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Home > Vol 23, No 4 (1998) > Harker

Canadian Advertising Regulation: Lessons For Australia

Debra Harker (Sunshine Coast University, Australia)

Abstract: Advertising is the most visible element of modern marketing and an essential component of trading. However the activity is often accused by its critics of being intrusive and pervasive, and neither of these accusations can be refuted by a worldwide industry which spends billions of dollars each year reaching and persuading its target markets through daily bombardment of thousands of ads in most developed countries. However, when advertising does offend, mislead, or is untruthful, a structure needs to be in place in order to provide protection to all parties and, in most cases, a country's legal system is complemented by a self-regulatory scheme. The advertising self-regulatory scheme in Australia was dismantled at the end of 1996 and is currently in a state of flux as the industry grapples with the design of a new system. Canada's advertising self-regulation system, on the other hand, is unique, healthy, and successful; much can be learned from both failure and success. In this article a conceptual framework of "acceptable advertising" is presented, discussed, and used to analyze the regulation of advertising in Australia and Canada, with a view to assisting in the formation of a new scheme in Australia.

Résumé: La publicité est l'élément le plus visible du marketing moderne et une composante essentielle du commerce. Cependant, les critiques de cette activité l'accusent souvent d'être importune et omniprésente. Ces deux accusations sont difficiles à réfuter, étant donné qu'une industrie mondiale dépense des milliards de dollars à chaque année pour rejoindre et persuader ses marchés cibles, au moyen d'un bombardement quotidien de milliers de pubs dans la plupart des pays développés. C'est pourquoi, lorsque la publicité est offensive, trompeuse ou mensongère, il faut qu'une structure soit en place pour protéger toutes les parties en cause; en conséquence, dans la plupart des cas, un schéma d'auto-réglementation de la publicité complète le système légal d'un pays. L'Australie a démantelé son schéma d'auto-réglementation à la fin de 1996. Le pays se trouve actuellement dans une période transitoire, l'industrie s'efforçant de concevoir un nouveau système. Le système canadien d'auto-réglementation, quant à lui, est unique, bien portant et réussi. On peut beaucoup apprendre à partir de succès et d'échecs. Cet article présente et discute une conception de "publicité acceptable", qu'il utilise pour analyser la réglementation de la publicité en Australie et au Canada. L'objectif est d'aider à la formation d'un nouveau schéma en Australie.

Introduction

Advertising is pervasive (Drake 1988, 21), intrusive (Blakeney and Barnes 1982, 35), and, at times, pernicious and the purveyors of the art have been known to be mischievous in their attempts to reach and persuade their target markets (Mittal 1994). It is estimated that worldwide expenditure on advertising has been "growing faster than the world gross product" (Mooij and Keegan 1991, cited in Agrawal 1995) and Boddewyn (1992, 22) for one states that, on a global scale, developed and developing societies are bombarded by "several hundred millions of different advertisements" which are published and broadcast each year. On the one hand, the figure is testament to the importance of this, the most visible element of the marketing mix (Boddewyn 1989, 22); however, it can also be viewed as further evidence that some members of society may need to be protected as some advertising can be harmful.

A tiny proportion of this enormous figure are offensive, false, misleading, unfair, or socially irresponsible advertisements, or they are perceived as such by the marketplace. So, when this is the case, a structure needs to be in place in order to provide protection to all parties. To complement their legal systems, developed countries have established programs of regulation which, in the main, are operated on a self-regulatory basis, where the industry is responsible for controlling the conduct of its own members.

The achievement of acceptable advertising through advertising self-regulatory systems is a topic that has been debated in the leading marketing journals for over 20 years. This extant literature can be classified into two key areas. The first provides a significant, although somewhat descriptive, body of knowledge of advertising self-regulation in general, for example dealing with how various schemes function around the world (Neelankavil and Stridsberg 1980; Miracle and Nevett 1987; Boddewyn 1988, 1992). The second area is more prescriptive, providing normative guides for regulators and advertisers in developing effective advertising self-regulation programs (Moyer and Banks 1977; La Barbera 1980; Armstrong and Ozanne 1983; Boddewyn 1985; Wiggs 1992). However, the current breakdown of one of the world's longest established advertising self-regulatory systems in Australia (Media Council of Australia 1996; Strickland 1996) highlights the fact that regulators and advertisers are still seeking a robust framework for effective advertising self-regulation, producing advertising that is acceptable to all. Indeed, the lack of an independent complaint-handling body in Australia since December 1996 has produced a number of what would have previously been classified by their complaint-handling body, the Advertising Standards Council of Australia (Australian ASC), as "unacceptable advertisements," which have successfully slipped through the regulatory net (Advertising Standards Council 1996).

While research in these two areas is producing incremental additions to knowledge, there is a dearth of literature concerned with the individual variables associated with achieving acceptable advertising in our societies. Indeed, the literature is still uninformed about whether industry self-regulation is effective at all, or what types of self-regulatory programs work best (Wotruba 1997). Thus, this article has three objectives: first, to present and discuss the conceptual framework of acceptable advertising and, second, to demonstrate its use and value in analyzing the regulation of advertising in Canada and Australia. The third objective of this work is more long-term and is concerned with contributing to a research stream that involves broadening the understanding of what constitutes acceptable advertising in contemporary societies.

The framework

The literature in the area suggests a conceptual framework of acceptable advertising, which can be applied to analyze the regulation of advertising. The framework comprises four independent variables which affect the dependent variable, acceptable advertising (see Figure 1).

Acceptable advertising

The "acceptability" of advertising is an issue that is discussed in some detail in the key marketing journals in relation to advertising self-regulation. However, having briefly addressed the issue of why advertising must be acceptable to society in the introduction to this article, perhaps we should now raise the question of to whom in our societies advertising must be acceptable?

Both the academic literature and the advertising self-regulation bodies in place in many countries view the issue of "acceptability" of advertising in a simplistic manner; if advertising either breaks the law, or the established complaint-handling body upholds a complaint about an advertisement, then that advertisement is deemed to be unacceptable to society as the complaint-handling body, in turn, purports to be representative of the public, the society (Miracle and Nevett 1987, xxiii; Neelankavil and Stridsberg 1980, 46; Marsh 1996). Thus, "acceptable advertising," in the context of this research area, is advertising that does not fall foul of either the legal or the advertising self-regulation systems in place in that society.

17.85P 1 Acceptable Advertising: A Framework for Analysis Source: Harker 1996

The legal regulatory framework

The "fundamental determinant" (Miracle and Nevett 1987, xxii) of a developed or developing country's advertising self-regulation system is a sound legal regulatory framework which complements the self-regulatory structure. The legal regulatory framework in this instance refers to the laws and regulations in place to protect society against unacceptable advertising, and also to those bodies charged with implementing the laws and regulations.

In most developed countries illegal advertising practices, encompassing "unacceptable advertising," are governed by laws pertaining to "marketing" or "broadcasting" and many countries have umbrella legislation of this kind in place. Further, there has been a recent worldwide trend to outlaw tobacco advertising in many countries.

The self-regulatory framework

The variable "self-regulatory framework" refers to the input from the various advertising self-regulation bodies involved in a country's control process but, more specifically, the performance of the dispute resolution body (Moyer and Banks 1977; La Barbera 1980; Boddewyn 1983; Armstrong and Ozanne 1983). By analyzing the self-regulatory framework in place in various countries we can evaluate, to some degree, the effectiveness of such schemes, guided by the work of researchers in the field. For example, does the system involve all arms of the media? Does it have industry support? How many codes of conduct does the system adhere to? What areas of advertising do the codes cover?

Industry compliance

Achieving industry compliance in an advertising self-regulation system is vitally important or else the program will be accused of impotence, and compliance is usually achieved through sanctions such as prosecution under law, in the most extreme circumstances, and financial incentives to comply with rulings from charter bodies. Complaint-handling bodies achieve varying levels of success in relation to encouraging industry compliance; for example, where the advertising self-regulation system incorporates a national tripartite system (Boddewyn 1992, 9; Sinclair 1992, 3) and the advertisers, agencies, and media are involved in the process, the chances of compliance are greatly enhanced as the complaint-handling bodies are given "teeth."

Prevailing community standards

Attempts to represent prevailing community standards in an advertising self-regulation system are usually achieved by involving the public in the complaint-handling process which should lead to increased effectiveness of the program (La Barbera 1980, 32; Boddewyn 1983; Armstrong and Ozanne 1983, 26; Moyer and Banks 1977, 194; Trade Practices Commission 1988, 53), and also provide a credible and transparent process which is open, frank, and candid for all.

Involvement from the public can be at two levels: as complainants and also as members of the complaint-handling body. Most complaints in most countries originate from members of the public and, as advertising self-regulation programs are established primarily to protect these people, this situation is healthy. However, there is concern about the growing number of complaints stemming from "competitors" and "trade organizations" in countries such as Canada (Boddewyn 1992) and Australia (Harker 1996).

There is no "magic mix" regarding the make up of a complaint-handling body and there is little in the literature to guide us as to what ratio works best. Whatever the mix, the public persons who are involved in determining complaints are generally not "ordinary people" but rather of the "great and the good" (Boddewyn 1983, 83) and "amateur, but often distinguished" (Tunstall 1983, 237). In essence the public members of a complaint-handling body are better educated and better known people and, usually, members of the "Establishment." However, one might question the appropriateness of selecting people such as these to represent the prevailing community standards of a society. Are the "great and the good" misled by advertising as easily as the "ordinary people"? Are they offended to the same degree and by the same advertisements? Can they be hoodwinked by untruthful advertising as easily as the "ordinary people"?

Generally, there appears to be little creativity amongst the advertising self-regulation systems in operation around the world when it comes to the representation of prevailing community standards. However, this is an area which requires further research in order to learn from those bodies which do go further than including members of the public onto the complaint-handling body. For example, monitoring trends in what people are complaining about and also trends in advertising itself would add new insights. Similarly, communication with the advertising self-regulation system's target markets through media awareness campaigns would also demonstrate an attempt at representing prevailing community standards.

In summary, the "acceptable advertising framework" has been drawn in a circular fashion in an attempt to show the influence of each variable on the others. For example, there is an overlap in both "prevailing community standards" and "acceptable advertising," neither variable can be viewed in isolation as one influences the other. Similarly, double-headed arrows have been used to show the two-way effect of both of these variables on the rest of the framework; "prevailing community standards" will inevitably affect the laws and regulations that are drawn up and the establishment of a self-regulatory framework for example. The output of advertising that is acceptable to society will similarly influence the entire process again; if advertising becomes more acceptable, then perhaps less rigid laws will be required, or industry may need less incentive to comply with rulings.

Applying the framework

The countries

Until the end of 1996, the advertising industry in Australia had observed the disciplines of self-regulation for more than 60 years (Australian Advertising Industry Council [AAIC] 1989); however, towards the end of its life, criticism of the system was fierce. Canada's system has survived successfully for more than three decades, despite the complexities associated with regulating advertising in a nation divided by culture and language. Thus, much can be learned from comparing these two schemes in terms of success, failure, and reformation.

To summarize the position in Australia, during 1995 and 1996 a number of important events took place which ultimately resulted in the current situation whereby the industry is charged with producing a new system of advertising self-regulation. First, the Australian Competition and Consumer Commission (ACCC) revoked the Media Council of Australia's (MCA) accreditation system for advertising agencies; this decision was unsuccessfully appealed in March 1996. Second, in August the ACCC announced a review of advertising standards, encompassing both the codes of conduct and the complaint handling body, the Australian ASC. One month after this announcement, the MCA declared its intention to cease operations at the end of 1996, effectively exposing Australian society to unacceptable advertising for the interim period. The current situation in Australia, therefore, is one of uncertainty and provides an excellent opportunity to learn from other successful schemes, such as the one in Canada. For the purposes of this article, the comparison will be conducted using the Australian situation of advertising self-regulation prior to 1997, providing ample opportunity to learn from failure.

Having presented and discussed the framework of acceptable advertising, this article will now apply the framework to the two advertising regulatory systems. The methodology utilized for this piece of research was a comparative study from secondary information, including correspondence entered into with the advertising self-regulation bodies.

The legal regulatory framework

Australia and Canada share an extensive array of local and national legislation governing broad marketing activities, and advertising in particular. For example, umbrella legislation exists in both countries covering the area of "broadcasting" on both radio and television, which incorporates advertising, and the recent worldwide trend outlawing tobacco advertising has reached both countries.

Important pieces of Canadian marketing legislation include acts relating to Canadian Human Rights, Consumer Packaging and Labelling, and the Criminal Code (Tuckwell 1988), whilst the Federal Combines Investigation Act deals with any form of advertising (Canadian Advertising Foundation 1988). There are also around 50 provincial acts which affect advertising in Canada (Tuckwell 1988). In Australia, on the other hand, many of these areas are covered by the Trade Practices Act (1974). Regulatory agencies or bodies which complement this legislation are also apparent in both countries.

The self-regulatory framework

Australia. While some of the players were disbanded in 1996, the most important "multifarious associations and agencies concerned with advertising self-regulation" (Blakeney 1986, 28) can be summarized here by discussing the main industry bodies (see Figure 2).

The Australian Advertising Industry Council (AAIC), established in 1978 as a tripartite organization, incorporates all major arms of the advertising industry. The Council has as its members the Australian Association of National Advertisers (AANA -- the advertisers), the Advertising Federation of Australia (AFA -- the advertising agencies), and the Media Council of Australia (MCA -- the media) (AAIC 1986).

11.56P 2 The Structure of Advertising Self-Regulation in Australia Source: Harker 1996

The two major casualties of the collapse of the advertising self-regulation system in Australia in 1996 were the MCA and the Australian ASC. The MCA was formed in 1967 as an unincorporated voluntary association of virtually all mainstream commercial media (MCA 1994). The Council brought together the various arms of media to ensure a uniform method of extending credit to advertising agencies, and to implement a system for the regulation of advertising content published or broadcast by its members through the development of five codes of advertising practice (MCA 1994). The codes covered advertising relating to alcohol, slimming, therapeutic goods, and cigarettes; it also brought in an umbrella code concerned with ethics.

In 1974, the Australian ASC was established by the MCA, AFA, and AANA as a "strictly independent and autonomous" complaint-handling body for the advertising industry (ASC 1993b, 1). Funding of the advertising self-regulation system in Australia was by way of a levy of 0.017% on all billings from advertising agencies, although the Australian ASC only received a proportion of these monies (ASC 1994).

The complaints procedure required a written letter to the Council which was passed on by the Secretariat to the Chairperson to decide if a prima facie case existed. If the outcome of this screening process was positive the complaint ultimately went before the Australian ASC for adjudication; determination by the Australian ASC usually took six weeks. While the majority of complaints made to the Australian ASC were made by members of the public, an increasing number came from industry sources. When in operation, the Australian complaint-handling system visibly strained under the weight of competitor versus competitor complaints; competitors accounted for less than 10% of complaints made to the Australian ASC (ASC 1984-1996), yet often represented 25% of items considered at Council meetings (Harker 1996).

While the Australian system of advertising self-regulation did not monitor trends in advertising generally, figures were collated each year regarding who complained and about what.

Canada. As a nation, Canada is divided by culture and language -- French and English -- and has a large multicultural population. This situation has considerable impact on advertising in that country as the two major groups share neither the same problems (Boddewyn 1992), nor the same language. The organization of advertising self-regulation in Canada is shown at Figure 3.

14.11P 3 The Structure of Advertising Self-Regulation in Canada Source: Harker 1996

The Canadian Advertising Foundation (CAF), a voluntary organization formed in 1957 and reconstituted in 1966, is the English arm of self-regulation in Canada. The French arm is La Fondation Canadienne de la Publicité (FCP) and it handles fund-raising and administration (with the Advocacy Division) of the Guidelines on Sex-role Stereotyping in the Province of Quebec (Boddewyn 1992, 42). Apart from the fund-raising conducted by the FCP, recent changes in the advertising preclearance procedures in Canada means that the CAF can generate more funds, having taken over the preclearance role and charging for this service.

The CAF oversees and finances three separate divisions with distinct responsibilities. The Advocacy Division is concerned with the social and economic issues related to advertising in the English language. Two self-regulatory mechanisms -- the Advertising Standards Council (Canadian ASC) plus the Standards Division -- and the Conseil des Normes de la Publicité (CNP) administer standards and codes of ethics (Boddewyn 1992).

The Canadian ASC was established in 1966 by Canadian advertisers, agencies, and media as an "independent, non-profit body to administer voluntary codes of advertising standards" (CAF 1992, 1). The Council's responsibilities include administering and publicizing the advertising codes, and determining complaints from all sources (ibid.).

All complaints are received initially by the Standards Division and trade disputes between competitors are taken to the Advertising Review Panel. Other complaints in English are passed to the Canadian ASC whilst French complaints go to the CNP for consideration (Boddewyn 1992).

The Canadian advertising self-regulation system administers a total of 12 codes of advertising standards; three main codes plus a further eight industry-specific codes and the Guidelines on Sex-role Stereotyping. Anyone can complain about any advertisement but the complaint must be in writing and signed. While the bulk of Canadian complaints are from consumers, a growing number stem from competitors and trade organizations and this could be explained by the growth of comparison advertising in Canada (ibid.).

Industry compliance

Once the complaint-handling body in Australia and Canada has determined that an advertisement is in breach of a particular code, modification or withdrawal of the offending material is usually sought. In most cases such action is forthcoming. However, where this is not the case, both countries have a definitive way of achieving full compliance. In Canada and Australia the media will not carry advertising that is in breach of accepted codes; both countries achieve industry compliance with rulings through their tripartite system which ensures that all members of the system comply with the rulings of the complaint-handling body. In extreme cases, litigation can ensue if advertisers choose to ignore such requests. Both countries offer an appeals procedure for advertisers who disagree with the ruling from the complaint-handling body.

Prevailing community standards

Australia. Consumer-oriented bodies and groups in Australia include various Consumer Protection Agencies and the Australian Consumer Association; the latter in particular has a history of involvement in advertising self-regulation.

In terms of composition of its complaint-handling body, Australian advertising self-regulation sought to fully represent prevailing community standards in that 10 of the 16 members were from public life with no connection to the advertising industry. The remaining six people represented the industry and were nominated by their particular associations; comprising three from the media, two advertisers, and one agency representative (MCA 1992, 17).

The public members of the Australian ASC were in line with Boddewyn's description (1983, 83), not being "ordinary people" but rather of the "great and the good," in essence better educated and better known people and, typically, members of the "Establishment."

Available literature from the Australian ASC is sparse, comprising documents providing information as to who the body was and what it did, and a biography of the members. Annual reporting was conducted and the Council also had a policy of publishing quarterly case reports which provided details of the Council's determinations (ASC 1992, 8). However, due to financial constraints, the Council began charging for these reports (ASC 1993a, 12), and the situation at the end of 1996 saw only the parties to a complaint receiving abbreviated versions of the documents (Harker 1996).

Public awareness campaigns were run for the Australian ASC but it had no direct control over when and where they were conducted, the industry retained tight control over this activity.

Canada. Canadian advertising self-regulation makes an attempt at representation of community standards; the Canadian ASC and CNP both comprise approximately two thirds industry professionals and one third public representatives, and the Canadian ASC is supplemented by 6 regional councils, staffed by volunteers in the same ratio of industry and public representation as the full Council (Boddewyn 1992). The national Council has 19 volunteer members, four each from the advertiser, media, and agency tripartite system, plus seven public representatives, three of whom are nominees of the Consumers Association of Canada (CAF 1992, 1).

The CAF produces a number of publications, covering what it is and what it does, articles about advertising, and an annual Complaint Report.

In an effort to be pre-emptive with regard to "acceptable advertising" in Canada (CAF 1991, 2), staff of the CAF maintain a tracking process to monitor trends in advertising and advertising complaints, and to highlight new developments and bring these to the attention of the adjudicating bodies (CAF 1991, 8).

Again, in line with the Australian system of advertising self-regulation, Canadian public awareness campaigns are run at the discretion of the advertising industry.

Summary and conclusions

This article has presented, discussed, and used the conceptual model of "acceptable advertising" as a framework for study and comparison of advertising regulation in two countries, Canada and Australia. The rationale for choosing these two countries is as follows: up until the end of 1996, the Australian advertising industry had successfully self-regulated itself for more than 60 years (AAIC 1989), while Canada's advertising self-regulation scheme is unique, healthy, and successful. Thus, with the demise of the Australian system, much can be learned from a comparison of these two schemes in terms of success, failure, and reformation. The findings can now be summarized, and conclusions drawn to assist advertisers and regulators concerned with providing effective and efficient regulation of advertising. Table 1 provides a summary of the main findings from this study, based on the framework applied.

Each of the countries has a legal regulatory framework with similar pieces of legislation that complements the self-regulatory framework, and in each case the two variables work together. It must be emphasized, however, that the self-regulatory scheme is a key variable in this framework. While there are many similarities between the two countries in terms of the types of laws in place to regulate advertising, it is apparent that establishment of a sound, committed, and supportive self-regulatory framework enhances the legal environment. Indeed the country which achieves an appropriate mix of legal and self-regulation, such that the weaknesses of one regulatory framework are compensated for by the strengths of the other, and vice versa, will provide its society with more acceptable advertising.

A significant difference between the two countries is the fact that a separate body in the Canadian system handles competitor complaints as opposed to other complaints, while the Australian scheme considered complaints from all sources at their Australian ASC meetings and, consequently, strained under the weight of increasing industry complaints.

While both Australia and Canada try to achieve industry compliance through their advertising self-regulation schemes, where the scheme incorporates a national tripartite system (Boddewyn 1992, 9; Sinclair 1992, 3) and the advertisers, agencies, and media are involved in the process, the chances of compliance are greatly enhanced as the complaint-handling bodies are given "teeth." When the Australian body was in place, prior to 1997, the system achieved compulsory industry compliance with this method and Canada operates on the same basis.

The representation of prevailing community standards, the most intangible of the four variables, is difficult to gauge in a study such as this. In terms of public representation on the complaint-handling body, Australia put the balance soundly in favour of the public with a 10:6 public:industry ratio, whilst Canada prefers a 7:12 split. The public members on both complaint-handling bodies reflect the descriptions portrayed in the literature, resembling the "great and the good," and being "amateur, but often distinguished" (Boddewyn 1983; Tunstall 1983). However, a major difference between the two countries in this area is that Australia's public members represented a far greater proportion of the complaint-handling body (63%), compared to Canada (37%). Further, all 10 of Australia's public members on its complaint-handling body were there to specifically represent the public interest as members of that public, not representing any other organization. Conversely, Canada's seven public members actually only include four people who can be described in the same way as the Australian public members, the other three "public members" being nominees of the Consumers Association of Canada.

An important feature of the Canadian system of advertising self-regulation is that monitoring of advertising is conducted and the data used to inform determinations at Council level. This sort of tracking service was not provided at the Australian ASC and this could have implications for effective representation of prevailing community standards. Both countries collate figures relating to who complains and about what and, again, Canada is more proactive than Australia was in that "new developments" are brought to the attention of the regulators. Finally, both countries are in the hands of the industry when it comes to scheduling community awareness campaigns.

This article articulated two immediate objectives; first, to present and discuss the conceptual framework of acceptable advertising and, second, to demonstrate its use and value in analyzing the regulation of advertising in two countries. These two immediate objectives have been met and conclusions have been drawn to assist advertisers and regulators when reforming or designing advertising regulatory systems.

The third objective of this work was more long-term and is concerned with contributing to a research stream that involves broadening the understanding of what constitutes acceptable advertising in contemporary societies. With several hundred million advertisements (Boddewyn 1992) being broadcast or published each year, developed and developing societies are demanding advertising which is acceptable to all; that is, commercials that do not mislead, are truthful, and do not offend. In this endeavour, society is assisted by a structure of regulation which has the same goal: acceptable advertising. This work has contributed to that research stream, building on the work of others in broadening the understanding of what constitutes acceptable advertising in contemporary societies.

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