the alcohol beverage industry to make sure that they comply with the Federal Trade Commission Act and voluntary industry advertising codes.  The FTC has broad authority to prohibit and take enforcement action against advertising that is deceptive or unfair.  FTC officials have long maintained that this authority empowers the agency to limit exposure of persons under the legal drinking age to alcohol beverage advertising content in all media.  The Special Order requested information about online and social media activity at pages 4-6 and 9-10, and companies should recognize that advertising content, planning documents and placement information may be requested in similar special orders in the future.

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Alcohol Advertising in Digital Media, Part 1: Overview

Tremendous opportunities exist for advertising brands, events and other promotional activities in digital media, which includes traditional web sites, social networks and integrated advertising platforms.  Properly executed marketing efforts provide great flexibility to reach and interact with adults of legal drinking age on a range of devices.  “Properly executed” is the key, particularly in digital media where campaigns can go from the conceptual stage to dissemination to millions of consumers in a matter of days.

Many professionals in the rapidly evolving media landscape grew up in a culture of free expression unparalleled in human history and several generations removed from the post- Prohibition mindset that inspired existing restrictions on alcohol advertising.  Those who are anxious to use their creative talents in alcohol beverage advertising campaigns must become familiar with unique federal and state laws governing alcohol advertising as well as voluntary industry codes.  Failure to take basic compliance measures can result in a devastating delay or removal of an innovative app, social network site or geo-targeting plan.  In addition to the loss of a key part of a campaign, government enforcement actions can result in penalties and reputational damage.

  • At the federal level, the Alcohol and Tobacco Tax and Trade Bureau (TTB) and the Federal Trade Commission (FTC) regulate alcohol beverage advertising.  Both agencies have shown recent interest in online and social media.
  • Each state has alcohol beverage and consumer protection statutes and policies.
  • Several industry trade associations and many digital media outlets have self-regulatory codes or unique rules that apply to content and placement of alcohol beverage advertising.

Basic principles of government regulation and industry self-regulation include societal concerns over issues such as alcohol abuse and potential appeal of advertising content to underage audiences.  The power of digital media triggers additional issues such as privacy and data security.

The next three parts of this series will address federal regulation, state regulation and industry self-regulation.

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