Figuring out what consumers want in ads and how they want to be reached are questions that haunt CMOs’ dreams. CMOs and others will have endless debates about whether consumers want ads to be, for example, more humorous, relatable, authentic, or personalized—without intruding on consumers’ privacy. Today, advertisers have more mediums than ever before to deliver their messages, including ones that did not exist all that long ago, such as social media platforms, mobile, search or key word advertising, video and podcasts. Without doubt, in the future more mediums will be invented, and endless conferences will be held about which ones deliver the best ROI.
How to reach and engage consumers with advertising content that achieves brand loyalty will be an ongoing challenge for brands. But whatever creative messaging or clever medium is used in the future, one old-fashioned principle will continue to be critical to winning and retaining consumers—trustworthiness. These days much is written, and deservedly so, about the need for brands to demonstrate “purpose,” to manage social risk, and to take into account the needs of employees, customers and stockholders while managing their brands’ reputations. Inherent, but not spelled out in those to-do lists, is the need for truth-in-advertising. This topic deserves a closer look.
As a former senior executive service official in the Federal Trade Commission’s Bureau of Consumer Protection, protecting consumers from unfair and deceptive practices was my daily bread, and passion. Amazingly, even companies long beloved by consumers, companies widely esteemed for their social purpose, and high performing companies admired for being in the Fortune 500 occasionally ran afoul of the FTC Act’s prohibition against deceptive practices. These fouls happened because, among other things, they misrepresented their products’ performance, benefits or origins; failed to have appropriate substantiation to back up their ad claims; or botched telling consumers that content they were seeing was an ad or that an influencer’s statements had been bought.
Only a tiny fraction of consumers are skeptics like myself, questioning most advertising claims. Most consumers want to and do believe what advertisers say and are unhappy when they discover there’s a gap or a gulf between what was said and the reality. We know from research conducted by the Better Business Bureau (the 2017 BBB Trust Sentiment Index) that a top cause of consumer frustration is when a product or service is different than advertised. And these days, consumers can vent their dissatisfaction publicly in the form of reviews or posts on social media, thus requiring brands to be vigilant in monitoring these platforms to manage their reputations.
When it comes to false or misleading credence claims—claims where the consumer cannot really tell for herself if the claims are true (unlike, e.g., a “tastes great” claim) or whether the touted value, such as a health benefit, is actually being delivered—there is even more at stake. In those situations, the consumer is utterly dependent on the advertiser being truthful and having proper substantiation for those claims. This is where the FTC plays a well-exercised and critical role to a well-functioning marketplace as the nation’s truth-in-advertising cop-on-the beat. When the FTC unmasks such deceptions, an advertiser reaps negative press, reputational harm and financial consequences. The same is true when State Attorneys General and other state and local officials or class action attorneys file lawsuits.
So how do such “mistakes” happen to good companies? Lots of reasons. Being overly enthusiastic and insufficiently critical of promising research, overlooking research that casts doubt on the desired claim, mistaking correlation for causation, failing to rule out confounding factors, poor research design, not properly qualifying claims or making appropriate disclosures, and more.
Whatever the cause, the bottom line is that the long-established doctrine of “truth-in-advertising” is as important as ever for companies’ perceived trustworthiness. “Purpose,” taking positions on important issues of the day, being responsive to employee concerns, and managing “inherent negatives” while now recognized as imperatives for building trust with consumers must not overshadow the need for truthful advertising. CMOs will be well-served by putting themselves in their customers’ shoes in evaluating proposed claims—bringing healthy skepticism to claims the marketing department proposes and working closely with General Counsels. Your lawyers need to rigorously review whether necessary disclosures have been made and ensure that all material express and implied claims and the substantiation for such claims meet the FTC’s standards. Finally, CEOs will want to promote a culture of respect for those who question the appropriateness and legality of advertising claims and the long-term need for consumers’ trust.