Advertising: On Loyalty and Deception

The world of advertising is a world of assumptions and perceptions. These assumptions and perceptions often have a great influence on our lives. Some of these influences are clear and easy to understand (such as causing us to purchase goods) while other influences are far more sinister in nature. In 2004, Kilbourne went as far as concluding that advertising was causing women to be harmed by converting them to an object in the perception of the masses. In 2006 Fox noted that in the earlier years advertising mimicked reality, but now reality is beginning to mimic reality. Despite the fact that so many scholars have attested to the harmful affects that advertising has upon society, why do consumers often remain loyal to companies that they know are advertising deceptively?

History and Background

Throughout time, advertising has evolved from a small, singular action into a beast of an industry that our society depends upon to stimulate both global and domestic trade. The reigns of this beast are controlled by the major businesses of the world, and with the help of this beast these businesses are able to influence our decisions. Not unlike many other social developments of our society, this beast was born to fill a simple need; in this case, the need of alerting potential buyers of the existence of a product or service. After hundreds of years of evolution this beast began to have negative effects upon society. Imbued with the knowledge from its seemingly all seeing eye, it became able to harm consumers and influence institutions. Recently attempts have been made to tame this ferocious beast by governments of the world. These attempts came in the form of regulations that limit the places and products that companies are allowed to advertise. In order to understand how a simple action can turn into an industry that has become so invasive in our society one needs to be able to understand the story behind the beast.

In comparison to other aspects of society the concept of advertising took an extremely long time to evolve to its present state. Fox concluded in 2007 that advertising was born when one person wanted to offer a product or service to another. This person would then communicate to the second person what that person must do to acquire the product or use the service. The person that purchased the product or service would then share the experience that he had with the first person (or vendor). Most experts refer to this as the "word of mouth" method of advertising. Shortly after this act of advertising is thought to have occurred the next major evolution came in the form of the sign. Robbs (2006) noted that "Archaeologists have found evidence of advertising dating back to the 3000s bc." This evidence comes in the form of many painted walls and chiseled signs that archeologists have discovered. One such sign describes the terms of rent for a room in Rome, and yet another describes the location of a tavern near ancient Pompeii. It took society a very long time to improve upon these two mediums of advertising (both of which still exist today). The next improvement came in the form of the town crier. A town crier would shout announcements throughout the towns of antiquity. Naturally, some of these announcements were trade announcements that would alert the consumersof the town to certain deals that they may offer. Without any new technological advances, methods of advertising remained relatively primitive.

After a number of centuries advertising began to catch up with the rest of the world and ride the wave of technological advancements. Ad Age (2005) noted that "the first newspaper advertisement, an announcement seeking a buyer for an Oyster Bay, Long Island, estate, was published in the Boston News-Letter in 1704." Advertising's exploitation of the printed word sparked a rapid advancement in the field. In 1843 the first advertising agency was opened by Volney Palmer in Philadelphia. In the following centuries advertising would make use of any new advances in technology and become an industry of its own. Postal mail, radio waves, television, and the internet are only some of the mediums that advertising has permeated within the last few centuries. Advances in the field of advertising have corresponded with a time of very rapid technological developments as well as an exponential population growth curve. According to Hand (2001) in current times, new technology and a greater number of consumers has led to the development of means to identify the consumer, so that the advertising industry is able to target the people most susceptible to their ads.

After advertising successfully permeated most known means of communication companies began to "target" the consumer that they wished to purchase their product or service. Around the turn of the century the act of targeting specific groups of individuals instead of the general consumer population represents a significant shift in the paradigm of advertising. It changes advertising to the act of merely alerting consumers to something's presence into the act of persuading them to purchase a product; therefore, significantly increasing sales among the target group. The scope of this targeting can be honed to near perfection by large amounts of data or model studies (this is practice is often referred to data mining). In some cases a company will survey 1,000 people from a target group. The answers of these thousand people would then be assumed to be "statistically correct" throughout the entire target group. This allows advertisers to make their products or services more appealing to their general group. In other cases two images are chosen to represent the exact same information. Companies then use the data collected to determine which image sell their product more effectively. The rapid evolution of technology has made it much easier to collect this consumer information. This trend is represented by one of the most coveted stocks currently listed on the stock market: Google. This company collects massive amounts of data on the internet about potential consumers. It collects this data from the websites visited by users and the contents of their emails. It then allows companies to target consumers that are already looking for their product. Pierce concluded (1991) that the targeting of consumers by advertisers has persuaded the minds of many people to do things against their well being.

The fact that advertising can often be so persuasive has led to a number of restrictions and regulations regarding how and where advertisements can be placed. In 1998 the state attorney general won a lawsuit against tobacco companies for two hundred and six billion dollars. Regulations were made that prevented tobacco and alcohol products to be advertised to minors, in many Muslim countries the advertising of alcohol is completely illegal. A number of drafts were made that were supposed to be able to limit advertisements that prey specifically on children from coming into circulation. The proverbial child sitting in front of the television all day is thought to be at a very high risk of becoming "brainwashed" by marketing rings and jingles being constantly repeated. Many other countries of the world have enabled advertising regulations to protect culture. In France, for example, foreign words are not allowed to be used in advertisements, and in the Philippines blue jeans are not allowed to be shown in yet another effort to protect culture. Jhally (1991) noted that the effectiveness of advertising has led many countries to create regulations that protect consumers or a particular cultural interest.

The journey through the evolution of advertising is an interesting one. Advertising has quite humble roots, yet has grown up to become an incredibly invasive and often harmful menace. People are constantly trying to tame this menace with rules and regulations, but they are rarely able to bar it from the minds of the common consumer. This is because most consumers do not realize that they see between 500 and 1,000 advertisements a day, most consumers remain ignorant to the fact that companies are trying very hard to get into their minds (last year companies spent 2.4% of gross receipts on advertising, and this year that number has grown to 2.6% of gross receipts). Despite the wealth of information that is already known about advertising and its effects on consumers there are a number of questions that remain unanswered.

Existing Knowledge

There have been countless studies detailing cases of deceptive advertising and the effects caused by it. In addition to creating a higher turnover, raised cash flow, and the occasional lawsuit, deceptive advertising brings with it a great deal of unexpected social consequences. According to Marshall (2004) business are constantly trying to make their product as appealing as possible to their potential customers. In the process of making their products more appealing to customer's unrealistic (or confusing) numbers or terms are sometimes used. To businesses this translates to greater profits, whereas to the consumer this same action can cause a great deal of dissatisfaction and sometimes even injury. The relationship between customer loyalty and deceptive advertisements remains a shady area.

Many businesses are lured into deceptive advertising schemes by dreams of profit previously unattainable. In 2004, Marshall defined advertising as a means of "providing information to consumers so that they can make informed choices on a product or service." The FTC (2006) defined deceptive advertising as advertising that "is likely to mislead consumers acting reasonably under the circumstances." In 2005 Gardner noted a case where a business had advertised it's jewelry at wholesale prices. The jeweler had legitimately reduced their prices, but in order to make their product more attractive to potential consumers, they advertised it as being sold at wholesale prices. The jeweler made a very small ethical lapse, and in turn provided their customers with false information in hopes that they would make an uninformed purchase.

Another method of deceiving consumers is providing too much information or information that is completely false. Such is the case when Liebman (1993) argued that grape nuts should not be advertised as a "natural energy source" because almost every food would fit into that category. According to Lewis (2001) "when a food company touted its high-priced healthy treats as being nearly fat free and containing almost no calories, vendors all over the United States began buying them by the baker's dozens." This example shows how a larger ethical lapse can sometimes cause a large profit for the advertiser. Instead of redefining a word, the advertisers misrepresented a fact. Moving on even further to the other side of the ethical scale one can find companies that are looking for a "buy button" within people's head. Marshall noted that such experimental neuro-technology would "give unprecedented insight into the consumer mind. And it will actually result in

According to Marshall (2005), the amount of money spent on advertising to American consumers increased from 188.7 billion per year in 2003 to 247.3 billion dollars per year in 2004 (this figure is roughly 30% higher). This number is increasing so rapidly because advertising is what informs the consumer of a product, and what a consumer is informed of is what the consumer will make their decision on. According to Lewis (2001) when a company had understated the amount of fat in their product by nearly 50%, it became hugely successful. The same was true in Lewis's scenario (2001) when the jeweler had twisted the word wholesale. These two businesses gained an unfair advantage over their competitors by advertising a particular trait that their product did not possess. In many cases this unfair advantage leads to the consumer suffering at the hands of the advertiser.

The unethical actions of one often cause adverse reactions among their associates. According to Lewis (2001), the consumer's that purchased the improperly marked food later had it tested, which led to a series of legal charges against the company that had defrauded the customer's for a hefty profit. In 2006 Sileo noted that a federal judge has decided to see a case regarding the obesity of people gained through deceptive advertising. In the case of the jeweler (Gardner, 2005), a competing jewelry shop was losing a large number of sales due to the customer's perception of "wholesale" prices. This was later fixed when the competing store filed a complaint. Upon hearing this complaint the jeweler quit its deceptive marketing practices. The major examples of deceptive marketing are often noticed quite quickly, it is the small examples of deceptive advertising that people have to look out for the most (Liebman, 1993).

There exists a relatively strong debate regarding the ethics behind deceptive marketing. Some people seem to allow it while others are fighting fervently for the government to pass regulations to prevent it from occurring. Interestingly enough, businesses seem to be pro deceptive marketing while groups of consumer's have often rallied against it. Even with strict and encompassing government regulations we would still see advertisements such as in Liebman's example of a food source being described as a source of energy. This leads many to believe that the solution is to train costumers to discern misleading advertising from the truth. The FTC would be the most likely candidate to provide this education, but it is currently unable to educate consumers to the degree necessary for their protection.

Most of the articles referred to have examined real products, cases, and scenarios. This is the best way to approach this topic because these examples can be seen in the real world, and are therefore very practical. It would however add a significant amount of clout to Marshall's article if he were to include real life examples as opposed to the purely theoretically examples provided. Liebman's argument would also be significantly stronger if there was more explanation to the fact's and "case studies" that he has provided.

So much information has already been covered about this topic by other researchers. They have focused upon rules and regulations that attempt to repress deceptive advertising. It is very interesting to note that most of the researcher's seem to disagree as to how this issue should be handled. No one can agree whether or not there should be strict regulations regarding commercial free speech. My research instrument will prove that educating consumers will provide for an environment where deceptive advertisements are no longer tolerated by the masses.

The Federal Trade Commission

The Federal Trade Commission is a wide reaching organization with the ability to regulate trade in America. In 1914, shortly after advertising became an industry of its own, the Federal Trade Commission was formed. Its original goal was to help regulate interstate commerce, but eventually it took on a wider array of goals. The modern FTC serves its original purpose as well as providing consumer protection to. The bureau of consumer protection is but a small part of this large organization, and its job is (as its name suggests) to protect customers from unfair or deceptive advertising practices. This department of the federal trade commission is also responsible for the recent "Do Not Call Registry".

The FTC is an organization that consumer's can report fraud to. Its job is to handle consumer complaints, and then investigate the businesses accused of performing these complaints. In many cases these complaints are "corrected" by fining the businesses accused of performing these frauds. The FTC is however currently unable to correct social damage that society is suffering as a result of advertisements. One such case of social harm was identified by Kilbourne (2004), when she accused the advertising industry of turning women into objects in order to create more provocative (successful) advertisements.

My research study will show that the FTC needs reform in order to achieve its job of protecting consumers from deceptive or outright false advertising claims. Many consumers continue to purchase products even after they are made aware of the fact that the companies have used deceptive advertisements to advertise their products. In the past the FTC has made great progress in the realm of consumer protection. In fact, it successfully converted an unregulated "wild west" form of industry into an industry that is riddled with rules and regulations. However, in order to continue to achieve its job of protecting consumers from advertisements the FTC will need to educate the consumer to make more educated decisions.

Determining Deceptive Advertising's affects on Consumer Loyalty

In order to determine what effects deceptive advertising campaigns have on consumers one would needs to create a research instrument designed to interact directly with the consumers. This research instrument could be conducted online in the form of a survey, but would offer a wider range of results in a large shopping center. This is due to the fact that most of the people present at the mall would also be considered consumers, and that fact alone makes this location an excellent (if not the best) choice. Such a research instrument can be found in Appendix A. This research instrument asks a series of questions that are designed to reduce the consumer's natural tendency to obscure such answers. In order to obtain more natural (accurate) results some questions have been split into multiple sections. This makes the consumer taking the survey unable to say that such results do not apply to them.
Accurate results could be obtained with roughly 100 surveys completed. The environment that this survey would be conducted in is a great determining factor in the number of acceptable surveys that will be completed. Most environments would require roughly 300 surveys to be handed out in order for 100 to be returned to the researcher assuming a 1/3 participation rate.
My research instrument will consist of a survey containing exactly 16 questions. The answers will be allowed to be highly individualized in order to measure the consumer more accurately. Due to this factor, quantitative analysis will be difficult to impossible to perform, and the researcher will face the task of converting raw data into categories that best fit what was on the consumer's mind.

The lack of such research has greatly limited the understanding many scholars have about the subject at hand. My research method will hopefully provide the researcher with a myriad of information and statistics about the effects that advertising has upon a group of consumers; with specific regard being given to the correlation between customer loyalty and deceptive advertising techniques.

Intended Results

The results of this study will very likely support the fact that customer loyalty is not affected by deceptive advertising techniques. This is particularly interesting because common sense would seem to indicate that lying to consumer, misrepresenting facts, and other dastardly deeds would make the consumer less likely to continue business with the perpetrator. My research study will clearly indicate that there is no correlation between consumer loyalty and deceptive advertising. Consumer loyalty will prove to remain unrelated in regard to the consumer's perception and detection of advertisements of a "misrepresented" nature

Furthermore it will go on to show that advertisements remain deceptive despite efforts of organization such as the Federal Trade Commission. The research study will reinforce Attas's (1999) conclusion that organizations cannot protect consumers from all forms of deceptive advertising. Lawsuits alone cannot protect the consumer from themselves. The designated research study should show that consumer's actions remain unchanged even after they have been informed that particular advertisements have little or no factual base.

Conclusion

In order to reduce the occurrence or temptation to advertise deceptively consumers need to be educated about the harm they are causing themselves and society through their tolerance of deceptive advertisements. The FTC needs to do a better job educating consumer's as opposed to simply handing out fines and lawsuits. Mittal (1994) stated that companies are devoting more and more resources to advertising with declining results. Such a trend could lead many corporations to far more competitive and often harmful advertisements. The FTC needs to inform customer's of the harm that such advertisements can do, as well as the fact that many decisions are being based on facts that are misrepresented or designed to be misinterpreted. Without the support and education of the consumer any deceptive advertising regulation is bound to failure.

According to the FTC website (2006) there is a very simple way for consumer's to file a complaint against a firm for deceptive advertising. This seemingly simple mechanism could form an amazing amount of synergy when coupled with consumer education. If the FTC simultaneously increased public awareness about their complaint program while alerting the public to the danger's and consequences of deceptive advertising then the consumer would be in a far better position to make educated decisions which may finally make honesty a factor in determining customer loyalty. This process would greatly reduce the occurrences of deceptive advertising, and simultaneously increase general customer satisfaction with the products they have purchased.

References:

Attas, D (1999).What's Wrong with "Deceptive" Advertising?. Journal of Business Ethics. 21, 49-59.

Cook, G (2001). The Discourse of advertising (2^nd ed.). New York, New York: Routledge.

Crain Communications, Inc. (2005). Ad Age. Retrieved January 23, 2007, from The Advertising Age Timeline Web site: http://adage.com/century/index.html

D. Hand, H. Mannila, P. Smyth (2001). Principles of Data Mining. MIT Press, Cambridge, MA

The Federal Trade Commission. (2006) . Retrieved 8 March, from

http://www.ftc.gov/bcp/conline/pubs/buspubs/ad-faqs.htm

Fox, S How Advertising Works. Retrieved January 29, 2007, from The 'who', 'what', 'when', 'where' and 'why' Web site: http://www.ciadvertising.org/studies/student/98_fall/theory/hornor/how.htm

Gardner, C. (2005, October 1). Main advertising rule: Keep it fair. National Jeweler ( New York ), 99, 18. Accessed using the ABI/INFORM Trade & Industry database

Jhally, S (1990). The Codes of Advertising: Fetishism and the Political Economy of Meaning in the Consumer Society. New York, New York: Routeledge.

Kilbourne, J. (2004). Two Ways a Woman Can Get Hurt: Advertising and Violence. Colombo, G., Cullen, R., & Lisle B. (Eds.), Rereading America: Cultural Contexts for critical thinking and writing (pp. 455-476). New York: Bedford/St. Martin's. 

Lewis, C. (2001, July). The Case of the (Not-So) `Skinny' Treats.(deceptive product labeling and advertising)(Statistical Data Included). FDA Consumer, 35, 38. Accessed using Health and Wellness Resource Center Database

Liebman, B. (1993). When bad ads happen to (mostly) good foods. (deceptive advertising). Nutrition Action Healthletter, 20. Accessed using the Health & Wellness Resource Center Database

Marshall, P. (2004, January 23). Advertising overload. CQ Researcher, 14, 49-72. Retrieved February 12, 2007, from CQ Researcher Online, http://library.cqpress.com/cqresearcher/cqresrre2004012300.

Pierce, J. P. (1991).Does tobacco advertising target young people to start smoking?. The Journal of the American Medical Association. 266, Accessed using the JAMA electronic database

Robbs, B (2006). Advertising. In MSN Encarta [Web]. Microsoft. Retrieved January 23, 2007, from http://encarta.msn.com/encyclopedia_761564279_1/Advertising.html

Rotzoll, K.B., & Haefner, J (1996). Advertising in Contemporary Society: Perspectives Toward Understanding .Illinois: University of Illinois Press.

Sileo, C. (2006). Federal judge allows obesity lawsuit alleging deceptive ads. Trial, 42, 68. Accessed using Expanded Academic ASAP

Appendix A

Consumer Survey

Deceptive Advertising's affects on

Customer Loyalty

This survey is being conducted as part of a research project for a class at Green River Community College. I am very interested in how you act as a consumer. To be more specific, I am particularly interested in how you perceive deceptive advertising. You are by no means required to participate in this survey, and are not required to identify yourself at any part of the survey. By filling out this form you will be making a small contribution to the scholarly knowledge regarding deceptive advertising's affects on customer loyalty.

Please answer all of the following questions by circling the number that most accurately represents your response.

1. Do you make purchases based on advertisements you have previously seen? _______________________________________________
2. How many purchases do you make per week? _______________
3. When is the last time that you purchased something that was not on your shopping list? _________________________________________
4. Have you ever used a product only to find that it did not perform as

they advertised? _______________________________________

4a. If so, what type of product was it, and how were you dissatisfied?

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1. If you felt betrayed by an advertisement, what action would you take?
2. What is your favorite fast food restaurant? ________________________

7. Do you often convince friends and family to use other products?

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8. How many times in a week do you eat at the restaurant that you mentioned in question 6?

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9. How much work do you think has gone into the advertisements that surround you?

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10. What advertisement is most memorable in your mind, please describe it as best you can using the space provided.

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1. Can you remember any advertising "Jingle" or tune associated with a product? _________________________________________________________

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1. Do you ever compare yourself to a person or character in an advertisement? ____________________________________________
2. How often do you look at the nutritional information of food you eat?

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1. Have you ever made purchases based on claims made on the front of

the product? ______________________________________________

1. Would it effect your answer to Question 8 if you became aware that your answer to question 6 was being sued for deceptive advertising practices. If so, how?________________________________________________

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Thanks again for participating in our survey!