Response Magazine's 13th Annual State of the Industry Report1 Sep, 2008 By: Thomas Haire Response
Stacey: It's really a matter of perspective and depends on which part of the industry you are involved with. Personally, I think about how to grow revenues. In my company, this involves new product development and innovation, as well as increasing sales in the E-commerce, retail and international channels of distribution. From a general interest perspective, I am interested to see how the U.S. market handles the mandated conversion from analog TV to digital.
Are the Federal Trade Commission (FTC) and Federal Communications Commission (FCC) expanding, maintaining or backing off on the number of investigations into DR-related marketing programs? What do you believe the most crucial marketing topics facing these two regulatory bodies will be in the coming 12-24 months?
Eden: The FTC and FCC as regulatory bodies have tunnel vision. There are really no standards that a marketer can count on when developing its offer or creative. They grease the squeaky wheel based on consumer input after the fact, rather than being proactive. The key focus of these regulatory bodies should be pharmaceutical and nutraceutical companies. They should be held to more stringent standards — beyond the direct-to-consumer (DTC) guidelines. This form of advertising has caused a significant increase in the use of medicine — often consumer requested — as well as unnecessary fear of new symptoms. The contra-indications of nutraceuticals and prescription drugs are unknown or not shared with the consumer. These companies, particularly nutraceutical marketers, should include comprehensive information in each package similar to what is received when a prescription is filled. This area should receive more focus, as there potentially could be "bodies on the table" if regulators do not take a proactive approach to these products.
Garnett: It seemed that there was more scrutiny than usual from these bodies. And that's good for our business. The Electronic Retailing Association's (ERA) theory of "self-regulation" hasn't been helping, and we're seeing just as many egregious violations of marketing ethics as we've always seen. We had some new contact with the "traditional" DRTV business in the past year, and I now see that it's going to be impossible for there to be effective self-regulation. The traditional business' ethical lapses are so habitual that many of the individuals in that business have lost the ability to tell when they're crossing the line — it's too profitable to lie to consumers then rake in the money.
Lee: The regulators are maintaining, it seems. Testimonials — claims, before-and-afters— will be one of the biggest issues along, with credit card sharing.
Medico: I really can't say if the FTC and FCC are getting more or less aggressive, as I don't have any knowledge. It appears from reading the trades that both regulatory bodies will continue to aggressively pursue "unverified claims," as well as non-delivery-of-service issues.
Sarnow: It's expanding! The FTC is getting larger budgets, and it will increase its investigations, especially in the nutritional health and dietary supplement product categories.
Stacey: ERA has done a great job in the United States with its self-regulatory program. It's been very effective in alerting marketers when there is a potential problem and allowing them an opportunity to respond prior to consumers being significantly affected or prior to the government having to spend unnecessary resources. Prior to the ERA system, there were no winners. Going forward, crucial topics should include those issues that most significantly affect consumers. The FCC must better deal with access issues, as there is still no reason why the U.K. has more than 40 shopping channels and the U.S. has only three. Also, the FTC needs to continue to strengthen its relationship with ERA so that marketers and consumers are notified as early as possible where there are regulatory concerns.