FTC Reports on Alcohol Marketing and Self-Regulation

A new Federal Trade Commission report on alcohol marketing and youth examines industry efforts to reduce the likelihood that alcohol advertising will target those under the legal drinking age of 21. It also announces a new system for monitoring alcohol industry compliance with self-regulatory programs. The report explains where alcohol suppliers spend their promotional dollars, provides data on compliance with the industry's advertising placement standard, discusses the status of external review of advertising complaints, and provides information about the Commission's education program to reduce teen access to alcohol.

This is the third FTC report on the status of alcohol industry self-regulation. The Commission's first report in 1999 criticized the voluntary guidelines, which at times permitted alcohol ads to appear in media for which up to half the audience consisted of children and youth, and for failing to provide for third-party consideration of complaints about compliance with the guidelines. The FTC's 2003 report announced that the alcohol industry had agreed to obtain audience data before placing ads, and required that at least 70 percent of the audience for print, radio, and television ads consist of adults over 21. Noting that one industry group had adopted third-party review of advertising, the report continued to urge the remaining two groups to follow suit.

The new report, based on data provided by 12 major alcohol suppliers in response to FTC orders, is the first to present detailed information about how alcohol companies allocate their promotional dollars. It finds that about 42 percent of such expenditures are used for traditional television, radio, print, and outdoor advertising; about 40 percent are used to help wholesalers and retailers promote alcohol; about 16 percent are used for sponsorships; and two percent are directed to other efforts, such as Internet and digital advertising.

With regard to advertising placement, the FTC found that more than 92 percent of radio, television, and print ads disseminated by the 12 suppliers met the 70 percent standard. Because placements that missed the target were concentrated in smaller media, more than 97 percent of total alcohol advertising "impressions" (individual exposures to advertising) met the 70 percent standard. The report also notes that all three segments of the alcohol industry have now adopted systems for third-party review of advertising complaints.

In addition, the report provides an update on the FTC's "We Don't Serve Teens" alcohol consumer education program. Supported by a broad base of public and private organizations, including federal and state organizations, the alcohol and advertising industries, and consumer groups, "We Don't Serve Teens" provides information about the importance of restricting underage access to alcohol. In 2007, "We Don't Serve Teens" public service announcements (PSAs) generated more than 1.1 billion advertising impressions, with a market value of over $9 million.

The report recommends that the industry adopt the 70 percent standard for event sponsorships, and that self-regulatory review boards accept complaints from competitors and anonymous complainants. It also found that a 70 percent placement standard has now been adopted for Internet advertising, at the agency's request. Finally, it announces a new monitoring system to help the agency assess the industry's efforts on an ongoing basis. Each year, the Commission will issue orders requiring two to four suppliers to provide information about advertising and marketing practices and compliance with self-regulatory guidelines.

The Commission vote to approve the Report on Alcohol Marketing and Advertising was 4-0. Commissioner Pamela Jones Harbour issued a separate statement concurring in part and dissenting in part. This statement can be found as a link to this press release on the FTC's Web site.

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