Alcohol advertising is the promotion of alcoholic beverages by alcohol producers through a variety of media. Along with tobacco advertising, alcohol advertising is one of the most highly regulated forms of marketing. Some or all forms of alcohol advertising is banned in some countries. There have been some important studies about alcohol advertising published, such as J.P. Nelson's in 2000.
Scientific research, health agencies and universities have, over the decades, been able to demonstrate a correlation between alcohol beverage advertising and alcohol consumption; however, it has not been proven that alcohol advertising causes higher consumption rather than merely reflecting greater public demand. Many commentators suggest that effective alcohol campaigns only increase a producer's market share and also brand loyalty.
The intended audience of the alcohol advertising campaigns have changed over the years, with some brands being specifically targeted towards a particular demographic. Some drinks are traditionally seen as a male drink, particularly beers and whiskies, while others are drunk by females. Some brands have allegedly been specifically developed to appeal to people that would not normally drink that kind of beverage. These ads may contribute to underage consumption and binge drinking. In 2011 a study found that twenty-three percent of twelfth graders had binge drank in the past two weeks, this figure doubled for kids in college. Use of alcohol before the brain fully develops can alter or negatively affect the development of the brain.
One area in which the alcohol industry has faced criticism and tightened legislation is in their alleged targeting of young people. Central to this is the development of alcopops – sweet-tasting, brightly coloured drinks with names that may appeal to a younger audience. However, numerous government and other reports have failed to support that allegation.
There have been several disputes over whether alcohol advertisements are targeting teens. There happens to be heavy amounts of alcohol advertising that appears to make drinking fun and exciting. Alcohol advertisements can be seen virtually anywhere, they are especially known for sponsoring sporting events, concerts, magazines, and they are found anywhere on the internet. Most of the vendors’ websites require an age of 21 to enter, but there is no restriction besides simply entering a birth date. With the catchy slogans, the idea that drinking is trendy, and no mention of the negative side of excessive use such advertising could be very harmful. A study done by the American Journal of Public Health concluded that Boston train passengers between the ages of 11 and 18 saw an alcohol-related advertisement everyday. There have been studies similar to this, which supports the allegation that underage consumption of alcohol is in correlation with the exposure of alcohol ads. In response, many cities have recognized the effect of alcohol-related ads on adolescents and in some cities these advertisements have been banned on public transportation. It is difficult to make definite allegations regarding youth exposure to these types of advertisements but it is necessary to find ways in which these allegations may be limited.
The National Household Survey on Drug Abuse reports the rates of binge alcohol use in 2008 were 1.5 percent among 12 or 13 years old, 6.9 percent among 14 or 15 years old, 17.2 percent among 16 or 17 years old, 33.7 percent among persons aged 18 to 20. In 2009, the rates for each group of underage alcohol usage increased by a fourth.
According to 2001 College Alcohol Study (CAS), continuous alcohol promotions and advertisements including lowering prices on certain types of alcohol on a college campus have increased the percentage of alcohol consumption of that college community. Alcohol advertising on college campuses have also shown to increase binge drinking among students. However, it is concluded that the consistency of these special promotions and ads could also be useful in reducing binge drinking and other related drinking problems on campus. (Kuo, 2000, Wechsler 2000, Greenberg 2000, Lee 2000).
- Results from one study indicate that beer advertisements are a significant predictor of an adolescent's knowledge, preference, and loyalty for beer brands, as well as current drinking behavior and intentions to drink (Gentile, 2001).
- Television advertising changes attitudes about drinking. Young people report more positive feelings about drinking and their own likelihood to drink after viewing alcohol ads (Austin, 1994; Grube, 1994).
- The alcohol industry spends $2 billion per year on all media advertising (Strasburger, 1999).
- The beer brewing industry itself spent more than $770 million on television ads and $15 million on radio ads in 2000 (Center for Science in the Public Interest, 2002).
Research clearly indicates that, in addition to parents and peers, alcohol advertising and marketing significantly affect youth decisions to drink. (The Center on Alcohol Marketing and Youth [CAMY]).
"While many factors may influence an underage person's drinking decisions, including among other things parents, peers and the media, there is reason to believe that advertising also plays a role." (Federal Trade Commission, Self-Regulation in the Alcohol Industry, 1999)
Parents and peers substantially affect youth decisions to drink. However, research clearly indicates that alcohol advertising and marketing also have a significant effect by influencing youth and adult expectations and attitudes, and helping to create an environment that promotes underage drinking.
Even though people these days must put themselves into that situation, David H. Jernigan (2005: 314) underlines how “more than fifteen percent of twelve-year-olds will be likely to create the situation where youth are more likely per capita to see the magazine than adults over twenty-one years, the legal drinking age in the United States”.
Main article: Malt liquor § Advertising
The target market for malt liquor in the United States has been among the African-American and Hispanic populations in cities. Advertisers use themes of power and sexual dominance to appeal to customers. Critics have objected to ads targeting this segment of the population, which suffers disproportionately high rates of alcohol-related illness and poor access to medical care.
Peter Anderson and his colleagues performed longitudinal studies and concluded that “alcohol advertising and promotion increases the likelihood that adolescents will start to use alcohol, and to drink more if they are already using alcohol.” Elizabeth D. Waiters, Andrew J. Treno, and Joel W. Grube’s discussions with a sample of youth, ages 9–15, support this claim. They found that these youth saw the purpose of beer commercials is to urge people to buy the product based on not only its quality, but also on “its relationship to sexual attractiveness.” They see the “attractive young adults drink beer to personally rewarding ends” and the “youth-oriented music” and are influenced to drink alcohol.
Advertising around the world
The World Health Organization (WHO) has specified that the advertising and promotion of alcohol needs to be controlled. In September 2005, the WHO Euro Region adopted a Framework for Alcohol Policy for the Region. This has 5 ethical principles which includes "All children and adolescents have the right to grow up in an environment protected from the negative consequences of alcohol consumption and, to the extent possible, from the promotion of alcoholic beverages".
Cross-border television advertising within the European Union was previously regulated by the 1989 Television without Frontiers Directive, a harmonisation measure designed to remove barriers to international trade as part of the common market. Article 15 of this Directive sets out the restrictions on alcohol advertising:
- "it may not be aimed specifically at minors or, in particular, depict minors consuming these beverages;
- it shall not link the consumption of alcohol to enhanced physical performance or to driving;
- it shall not create the impression that the consumption of alcohol contributes towards social or sexual success;
- it shall not claim that alcohol has therapeutic qualities or that it is a stimulant, a sedative or a means of resolving personal conflicts;
- it shall not encourage immoderate consumption of alcohol or present abstinence or moderation in a negative light;
- it shall not place emphasis on high alcoholic content as being a positive quality of the beverages."
This article on alcohol advertising restrictions is implemented in each EU country largely through the self-regulatory bodies dealing with advertising.
The EU law 'TV without Frontiers' Directive has subsequently been expanded to cover new media formats such as digital television. Now called the 'Audiovisual Media Services Directive', the provisions regarding restrictions on alcohol advertising are laid out in Article 22 and are identical to the above.
Some countries, such as France, Norway, Russia,Ukraine,Myanmar, Sri Lanka, and Kenya have banned all alcohol advertising on television and billboard.
See also: Alcohol advertising on college campuses and Alcohol consumption by youth in the United States
In the United States, spirits advertising has self-regulatory bodies that create standards for the ethical advertising of alcohol. The special concern is where advertising is placed.
Currently, the standard is that alcohol advertisements can only be placed in media where 70% of the audience is over the legal drinking age. Alcohol advertising's creative messages should not be designed to appeal to people under the age of 21, for example, using cartoon characters as spokespeople is discouraged. Advertising cannot promote brands based on alcohol content or its effects. Advertising must not encourage irresponsible drinking. Another issue in media placement is whether media vendors will accept alcohol advertising. The decision to accept an individual ad or a category of advertising is always at the discretion of the owner or publisher of a media outlet.
In 1991, U.S. Surgeon General Antonia Novello criticized alcoholic beverage companies for "unabashedly targeting teenagers" with "sexual imagery, cartoons, and rock and rap music" in television and print ads.:113–5 The Federal Trade Commission has conducted investigations of possible targeting to those under the age of 21. However, its investigations and that of scholars have not found evidence of such targeting.[verification needed] Concerns exist that irresponsible advertising practices or "pushing the envelope" with audience composition may lead to permanent legislation governing the advertising of beverage alcohol.
In Malaysia, alcohol advertising on radio and televisions was outlawed in 1995. On Malaysian television, alcohol advertising is not shown before 10:00 pm and during Malay-language programs. However, non-Malay newspapers and magazines are allowed to continue alcohol advertising. Supermarkets and hypermarkets have also been criticized for advertising alcohol products on trolleys, which is controversial because Islam is the state religion of the country. After the ban of alcohol advertising on Malaysian radio and televisions, they continued to build the brands with sponsorships of concerts and entertainment events.
In Singapore, alcohol advertisement is not allowed to be shown during programmes intended for children and young persons and during Malay-language programmes.
In Indonesia, alcohol advertising was legal in the 1990s, but have since banned.
In Hong Kong, alcohol advertising is not allowed to be shown during Family Viewing Hour programmes.
In the Philippines, alcohol advertising is allowed. Alcohol warning is also shown in the end of the advertisement explaining with the words: "Drink Moderately". In 2012, the warning was changed to "Drink Responsibly".
In Thailand, alcohol advertisements are still allowed, but must accompanied by a warning message. See Alcohol advertising in Thailand.
In Sri Lanka, public advertising on alcohol is banned totally since 2006.
In South Korea, public advertising on alcohol is only allowed after 10:00 pm.
In Russia, advertising alcohol products is banned from almost all media (including television and billboards) since January 2013. Before that, alcohol advertising was restricted from using images of people drinking since mid-2000's.
In Sweden, since 2010 advertisements are legal for wine and beer, but not on television and radio. Non-periodic magazines are allowed to advertise alcoholic beverages above 15%. These advertisements must contain warnings, but which are worded less strongly than the warnings on tobacco products - for example, "Avoid drinking while pregnant," as opposed to "smoking kills." These rules were introduced into the law 2010 based on the provisions of an EU directive, provisionally applied by Swedish newspapers since 2005. Before that alcohol advertisements were forbidden, except for "class 1 beer" or "light beer." Such advertisements were common, as stronger beers which shared a name with advertised light beers, may have benefit from this.
In Finland, Parliament of Finland decided to ban alcohol outdoor advertising, except during sport events. This new law is going to take place in January 2015.
In the United Kingdom, the Advertising Standards Authority have banned several ads that don't comply with the restrictions in the EU directive.
In September 2017, Facebook announced it would allow users to hide all alcohol advertisements. The move is debated within the UK, as Alcohol Research UK group welcomed the change, while the Alcohol Standards Authority, said the UK already had some of the strictest rules in the world.
Responsible drinking campaigns
There have been various campaigns to help prevent alcoholism, under-age drinking and drunk driving. The Portman Group, an association of leading drinks producers in the UK, are responsible for various such campaigns. These include responsible drinking, drink driving (and designated drivers), proof of age cards. The Drink Aware campaign, for example, aims to educate people about how to drink sensibly and avoid binge drinking. The web site address is displayed as part of all of the adverts for products made by members of the group.
The Century Council, financially supported by a group of alcoholic beverage distillers in the United States, promotes responsible decision-making regarding drinking or non-drinking and works to reduce all forms of irresponsible consumption. Since its founding in 1991, it has invested over 175 million dollars in its programs.
Many campaigns by the alcoholic beverage industry that advocate responsible drinking presuppose that drinking for recreational purposes is a positive activity and reinforce this idea as an example of sensible consumption. Persons who believe alcohol can never simultaneously be used "sensibly" and recreationally would obviously disagree with the focus or direction of these campaigns.
A controversial anti-drunk driving advertisement in South Africa has threatened the public with rape in prison. The campaign is still underway with no reported complaints to the advertising standards authorities.
The sponsorship of sporting events and sportspeople is banned in many countries. For example, the primary club competition in European rugby union, the Heineken Cup, is called the H Cup in France because of that country's restrictions on alcohol advertising. However, such sponsorship is still common in other areas, such as the United States, although such sponsorship is controversial as children are often a target audience for major professional sports leagues.
Alcohol advertising is common in motor racing competitions, and is particularly prominent in NASCAR and IndyCar. One major example of this was the Busch Series (now known as the Xfinity Series), sponsored by a brand of beer sold by Anheuser-Busch. That sponsorship, which started in the series' conversion from a national Late Model Sportsman races around the country to the present touring format in 1982, ended after 2007.
Budweiser, the best-known Anheuser-Busch brand, has sponsored IndyCar drivers such as Mario Andretti, Bobby Rahal and Paul Tracy, as well as NASCAR Cup drivers such as Terry Labonte, Neil Bonnett, Darrell Waltrip, Bill Elliott, Dale Earnhardt Jr., Kasey Kahne and currently Kevin Harvick. Meanwhile, Miller has sponsored Al Unser, Danny Sullivan, Bobby Rahal, Rusty Wallace, Kurt Busch and currently Brad Keselowski.
Furthermore, NASCAR mandates drivers under 21 not be permitted to wear any alcohol-branded sticker on their cars. In cases with below drinking age drivers, a specialised "Coors Pole Award - 21 Means 21" sticker is placed on such drivers' cars. One team, Petty Enterprises, refuses to participate in alcohol advertising and forfeits all alcohol monies and bonuses.
For distilled spirits, teams must run a responsible drinking sticker clearly visible on the car. For Jack Daniel's, the theme is "Pace Yourself, Drink Responsibly", and includes on NASCAR's Web site a waving yellow flag warning drinkers. For Crown Royal, the television ads feature the car with the slogan "Be a champion, Drink Responsibly" and it acting as a pace car to drivers, warning them of responsibility. Jim Beam has radio ads and NASCAR mandated statements about alcohol control. None of the three, however, is a full-time sponsor, as they alternate sponsorship with other products unrelated to their firm on the car. (Jim Beam's parent, Fortune Brands, sometimes has its Moen Faucets replace Jim Beam on the car in selected races.)
Although tobacco companies have been the main source of financial backing in Formula One, some alcohol brands have also been associated with the sport. For example, Martini appears on the Williams F1 car while Johnnie Walker has sponsored McLaren since 2006.
Anheuser-Busch, being a conglomerate with non-alcoholic properties, complies with the French alcohol advertising ban in Formula One by placing their Busch Entertainment theme park logos (mostly Sea World) where their Budweiser logo would appear on the Williams F1 car at races where alcohol advertising is banned and in Middle Eastern countries, where alcohol advertising is discouraged. A few companies, however, have added responsible drinking campaigns with their sponsorship, notably the 1989–90 BTCCFord Sierra RS500 of Tim Harvey and Laurence Bristow, which was sponsored by Labatt. Throughout the two seasons, the car bore a "Please Don't Drink and Drive" message.
Some stadiums, particularly in the U.S., bear the names of breweries or beer brands via naming rights arrangements, such as Busch Stadium, Coors Field, and Miller Park; those three venues are all in or near the cities of their headquarters.
Diageo are a major sponsor of many sporting events through their various brands. For example, Johnnie Walker sponsor the Championship at Gleneagles and Classicgolf tournaments along with the Team McLaren Formula One car.
Cricket is a sport with a large amount of alcohol sponsorship. The 2005 Ashes, for example, featured sponsorship hoardings by brands such as Red Stripe, Thwaites Lancaster Bomber and Wolf Blass wines. In nations like India and Sri Lanka where alcoholic advertising is generally prohibited, those regulations are rounded with distillers offering clothing lines and sports equipment marked with one of their brands or separate soft drink or bottled water lines within tournaments such as the Indian Premier League and test matches, such as United Spirits Limited's McDowell's No.1 and Pernod Ricard's Royal Stag.
Rugby union also has a substantial amount of alcohol sponsorship. The All Blacks feature Steinlager sponsorship prominently. The Scotland national team has a long-established relationship with The Famous Grouse, a brand of Scotch whisky. Wales has a more recent relationship with the Brains brewery (But wear "Brawn" when playing in France), and the Springboks of South Africa agreed for South African Breweries to put the Lion Lager, then, the Castle Lager brand on their shirt until 2004. Magners was the title sponsor of the Celtic League, the top competition in Ireland, Scotland and Wales, Guinness is the title sponsor of the Guinness Premiership, the top competition in England, and the beer brand Tooheys New was the Australian sponsor of the Southern Hemisphere Super 14 competition through the 2006 season. Bundaberg Rum is one of the sponsors of the Australia national rugby union team.
Rugby league in Australia is sponsored by Victoria Bitter and Bundaberg Rum.
Guinness' iconic stature can be attributed in part to its advertising campaigns. One of the most notable and recognizable series of adverts was created by S.H. Benson's advertising, primarily John Gilroy, in the 1930s and 1940s. Gilroy was responsible for creating posters which included such phrases such as "Guinness for Strength", "It's a Lovely Day for a Guinness", and most famously, "Guinness is Good For You". The posters featured Gilroy's distinctive artwork and more often than not featured animals such as a kangaroo, ostrich, seal, lion, and notably a toucan, which has become as much a symbol of Guinness as the Trinity College Harp. Guinness advertising paraphernalia attracts high prices on the collectible market.
In a campaign reminiscent of viral marketing techniques, one advert quickly appeared as a screensaver distributed over the Internet. It was a simple concept, featuring Dublin actor Joe McKinney dancing around the drink while it was given time to settle. The accompanying music (mambo tune Guaglione by Pérez Prado) was released as a single and reached number one on the Irish charts and number two on the UK charts in May 1995.
In Malaysia, Singapore, and Hong Kong, Guinness launched a $8 million advertising campaign using the fictional character of Adam King to promote the embodiment of Guinness as a man could be incredibly powerful. The advertising campaign was handled by advertising firm, Saatchi & Saatchi.
In Africa, the character of Michael Power has been used since 1999 to boost sales.
Today, Guinness' principal television campaign in North America consists of limited animation commercials featuring two eccentric scientists in 19th-century dress complimenting one another's ideas as "brilliant!"
Absolut vodka is made in Sweden and was introduced to the United States in the year 1979. Its launch was a true challenge due to a variety of factors: Sweden was not perceived as a vodka-producing country, the bottle was very awkward for bartenders to use, and vodka was perceived as a cheap, tasteless drink. Absolut's advertising campaign by TBWA exploited the shape of the bottle to create clever advertisements that caused people to become involved in the advertising, and the brand took off. Before Absolut, there were very few distinctions in the vodka category. Today there are regular, premium, and superpremium vodkas each at different price points and qualities. Flavored vodkas have become ubiquitous and may be found commonly at regular and premium price points.
Sport has been suggested to be one of the primary, if not the dominant, medium for the promotion of alcohol and drinking to the general population with the majority of advertising spend an advertising placement occurring in sport. Work from New Zealand and Australia shows that sponsorship of sports participants or athletes is associated with more hazardous drinking, with calls from the UK, Australia, and New Zealand, for bans on alcohol industry sponsorship and advertising in sport.
- ^"Author Page for Jon P. Nelson". SSRN. Retrieved January 21, 2017.
- ^ ab(FTC Says Alcohol Type Not Aimed at Minors. Los Angeles Times, June 5, 2002; Nelson, Jon P. Alcohol advertising in magazines: Do beer, wine, and spirits ads target youth? Contemporary Economic Policy, July 2006, pp. 357-69)
- ^Web.ebscohost.com. (subscription required)
- ^Substance Abuse and Mental Health Services Administration (2009). Results from the 2008 National Survey on Drug Use and Health: National Findings(PDF) (Report). Rockville, MD: Office of Applied Studies, NSDUH Series H-36, HHS Publication No. SMA 09-4434. Retrieved November 8, 2017.
- ^Substance Abuse and Mental Health Services Administration (2010). Results from the 2009 National Survey on Drug Use and Health: Volume I. Summary of National Findings(PDF) (Report). Rockville, MD: Office of Applied Studies, NSDUH Series H-38A, HHS Publication No. SMA 10-4586Findings. Retrieved November 8, 2017.
- ^Meichun Kuo; Henry Wechsler; Patty Greenberg; Hang Lee (October 2003). "The marketing of alcohol to college students". American Journal of Preventive Medicine. 25 (3): 204–211. doi:10.1016/S0749-3797(03)00200-9.
- ^Anderson, Peter; Bruijn, Avalon de; Angus, Kathryn; Gordon, Ross; Hastings, Gerard (2009-05-01). "Impact of Alcohol Advertising and Media Exposure on Adolescent Alcohol Use: A Systematic Review of Longitudinal Studies". Alcohol and Alcoholism. 44 (3): 229–243. doi:10.1093/alcalc/agn115. ISSN 0735-0414. PMID 19144976.
- ^Waiters, Elizabeth D.; Treno, Andrew J.; Grube, Joel W. (2001-12-01). "Alcohol Advertising and Youth: A Focus-Group Analysis of What Young People Find Appealing in Alcohol Advertising". Contemporary Drug Problems. 28 (4): 695–718. doi:10.1177/009145090102800409. ISSN 0091-4509.
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- ^Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by Law, Regulation or Administrative Action in Member States concerning the pursuit of television broadcasting activities
- ^Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services (Audiovisual Media Services Directive)
- ^"Russia slaps ban on alcohol advertising in media". BBC News.
- ^Tobacco, alcohol advertising bans take effect in printed media, Kyiv Post (January 1, 2010)
- ^ ab"Sri Lanka bans public smoking, alcohol, tobacco advertising". Asian Tribune. July 6, 2006. Retrieved June 6, 2013.
- ^"BBC NEWS - Africa - Kenya to outlaw alcohol adverts". Retrieved 25 May 2016.
- ^Davidson, D. Kirk (2003). Selling Sin: The Marketing of Socially Unacceptable Products. Greenwood Publishing Group. ISBN 9781567206456.
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- ^"Strongbow's YouTube spoof and seven other banned alcohol adverts". BBC Newsbeat. 8 October 2015.
- ^"Strongbow's YouTube spoof and seven other banned alcohol adverts". BBC News. 20 September 2017.
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- ^"Forging the Link Between Alcohol Advertising and Underage Drinking". Rand Corporation. 2006. Retrieved 14 November 2014.
- ^"Alcohol ads and sports". Media-awareness.ca. Archived August 6, 2011, at the Wayback Machine.
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- ^O'Brien K, and Kypri K. Alcohol industry sponsorship of sport and hazardous drinking among New Zealand sportspeople. Addiction 2008; 103(12): 1961-6.
- ^O’Brien K.S., Miller P.G., Kolt G.S., Martens M.P., Webber A. Alcohol industry and non-alcohol industry sponsorship of sportspeople and drinking. Alcohol and Alcoholism 2011; 46: 210-13.
- Two articles among many are Effects of Alcohol Advertising Exposure on Drinking Among Youth, Snyder et al., Arch Pediatr Adolesc Med/ Vol 160, Jan 2006 pg. 18-24 and Exposure to Television Ads and Subsequent Adolescent Alcohol Use, Stacy et al., American Journal of Health Behavior, Nov-Dec 2004, pg. 498-509. To view the literature go to pubmed.gov and search for alcohol advertising and adolescent behavior or some iteration of this. These articles and related studies are reviewed in J.P. Nelson, "What is Learned from Longitudinal Studies of Advertising and Youth Drinking and Smoking?" International Journal of Environmental Research and Public Health, 7(3), March 2010, pp. 870–926. Open Access: http://www.mdpi.com/1660-4601/7/3/870; and J.P. Nelson, "Alcohol Marketing, Adolescent Drinking, and Publication Bias in Longitudinal Studies: A Critical Survey using Meta-Analysis," Journal of Economic Surveys, 25(2), April 2011, pp. 191–232.
- 27 July 2005. "Drinks adverts told 'no sexy men'" at BBC News. Accessed 27 July 2005.
- Federal Trade Commission. Alcohol Marketing and Advertising: A Report to Congress. Washington, DC: Federal Trade Commission, 2003.
- Fisher, Joseph C. Advertising, Alcohol Consumption, and Abuse: A Worldwide Survey. Westport, CT: Greenwood Press, 1993, p. 150.
- Frankena, M., Cohen, M., Daniel, T., Ehrlich, L., Greenspun, N., and Kelman, D. Alcohol Advertising, Consumption and Abuse. In: Federal Trade Commission. Recommendations of the Staff of the Federal Trade Commission: Omnibus Petition for Regulation of Unfair and Deceptive Alcoholic Beverage Marketing Practices, Docket No. 209-46. Washington, DC: Federal Trade Commission, 1985.
- Sanders, James. Alcohol Advertisements Do Not Encourage Alcohol Abuse Among Teens. In: Wekesser, Carol (ed.) Alcoholism. San Diego, CA: Greenhaven Press, 1994. Pp. 132–135, p. 133.
NBER Reporter: Research Summary Winter 2004
The Effect of Advertising on Tobacco and Alcohol Consumption
Researchers study the effects of tobacco and alcohol advertising because the consumption of these substances is known to have potentially adverse health consequences. Tobacco use results in illness in proportion to its consumption, with about one-third of tobacco consumers dying as a result of these illnesses. Alcohol is different in that about nine out of 10 adults use alcohol in limited amounts with no adverse outcomes. The other one in ten abuses alcohol, which results in a range of negative health and social outcomes including an estimated 100,000 premature deaths per year.
There have been a number of empirical studies on the effects of tobacco and alcohol advertising. The bulk of these studies indicate that advertising does not increase tobacco and alcohol consumption. However, many public health advocacy organizations do not accept these results. An examination of the methods and data commonly used in empirical studies provides an explanation for these divergent opinions. The key to understanding the empirical problems lies in the advertising response function and the type of data used to measure advertising.
The advertising response function explains the relationship between consumption and advertising. A brand-level advertising response function shows that the consumption of a specific brand increases at a decreasing rate as advertising of that brand increases. That is, the response function illustrates a diminishing marginal product of advertising.(2)Ultimately, consumption is completely unresponsive to additional advertising. The assumptions of the brand-level advertising response function also can be applied to industry-level advertising. The industry level includes all brands and products in an industry; for example, the industry level for alcohol would include all brands and variations of beer, wine, and spirits. The industry-level advertising response function is assumed to be subject to diminishing marginal product, as in the case of the brand-level function. The industry-level response function is different from the brand-level response function, though, in that advertising-induced sales must come at the expense of sales of products from other industries. Increases in consumption come from new consumers, often youths, or from increases by existing consumers.
The industry-level response function can be defined by measuring advertising with a time-series of national data. This function also can be defined by measuring advertising with cross-sectional data from local markets. The industry-level advertising response functions provide two simple predictions: first, if advertising is measured at a high enough level, there will be little or no consumption response; second, the greater the variance in the advertising data, the greater the probability of measuring the effect of advertising in the upward sloping section of the response function.
Most prior studies of tobacco and alcohol advertising use annual or quarterly national aggregate expenditures as the measure of advertising, probably because this type of data was, at one time, the least expensive available. These time-series studies generally find that advertising has no effect. The oligopolistic nature of the tobacco and alcohol industries results in competition for market share with advertising (and other marketing) rather than with price. Indeed, price competition may set off a price war in which all firms will lose revenue. Alternatively, the "share of voice" -- that is, the percent of industry-level advertising undertaken by one firm -- is directly proportional to the share of market. The advertising-to-sales ratios for tobacco and alcohol companies are about 6 to 9 percent while the average American firm has an advertising-to-sales ratio closer to 3 percent. Aggregate national advertising may well be in the range of near-zero marginal product. The advertising response function predicts that studies using national aggregate data are not likely to find much effect of advertising, and the empirical work supports this prediction.
Local advertising, known as spot advertising, is a function of local cost conditions, demographics, regulations, and other local factors. As a result, local advertising varies more than aggregate national advertising. Studies using cross-sectional measures of advertising generally find that is has positive effects; this is consistent with measurement in the upward sloping portion of the response function. A few prior studies used cross-sectional advertising data measured at the individual or local level. These studies generally found that advertising had positive effects. One possible explanation for the results from the time-series studies is that the national-level data, being more aggregated, has less variance and thus leads to insignificant effects.
The one other common type of research on advertising is the study of advertising bans. The effect of a ban on the use of one or more media is substitution into the remaining non-banned media and into other marketing techniques. This does not necessarily reduce advertising expenditures. Bans can, however, lower the average product of a given advertising budget. Advertising and other marketing expenditures may increase to compensate for the loss of sales attributable to the downward shift of the response function. If the bans are comprehensive enough, they may reduce consumption. The empirical work finds some evidence that bans do reduce consumption.
Counteradvertising, which is designed to reduce consumption, also fits into the framework of a response function. The counteradvertising response function slopes downward and is subject to diminishing marginal product. The levels of counteradvertising that have been undertaken are small in comparison to advertising. Thus it is likely that these expenditures are in the falling portion of the counteradvertising response function. The empirical work finds evidence that counteradvertising does reduce consumption.
To summarize, the response function predicts that using time-series aggregate national advertising data probably will lead to finding little or no effect of advertising. Cross-sectional data measuring local variations in advertising are more likely to fall in the upward sloping portion of the advertising response function, and are more likely to lead to finding a positive effect of advertising. Advertising bans, if comprehensive enough, may lead to finding effects of advertising on consumption too. With these predictions in mind I have completed seven studies which use either cross-sectional advertising data, advertising ban data, or cross-sectional counteradvertising data.
My most recent study, with Dhaval Dave, examines the effect of alcohol advertising on alcohol consumption by adolescents.(3) We use the Monitoring the Future (MTF) the National Longitudinal Survey of Youth 1997 (NLSY97) datasets for the empirical work. These datasets are augmented with alcohol advertising data, originating aton the market level, for five media. Use of both the MTF and the NLSY97 datasets improves the empirical analysis because each has unique advantages. The large sample size of the MTF makes it possible to estimate regressions with race and gender-specific subsamples. The panel nature of the NLSY97 makes it possible to estimate individual fixed-effects models. In addition, similar specifications can be estimated with both datasets. Since the datasets are independent, the basically consistent findings increase the confidence in all the results. These results indicate that blacks consume alcohol less than whites, and this cannot be explained with the included variables as well as it is for whites. A comparison of male and female regressions shows that price and advertising effects are generally larger for females. Models that control for individual heterogeneity result in larger advertising effects, implying that the MTF results may understate the effect of alcohol advertising. The results based on the NLSY97 suggest that a ban on all local alcohol advertising , which is about one third of all advertising, might reduce adolescent monthly drinking from about 25 percent to about 21 percent. For binge drinking, the reduction might be from about 12 percent to about 7 percent.
An earlier cross-sectional paper examined the effect of alcohol advertising on motor vehicle fatalities.(4) The data used were quarterly aggregates for the largest Metropolitan Statistical Areas for four years. The data indicate that the effect of a ban on broadcast alcohol advertising would be a reduction of about 2000 highway fatalities per year. The data also indicate that the elimination of the tax deductibility of alcohol advertising could reduce alcohol advertising by about 15 percent, reduce motor vehicle fatalities by about 1300 deaths per year, and raise about $300 million a year in new tax revenue.
I also have published two studies on alcohol advertising bans. The first uses a pooled time series from 17 countries for the period 1970 to 1983.(5) The empirical measures of alcohol abuse are alcohol consumption, liver cirrhosis mortality rates, and highway fatality rates. The results show that countries with bans on alcohol advertising generally have lower levels of alcohol abuse. In particular, the results indicate that countries with bans on spirits advertising have about 16 percent lower alcohol consumption than countries with no bans and that countries with bans on beer and wine advertising as well have about 11 percent lower alcohol consumption than countries with bans on spirits advertising only. A second study of alcohol advertising bans, with Dhaval Dave, followed up on the first by using a simultaneous equations system that treats both alcohol consumption and alcohol advertising bans as endogenous.(6) This study also updated the dataset with data from 20 countries over 26 years. The primary conclusions of this study are that alcohol advertising bans decrease alcohol consumption and that alcohol consumption has a positive effect on the legislation of advertising bans. The results indicate that an increase of one ban could reduce alcohol consumption by 5 to 8 percent. Furthermore, recent exogenous decreases in alcohol consumption will decrease the probability of enactment of new bans and undermine the continuance of existing bans. Canada, Denmark, New Zealand, and Finland recently have rescinded alcohol advertising bans. Alcohol consumption in these countries may increase, or decrease at a slower rate, than would have occurred had advertising bans remained in place.
I have conducted two studies of tobacco advertising bans as well. The first, with Frank Chaloupka, uses data from 22 OECD countries over 20 years.(7) We estimate the models with a full set of country and year fixed effects, along with other time-varying covariates including tobacco price, income, and the unemployment rate. The effects of the ban tend to be smaller in the models that include these additional independent variables. The primary conclusion of this research is that a comprehensive set of tobacco advertising bans can reduce tobacco consumption and that a limited set of advertising bans will have little or no effect. A second study of tobacco advertising bans used data from 102 countries.(8) Since no consistent price or income data are available for all of these countries, the models only use advertising bans, dichotomous country, and dichotomous year indicators as independent variables. Again, the conclusion is that a comprehensive set of tobacco advertising bans can reduce tobacco consumption and that a limited set of advertising bans will have little or no effect.
Finally, I am involved currently in a project with Melanie Wakefield, Chaloupka, and others to examine the effect of tobacco counteradvertising on youth smoking. This study uses data from Nielsen Media Research (NMR) on the 75 largest media markets in the United States between 1998 and 2002. These data were merged with the Monitoring the Future data. The results show that among eighth, tenth, and twelfth graders in the 1998-2000 MTF, exposure to tobacco industry-sponsored or pharmaceutical company advertising for cessation aids were either unrelated to, or increased, the probability of smoking. In contrast, higher exposure to advertisements that were part of a state-sponsored tobacco control media campaign was significantly associated with lower levels of smoking.
In conclusion, the theory of an industry advertising response function is supported by the empirical results from my own prior studies and reconciles the contrary findings from other prior studies based on aggregated time-series data. Taken together, these empirical studies suggest that time-series advertising data for alcohol and tobacco are not appropriate for measuring the effect of advertising. However, further studies using cross-sectional data are also likely to find positive effects of advertising; studies of advertising bans will find effects if they are comprehensive bans; and studies of counteradvertising are likely to find that counteradvertising reduces consumption.
1. Saffer is a Research Associate in the NBER's Program on Health Economics and a Professor of economics at Kean University. His profile appears later in this issue.
2. At low levels of advertising, increasing marginal product is also possible.
3. H. Saffer and D. Dave, "Alcohol Advertising and Alcohol Consumption by Adolescents," NBER Working Paper No. 9676, May 2003.
4. H. Saffer, "Alcohol Advertising and Motor Vehicle Fatalities," Review of Economics and Statistics, 79 (3) (August 1997).
5. H. Saffer, "Alcohol Advertising Bans and Alcohol Abuse: An International Perspective," Journal of Health Economics, 10 (1991).
6. H. Saffer and D. Dave, "Alcohol Consumption and Alcohol Advertising Bans," Applied Economics, 34 (11) (July 2002).
7. H. Saffer and F. Chaloupka, "The Effect of Tobacco Advertising Bans On Tobacco Consumption," Journal of Health Economics, (19) (2000).
8. H. Saffer, "The Control of Tobacco Advertising and Promotion" in Tobacco Control Policies in Developing Countries, P. Jha and F. Chaloupka, eds., New York: Oxford University Press, 2000.