FTC STUDY RELEASED ON ALCOHOL ADVERTISING AND UNDERAGE AUDIENCES

FROM:  FEDERAL TRADE COMMISSION 
FTC Releases Fourth Major Study on Alcohol Advertising and Industry Efforts to Reduce Marketing to Underage Audiences
Study Shows Over 93 Percent Compliance with Placement Guidelines

The Federal Trade Commission released its fourth major study on alcohol industry compliance with self-regulatory guidelines, including those designed to address concerns about youth access to alcohol marketing.

For the study, the FTC ordered 14 major alcohol companies to provide information on advertising and marketing expenditures from the 2011 calendar year, and advertising placement data (including audience data) for the first six months of 2011.   For the first time, the agency obtained substantial information on Internet and digital marketing and data collection and use practices.

Presented in an aggregate, anonymous fashion, the findings include:

How Companies Allocate Marketing Dollars: 31.9 percent of expenditures were directed to advertising in traditional media such as television, radio, magazine, and newspaper advertising.  The study found that 28.6 percent of expenditures were used to help wholesalers and retailers promote alcohol; 17.8 percent were allocated to sponsorships (sports and non-sports) and public entertainment; 7.9 percent were directed to online and other digital marketing – almost a four-fold increase from the 2 percent reported in the 2008 study; and 6.8 percent were directed to outdoor and transit marketing efforts.

Meeting Industry Standards on Ad Placement.  In the first half of 2011, 93.1 percent of all measured media combined (including traditional media and online/other digital) met the alcohol industry’s placement standard at the time, which required that 70 percent or more of the audience viewing the ads be 21 years old or older, based on reliable data.  Further, because compliance shortfalls were primarily in media with smaller audiences (such as local radio), over 97 percent of individual consumer exposures to alcohol ads were from placements meeting the 70 percent standard.  The industry has since adopted a new ad placement standard requiring that 71.6 percent of the audience viewing alcohol ads be 21 years old or older.

Ad Placement on Online and Other Digital Media. In the first half of 2011, 99.5 percent of alcohol ads that advertisers placed on sites owned by others – such as news, entertainment, and sports sites – met the alcohol industry’s 70 percent placement standard.  The alcohol companies’ web sites and social media pages are “age gated,” meaning that a consumer must either enter a date of birth that shows him or her to be 21 years old or older, or must certify to being over 21 to enter the site.

Privacy Concerns on Online and Other Digital Media. The report stated that alcohol industry members appear to have considered privacy impacts in the marketing of their products.  It appears that, at least in the context of online registration opportunities, alcohol companies generally advise consumers how their information will be used and that they require consumers to opt-in to receive marketing information and consumers can readily opt-out when they want to stop receiving such information.  Use of cookies and tracking tools on brand websites appears to be limited to those needed to ensure that only consumers who have stated they are 21 or older can re-enter the site.

Product Placements.  Product placement in movies, television shows, and other entertainment media accounted for a very small portion – about one-tenth of one percent – of expenditures.   Most product placements involve the provision of props (such as bottles and signs) rather than money.

Outside Review of Complaints.  The report found that all three major alcohol industry trade groups – the Beer Institute, the Distilled Spirits Council of the United States, and the Wine Institute – have procedures for external review of complaints regarding alcohol advertising, but only the Distilled Spirits Council received any complaints between January 2009 and December 2012.  In the majority of cases (including all cases involving Council members), the advertiser agreed to comply with the decision of the Council’s review board.
The report’s key recommendations include:

When placement compliance levels fall below 90 percent for a brand in a particular media, and lack of compliance is due to wide fluctuations in measured audience composition due to small sample size, the company should consider using a higher audience composition threshold at the time of placement, to increase the likelihood of meeting the standard at the time the ad actually appears.
Because audience demographic data for radio is now available for larger markets showing all audience members age 6 and older, the companies should review this more comprehensive data when making placements.

Companies should take advantage of age-gating technologies offered by social media, including YouTube, and age gates on company websites should require consumers to enter their date of birth, rather than simply asking them to certify that they are of legal drinking age.

Companies should improve posted privacy policies to make them brief, transparent regarding data collection and use, and understandable to ordinary consumers.

Regarding user-generated content, companies should use blocking technologies and engage in frequent monitoring to reduce the potential for violations of the voluntary advertising and marketing codes established by the Beer Institute, the Distilled Spirits Council of the United States, and the Wine Institute.
Alcohol companies and the industry as a whole should continue their efforts to facilitate compliance with the voluntary codes, including staff training and cross-company identification of best practices.

State regulatory authorities, consumer advocacy organizations, and others who are concerned about alcohol marketing should participate in the industry’s external complaint review system when they see advertising that appears to violate the voluntary codes.

Industry and others concerned with reducing underage access to alcohol are encouraged to use the free “We Don’t Serve Teens” alcohol education materials available on DontServeTeens.gov.

The FTC released previous studies in 1999, 2003, and 2008.  Recommendations from past reports have resulted in agreements by the Beer Institute, the Distilled Spirits Council of the United States, and the Wine Institute, to adopt improved voluntary advertising placement standards; buying guidelines for placing ads on radio, in print, on television, and on the Internet; a requirement that suppliers conduct periodic internal audits of past placements; and systems for external review of complaints about compliance.

The Commission vote to authorize release of the report was 4 - 0.